samchain/econo-pairs-v1 huggingface dataset:
Rapid deleveraging of positions in markets associated with the default of an HLI of the size of LTCM could have systemic impact even in large and mature markets, thereby threatening the global financial system. It has been said that a repeat of the like of an LTCM debacle is most unlikely to occur, given the downsizing of hedge funds. I certainly hope that this is the case but I also notice that the recovery of investor sentiment has seen more money from institutional investors as well as high net worth individuals flowing to the hedge funds. The second scenario, commonly known as the “Elephants in the Pond” problem, is a situation whereby the HLIs take very large and concentrated positions in smaller financial markets and adopt aggressive trading practices that could be destabilising to such markets. It is very encouraging that the “Elephants in the Pond” problem is by now recognised quite extensively as a real issue to be tackled. What is being done and is it enough? Different approaches have been floated to tackle the problems arising from the two scenarios I just described. The prevailing approach is through improving counterparty risk management. This is done indirectly by asking the banks and other financial institutions to be more prudent in granting credit lines to the HLIs, and directly by encouraging the HLIs to enhance their own risk management standards.

Fatos Ibrahimi: The banking system situation and the future challenges Address by Mr Fatos Ibrahimi, Deputy Governor of the Bank of Albania, at the European Finance Convention, Tirana, 14-15 September 2007. *  *  *  Dear participants, It is a pleasure to participate in this summit and to outline some of the main developments in one of the key areas of the Albanian economy, that of the banking system. In my following discussion, I will dwell on two main issues: First, the key steps in the banking reforms, with special focus on the issues related to commercial banks and the system’s financial developments in the recent years. Second, the aspirations of the Albanian economy to absorb foreign direct investments, their importance to our financial system and the FDI growth implications in the future. 1)  The performance of the Albanian banking system  Reform in banking was part of the structural reforms undertaken by the Albanian authorities after 1992. In addition to the macroeconomic stability, these reforms aimed to transform the Albanian economy into a market economy, through its privatization and the establishment of financial institutions and institutions of social protection. Albania has been going through a constant process of banking system consolidation since the transition into a market economy. In most of the 90s, this process was relatively sluggish as a result of the informal financial markets which had held the country’s economic and financial development back.
While the expectation is high, I can assure you that we will strive to fulfill our responsibilities the best we can to ensure that the economy overcomes any difficult challenges that may lie ahead. Thank you. 4  BIS Review 63/2008

It has also become necessary to evaluate whether the exercise of parate powers by commercial banks has achieved its objectives. According to banks and financial institutions, the very threat of parate action and publicity prompt defaulters to pay the debt. After fourteen years of the application of the debt recovery laws, it is therefore, fitting that an objective assessment be made to the recovery of debts through this legislation. The moderate development in the Sri Lankan economy in the past decade, saw a heavy demand for credit and the expansion of loan portfolios of banks. As banking is known to be a risky business, the monies placed on trust by depositors have to be prudently invested, but with a firm commitment to return funds to depositors when they call for it. In the circumstances, banks are duty bound to ensure the safety and soundness of their institutions by prudently deploying funds they mobilize. Loan defaults and non-performing advances are quite common in our part of the world. They have contributed to the maintenance of high interest spreads which in turn translate into high lending rates as banks tend to cover the cost of carrying large volumes of non-performing loans in their balance sheets. The cost of non-performing advances is therefore a charge on profits by way of provision to be made for these losses. Banks lose out on interest income that is rightfully theirs. Effectively therefore, the good borrowers pay the price for defaulting borrowers.
In the span of a decade, social media has become a bona fide global marketplace, marketing tool, recruitment platform and social scene. All this points to the double-edged nature of globalisation: While it may have brought people closer together, it also introduces the challenge of promoting greater appreciation of cultural, ideological and sociopolitical diversity. Conclusion Globalisation, once envisioned to be a beacon of unity, has fueled increasing polarisation in recent years. Let’s remind ourselves that in this globalised world, it is important for the contented to appreciate the struggles of the discontented. And, for the discontented to not lose sight of the potential that globalisation holds. And for all of us, to remember – that 75 years after Bretton Woods – the creation of a safe, fair and mutually beneficial global system is still not an easy pursuit. It is, nonetheless, a necessary one. Once again, I would like to welcome everyone to Sasana Kijang. The World Bank, a product of 3/4  BIS central bankers' speeches  Bretton Woods, along with the IMF and WTO, has brought to Malaysia an amazing gathering of thought leaders and experts on globalisation from all over the world. The next two days will indeed be a fine example of globalisation in action. Let me end with a passage from John Maynard Keynes which I think is appropriate for the occasion. “Yet the new economic modes toward which we are blundering are, in essence of their nature, experiments.

Policy configuration will need to be pragmatic and premised on the risk that is being managed. Indeed, macroprudential policies have been found to be effective in managing financial cycles and associated risks, such as excessive credit growth and asset price inflation. Nevertheless, sizeable shifts in capital flows could cause disorderly financial market conditions and excessive exchange rate movements. In pursuit of preserving stability, policymakers must therefore be able to avail ourselves to a broad range of policy toolkit. Globalisation of Human Capital Lastly, I will briefly touch on what globalisation means for the average person in today’s economy. Being skilled alone is no longer a guarantee of employment. With offshoring of jobs, workers are now competing in a fluid workplace, against a global workforce. A job that is available locally today can be effortlessly transferred to a different country tomorrow. Essentially, the increasingly dynamic nature of work underscores the importance for workers to constantly adapt, re-skill and up-skill. A global workforce also means that borders no longer limit the search for preferred jobs. In fact, globally, 258 million people, almost the size of Indonesia’s entire population, are living in a country that is not of their origin. Another aspect is the intensification of globalisation of information. Technology has brought the world into the palm of our hands. Last year, 3 in every 4 persons were active on a social media platform. In fact, if Facebook were a country, with 1.5 billion active users, it would be the largest country in the world today.
In an inter-institutional level, the commitment to be active on AML goes beyond full compliance with the regulatory requirements. We must be mindful of the role we have in the mosaic of the institutions that are relevant on implementing the AML program in the society. Furthermore, we should be sensitive and helpful toward such institutions, especially when we know the difficulties they face in performing their functions. More concretely, I do not believe that the banking industry and other nonbank financial institutions, are giving their maximum contribution, if they suffice with fulfilling rigorously some quantitative mandatory requirements of the law, and not focusing also on some non-mandatory but very important requirements. For example, a very low number of suspicious transactions is currently reported at Anti Money Laundering Directorate (FIU), while the number of reports about transactions above the threshold required by law, is huge. In this instance banks are acting in accordance with the law requirements, but are not in compliance with spirit of the law.

For anyone familiar with Carmen’s work, this does not come as a surprise. Besides being an outstanding economist, Carmen is also an excellent writer. She writes on apparently dry economic topics in a captivating and entertaining way. It is fair to say that this is not the norm in our profession. Carmen’s research in economic history involves spending countless hours in libraries, consulting obscure sources – some of them centuries old – in the search for economic data. Carmen has compared her endeavours in finding and analysing data both to archaeological expeditions as well as to the detective work of Sherlock Holmes. While this sounds rather exciting, the process can be painstaking. Carmen once described an episode where she found herself, at 3 o’clock in the morning, counting the number of zeros in records from countries that had experienced hyperinflation. Of course, with such a tiring task a little help can come in handy. If the legend is true, Carmen’s husband and frequent co-author, our friend Vincent Reinhart, once put together almost all the economic data published by the League of Nations and gave it to Carmen on Valentine’s Day. Maybe Carmen can tell us a little bit more about this most unusual gift. Now back to Carmen’s economic research. Carmen’s specialty is to draw lessons for the present by studying the past. Taking a long-term view helps to put things into perspective, and reveals that there are often historical analogies to contemporary situations that may at first seem unprecedented.
This is a substantial cut and it has been made on the grounds that since the previous Monetary Policy Report was published in October there has been an unexpectedly rapid and tangible downturn in economic activity in Sweden and abroad. So, in order to prevent development being far too weak and inflation too low, a significant reduction in the repo rate was required. The fact that the interest rate needed to be cut substantially is also due to monetary policy not having such a large impact recently as it normally does. With lower policy rates and a more expansionary fiscal policy in Sweden and abroad, we expect to see an easing-off in the slowdown of the economy and a recovery at the end of 2009. In this acute situation, one may wonder whether wage formation is something that we need to discuss just now. Obviously, wage formation is not the most central issue for monetary policy at the moment. At the same time, it is important to be able to stand firm when a storm is brewing. Today, the Swedish economy stands on much firmer foundations than it did in the early 1990s – largely thanks to the lessons that we learned from the crisis at that time and the improvements that have been made in the functioning of the economy since then. I would claim that wage formation has been an important element of this and I intend to explain this in more detail in my speech today.

They are even less so at the level of the financial system as a whole. This is nevertheless the challenge we have to face today. Let me come back to the G20 action plan. This plan first recognises the need to strengthen prudential regulation in three areas. Capital requirements need to be strengthened and made more counter-cyclical by introducing a system of capital buffers. The quality of capital should be enhanced and its definition harmonised. We also may need to add to the range of instruments currently available a simple mechanism to measure leverage in order to complement the information provided by the solvency ratio. Another lesson that the G20 has learned from the crisis is that the current scope of regulation and supervision is inappropriate as it is too narrow. The current framework is based on the implicit idea that banks alone – because they collect deposits – are the source of risks for the system as a whole. This used to be the case. Yet, it is no longer true at all. It is now evident that all systemically important institutions and markets need to be regulated. In concrete terms, the G20 is widening the scope of regulation to include rating agencies, hedge funds and derivatives markets. The general principle is to abandon a silo approach to regulation, which was structured around institutions' legal character (e.g. banks, insurance companies, etc.
Given the small and externally-oriented nature of the Hong Kong economy and its role as an international financial centre, maintaining exchange rate stability against the US dollar, which is the most commonly used currency for conducting international trade and finance, is conducive to the long-term economic development of Hong Kong. Second, on linking the Hong Kong dollar to the renminbi instead of the US dollar: this is inappropriate and technically not feasible. The US dollar is still the most appropriate anchor currency for the Hong Kong dollar, taking into account factors such as international usage, business cycle synchronisation between Hong Kong and the US being higher than that between Hong Kong and the Mainland, the different stages of economic development between Hong Kong and the Mainland, and the fact that the renminbi is not freely convertible. Third, on inflation and the linked exchange rate system: it is true that the weakness of the US dollar and the strength of the renminbi may increase inflationary pressures in Hong Kong, but rapid growth in productivity in Hong Kong and diversification of sources of imports can in part mitigate the inflationary pressure. HKMA research showed that a 10% appreciation in the renminbi would increase Hong Kong’s inflation rate, as measured by the CCPI, by roughly 0.4 percentage points. Furthermore, only about 9-17% of imports retained in Hong Kong come from the Mainland.

Remarks on The Post-pandemic Landscape for Central Bank Statistics 11th IFC Biennial Conference Pablo García Silva, Deputy Governor, Central Bank of Chile August 25th 2022 I want to thank the organizers for the opportunity to participate in this distinguished panel, providing some remarks on the challenges we face as Central Banks and as providers of statistics, particularly in the environment we live today, as the pandemic recedes. Central Banks are keenly aware of the need to provide timely, accurate, and in-depth understandings of the changing economy. This not only to inform correctly policy making, but also to satisfy the shifting demands of society regarding the environment we live in. This inevitably implies trade-offs. Operative and budgetary constraints mean that a careful balance of timeliness, accuracy, and depth needs to be achieved. The ever-expanding complexity of economic relationships, and the speed at which policies have had to adapt to very large shocks, imply in my view that compared to a not so distant past timeliness is today at a premium. The times of change we live in require us to react promptly. This, however, carries the cost that both the accuracy and the depth of data will be inversely related to its timeliness. This brings about the implication that both policy making needs to consider the implicit uncertainty of the environment, and also that statistics providers need to be candid about those uncertainties when communicating with the public.
It naturally follows that the objectives set out in the first paragraph of the objects clause are primary objectives for the Bank and fully in line with the principles on which the Bank already bases its activities. 1/8  BIS central bankers' speeches  Trust in the stability of the value of money is the very foundation of the monetary system. In addition, households and businesses must be confident that the payment system will allow them to conduct transactions securely at all times. An efficient and stable interbank payment and settlement system also provides a necessary basis for the stability of the financial system. With financial system stability, investors can channel available capital to investments offering the highest return. Norges Bank also has a key role in the management of crises in the financial system. In a crisis, the Bank can supply liquidity both to influence market interest rates and to stabilise the financial system. Flexible inflation targeting The purpose of “maintaining monetary stability” sets a long-term objective for monetary policy. The day-to-day conduct of monetary policy requires a more operational target. Most countries set this target in the form of a regulation or a more time-limited mandate issued by the government. The operational target is set to meet the primary objective, but is also a means of holding the central bank accountable. Chart: Emergence of inflation targeting The objective of monetary stability is compatible with a range of operational targets.

Those that had doubts about the importance of the innovation or the persistence of the gain in asset prices lose confidence in their opinions as they underperform and lose business and market share. Those who believed that the large gains in asset prices were justified by the innovation and who benefited from those beliefs become more dominant. Casual investors see the large rise in prices and jump in. This shift is important because, in markets, prices are driven by the marginal investor. As new and often less well-informed investors plunge in to participate in the boom, they can overwhelm the so-called “smart money” that gets frustrated after having lost repeatedly trying to take the other side. In this respect, a bias toward optimism may also play an important role. Studies have found that most people believe that they are above average in terms of their acumen, be it as investors, car drivers or in other activities. 5 This overconfidence may cause some people to keep investing in the asset, even when they are skeptical about its valuation because they are overly confident that they will anticipate the end of the bubble and be able to get out in time. Fifth, asset bubbles occur more easily when it is difficult to short the assets.
Features of the design and operation of an infrastructure can help to lower risks of this type – for example, by introducing collateralisation and loss-sharing rules, net sender limits and throughput guidelines to promote efficient liquidity recycling – so that failures do not give rise to financial contagion. Again, left to their own devices, users will lack an incentive to take into account fully the costs imposed outside of the system and they again face acoordination challenge in effectively implementing system design or rule changes to reduce such effects. Infrastructure robustness and the changing nature of risks Some of the financial market trends identified earlier have placed additional pressure on potential shortcomings in the financial infrastructure, attracting the interest of the public authorities and, in some cases, prompting targeted intervention. I would like to discuss two of these: financial market innovation; and the global linkages and system interdependencies that arise from the emergence of large cross-border banking groups. Financial market innovation Taking the first of these, over-the-counter (OTC) derivatives markets have grown rapidly in recent years, particularly in the credit sector, driven in part by the shift towards an “originate and distribute” model of banking finance and by greater recourse to credit risk transfer to manage and hedge risks, as well as increasing activity by insurance companies, hedge funds and institutional investors in this sector. The infrastructure for OTC derivatives has, however, lagged behind.

Although differences in policies are not completely unexpected now that the collapse scenario has been reduced, they do show that the international financial architecture still lacks sufficient leverage to coordinate the interests of the different countries. Symptoms of imperfect coordination can be seen across the board today and, unfortunately, the euro area is no exception. As I have mentioned and illustrated above, a lack of coordination leads to national responses which can generate negative externalities. Recovering the sense of common purpose shared at the height of the crisis remains of the essence when designing the right policies at the global level. In these circumstances, it would be of paramount importance to reinforce the efforts to keep cooperation and dialogue open, and this Seminar is intended to contribute to that goal. The other area where international cooperation is definitely needed is in the construction of global safety nets as a way to reduce global financial risks. A wider use could help mitigate certain policies that may be detrimental to global stability from a collective standpoint, such as excessive reserve accumulation. In that respect, additional work is needed to improve the incentives associated with IMF lending facilities for emerging market economies and to address more effectively the traditional problems associated with them (for instance, the stigma problem). International fora are well suited for resolving these coordination problems. That brings me to the end of my introduction to the Seminar.