samchain/econo-pairs-v1 huggingface dataset:
But the fact that firms are starting to grapple with implementation means that they’ve got past denial and bargaining and settled down to acceptance. Smaller firms may be lower down on the preparation curve, although presumably their total risks are also smaller. In December, the Federal Financial Institutions Examination Council presented a one-hour webinar on LIBOR transition that drew about 1,300 participants from supervised firms. Of those who responded to a polling question during the webinar, about one-fifth said it was the first time they were hearing about the topic. To continue forward, several issues must be resolved. For example, what events should trigger the shift from LIBOR to SOFR or another alternative rate? A definitive end to LIBOR is an obvious trigger. But, short of that, what events should prompt the switch? What if LIBOR was nominally available, but the UK FCA used its supervisory power to declare that LIBOR is unrepresentative of the underlying market? Last month, an FCA official highlighted the possibility that this is exactly how the end of LIBOR might come about, and urged market participants to seriously consider this possibility when crafting their fallback triggers.23 In their various consultations on fallback language, the ARRC has proposed that such a declaration by the FCA would trigger the switch to an alternative rate. A clear majority of respondents supported that proposal. I think every market participant should ask how the fallback triggers in their contracts would respond. In addition, the precise mechanism of changing from LIBOR to, say, SOFR will vary.

The solution is not a simple substitution. There are inherent differences between SOFR and LIBOR that will need to be adjusted for in the transition. For one thing, most contracts that reference LIBOR key off of three-month or six-month LIBOR. Mortgages often use one-year LIBOR. But SOFR is an overnight rate—there’s no such thing as three-month or six-month SOFR. One solution to this difference is to use the daily SOFR for each day during the term, either averaged or compounded each day until the end of the period. ISDA has indicated that derivatives will fall back to this kind of average, and the SOFR floating rate notes issued recently use a similar approach. To facilitate this method, the New York Fed is preparing to produce a backward-looking compounded average alongside the daily SOFR. Some market participants may need to use a forward-looking “term SOFR” created by constructing a yield curve off of trading in forward-looking SOFR derivatives, particularly for legacy contracts that already reference a term LIBOR rate. Creating a new rate like that is part of the ARRC’s transition plan, although it’s more concept than reality at this point. But under all of the cash product consultations put out to date, the first preferred fallback is to that kind of term rate, if such a rate were to be created that was up to IOSCO standards and endorsed by the ARRC.
Such is our aim in Hong Kong. But this does not mean throwing money into each and every idea which comes along - there’s no point in constructing highways if no-one wants to drive down them. There must be a reasonable business case. On the other hand, no venture no gain. The opening up of a footpath may lead to the emergence of heavy traffic. Thus we have been selective in the initiatives which we support and, although not every project may have been an unqualified success, examples such as our HKD RTGS system which we pioneered in the mid-90s; the CMU which provides such an excellent settlement and custody service for debt securities and which is being linked up with a growing number of overseas counterparties; and the relatively recent USD clearing system; all of these present a strong track record. We are here today to mark another milestone in this infrastructural development - in the field of clearing and payments. Our USD clearing system, introduced in 2000, has demonstrated that a niche exists for services of this type in this part of the world. USD RTGS turnover has grown to about 3,000 transactions a day with a value of some $ billion; and over 1,000 USD cheques are being processed daily. Enquiries and discussions with banks suggested to us that there was also a business case for a roughly parallel service in euro.

Joseph Yam: A new euro clearing system for Hong Kong Remarks by Mr Joseph Yam, Chief Executive of the Hong Kong Monetary Authority, at the signing ceremony for the appointment of Standard Chartered Bank as settlement institution for the euro clearing system in Hong Kong, Hong Kong, 3 July 2002. *  *  *  We live in a financial world where boundaries and barriers are progressively collapsing, whether as the result of conscious policy decisions in favour of liberalisation or because of the new vistas opened up by the onward march of information technology. Thus, restrictions on providing or using services across geographic or political borders are on the decline. Particular transactional services, such as quoting, dealing, confirming, settling, delivering, paying and safe-keeping, are increasingly footloose, in the sense that many of them can be readily accessed from remote locations. Moreover, the development of interfaces between systems in different parts of the world provides scope for continuous 24-hour real-time trading. At the same time, the regulatory framework is tending towards standardisation around the world, thereby reducing the potential for regulatory arbitrage between jurisdictions. As a result of these various developments, the marketplace in which we can operate is potentially ever larger, but at the same time the potential number of competitors is ever growing. Against this background, financial centres must be nimble, competitive, efficient and safe, and alert to the changing world, if they are to thrive. One of the essentials is that they must offer an effective and robust financial infrastructure.
When market participants obtain timely, accurate, realistic and latest information about the institution's performance, their investment and credit decisions can be a means of pressure and incentives for managers and boards of directors for managing their risks soundly. Equally important, the same market participants can penalize firms that fail to manage their risks soundly. Therefore, market discipline must be supported by adequate public disclosure and compliance with sound accounting standards. Knowing a company's risk appetite and its approach and methodologies for managing risk is essential to assessing the institution's future. Progress in the disclosure area, however, requires that accounting standards are enhanced to ensure proper valuation and to reflect innovations, in terms of both new products and modern risk management techniques. Accounting systems serve a variety of purposes, the most prominent of which is helping creditors and investors make rigorous and informed decisions as to which enterprises meet the market needs in terms of efficiency, competitiveness, and profitability. Sound accounting systems also enable investors in assessing the real financial value of enterprises. The systems also assist in attracting capital, both foreign and domestic. Looking ahead, I believe that a major challenge for directors and executive management is to find directors who are sufficiently independent but still knowledgeable about the business of the financial institution. Independence reflects qualities of objectivity, experience, insight, and force of character.

One example is data on the size of  2  BIS Review 19/2007  daily variations in net asset value, VAR, or profit and loss over the previous quarter. This type of information would not reveal proprietary information about trading strategies or otherwise create substantial disincentives to risk taking. Although these would provide some information on the overall risk profile of the fund, they would be lagging indicators, and they would carry the usual risk of providing false comfort in some circumstances and excessive concern in others. Adopting such measures would give the institutions that provide financing and leverage to hedge funds a somewhat greater capacity to judge their direct risk to those funds. But that is not their principal challenge. The institutions already know the positions they are financing, and they can use the usual range of tools to measure the potential exposure, net of collateral, in those positions. And where they do not feel they have adequate information to evaluate the overall risk profile of the fund, they can manage that risk by taking less exposure, by requiring more margin, or by building a greater cushion of protection against overall risk. So the potential gains from a disclosure regime of this type would be limited, at least as compared with the cost of trying to put such a regime in place on the global scale that would be necessary to make it effective.
Eighth, a second potential source of regulatory arbitrage is the shadow banking system. Even ahead of the present crisis, this had grown to a scale potentially in excess of the conventional banking system (Adrian et al (2010)). Operating macro-prudential policy on a sub-set of credit providers, ignoring the shadow banks, suffers the same problems as microprudential policy operating on a sub-set of banks. It risks not only being ineffective, but also providing incentives for risk to migrate to the unregulated sector. This underlines the importance of policing the regulatory boundary and moving this boundary if credit provision risks crossing the border in the course of setting macroprudential policy. Ninth, especially at the outset, uncertainties about the role and efficacy of macro-prudential policy will be considerable. Simplicity and humility will be needed. Simplicity to prevent confusion about the objectives and transmission channels for macro-prudential policy, given the importance of signalling. Humility to reduce the chances of banks over-relying on public policy signals about credit provision at a time when these are sure to be noisy (see Morris and Shin (2002)). As with the business cycle and monetary policy, macro-prudential policy cannot be expected to eliminate the credit cycle. This is neither feasible nor desirable. And simple rules, augmented by judgement, offer the best chance of ensuring robust decisionmaking at the start of a new macro-prudential policy regime (Taylor and Williams (2010)). Tenth, the state of macro-prudential policy today has many similarities with the state of monetary policy just after the second world war.

The ECB’s asset purchases are being expanded in terms of both size and composition: the monthly purchase volume has been increased from € billion to € billion and the universe of eligible assets now includes non-bank corporate bonds. Purchases are intended to run until the end of March 2017 – or beyond, if necessary – , and in any case until the Governing Council sees a sustained adjustment in the path of inflation to levels close to 2% over the medium term. Taking into account the current outlook for price stability, the Governing Council expects the ECB’s key policy rates to remain at present or lower levels for an extended period of time, well past the horizon of the net asset purchases. We are confident that the very accommodative monetary policy stance will provide further support to the euro area recovery and will accelerate the return of inflation to levels that we consider to be consistent with our objective. The Governing Council has done and, within its mandate, will continue to do whatever is needed to pursue its price stability objective. Our very accommodative monetary policy stance has provided considerable support for the euro area recovery. By supporting growth prospects, our actions have also been beneficial for financial stability.
In short, the efforts of banks over the past seven years to rebuild their balance sheets and improve risk management are paying off. Mortgage rates are at all-time lows. Corporate credit availability has recovered solidly. Lending to small firms is growing again having fallen sharply in the wake of the crisis (Chart 1). Chart 1: Corporate credit growth as a whole recovering and SME credit growth positive(a) 2.0 1.0 0.0 -1.0  Large(c)  -2.0  Total  -3.0  Per cent  SMEs(b)  -4.0 -5.0 -6.0 -7.0 Apr Jun Aug Oct Dec Feb Apr Jun Aug Oct Dec Feb Apr Jun Aug Oct Dec Feb Apr Jun Aug Oct 12 12 12 12 12 13 13 13 13 13 13 14 14 14 14 14 14 15 15 15 15 15 Notes: (a) Rate of growth in the stock of lending on previous year. Lending by UK MFIs. Data cover lending in both sterling and foreign currency, expressed in sterling. Not seasonally adjusted. (b) SMEs are those businesses with annual debit account turnover on the main business account less than £ million. (c) Large businesses are those with annual debit account turnover on the main business account over £ million. 1  The test was tough. In the scenario, gilt yields falls over 100 basis points, Bank Rate falls to zero, unemployment increases by 3 ½ percentage points, and house prices fall by one fifth. Equity prices fall sharply – by around twice their recent falls.

Dangerous bubbles are those in which a market experiences not only rising prices, but also the use of the underlying assets as collateral. This leads to the unsustainable long-term development of the price of these assets, parallel to unsustainable long-term credit growth. As these prices increase, so too does the value of the underlying assets, enabling them to be used as collateral for further loans. At the same time, increased credits provide increased purchasing power, allowing prices to rise even more. This can turn into a feedback loop that is hard to break. The development of housing markets in the United States and a number of other countries in the period leading up to the present crisis are examples of such bubbles. The Swedish commercial property market at the start of our crisis in the 1990s is another illustrative example. A current illustration was provided in last week’s Financial Times by the well-known economist Frederic Mishkin, who, among other research, carried out an assessment of Swedish monetary policy a couple of years ago. Mishkin emphasised the importance of making a distinction between different types of bubble. Bubbles are dangerous when the underlying assets are used as collateral and fuel an excessive credit boom. However, this is not the situation in the world today. On the contrary, the banks are shrinking their balance sheets and tightening their credit conditions. Thus the asset price increases that we are currently seeing in a number of countries hardly constitute a serious problem.
Figure 2 Nominal loans by type of credit (annual change, percent) 30  30  25  25  20  20  15  15  10  10  5  5  0  0  -5  -5 03  04  05 06 07 08 09 10 11 Consumer Housing Commercial  12  13  Sources: Central Bank of Chile and Superintendence of Banks and Financial Institutions (SBIF). BIS central bankers’ speeches  7  Figure 3 Inflation indicators (annual change, percent) 10  10  8  8  6  6  4  4  2  2  0  0  -2  -2  -4  -4  -6  -6 06  07 CPI  08  09  CPIEFE  10  11  CPIEFE goods  13  12 CPIEFE services  Sources: Central Bank of Chile and National Statistics Institute (INE). Table 1 International baseline scenario assumptions 2011  Growth  Trading partners' GDP  2012 (e) Dec.12 Mar.13 Report Report 4.2  3.3  2013 (f) Dec.12 Mar.13 Report Report  2014 (f) Dec.12 Mar.13 Report Report  (annual change, percent)  3.4  3.5  3.6  4.0  4.2  World GDP at PPP  3.9  3.0  3.0  3.3  3.3  3.8  3.9  United States Eurozone Japan China India Rest of Asia (excl. Japan, China and India) Latin America (excl.

Jean-Pierre Roth: Switzerland – a platform for global business Summary of a speech by Mr Jean-Pierre Roth, Chairman of the Governing Board of the Swiss National Bank and Chairman of the Board of Directors of the Bank for International Settlements, at the Forum de l'Economie vaudoise, Lausanne, 14 September 2007. The complete speech can be found in French on the Swiss National Bank’s website (www.snb.ch). *  *  *  Within the past ten years, Switzerland has become a genuine platform for global economic operations. From here, the international markets are being worked systematically, and an ever-growing part of our economic performance is now attributable to investment activity abroad. This is a welcome development since it allows us to keep high value-added jobs in Switzerland. However, it also involves some risk because the international mobility of production has increased. Consequently, the general conditions which help to keep Switzerland attractive as a business location must be maintained. This platform for global economic operations has given us a role outside the European Union and the euro area. Thus we have chosen to face the challenge of globalisation instead of the challenge of European integration. Our path may be demanding, but it is also promising! BIS Review 101/2007  1
Correlation analysis suggests that, while short-term fluctuations in nominal as well as index-linked bond yields tend to be quite closely synchronised between the euro area and the US, the relationship between euro area and US break-even inflation rates tends to be very weak (see Chart 8). Only in times when inflation expectations react to common global inflationary shocks, for example to strong increases in oil prices, can a closer synchronisation of movements in break-even inflation rates be observed. How would the European economy have developed had the euro not been introduced? We can only speculate, but past experience can be quite instructive. We must not forget that, as a consequence of the collapse of the Bretton Woods system and the world’s first major oil crisis, the 1970s were a period of monetary disintegration in Europe. Nor should we forget the devaluation of the Italian lira by almost 30% against the Deutsche Mark after the 1992 ERM crises. The exchange rate risk premium, which is  BIS Review 43/2006  7  believed to have been a major determinant of interest rates before the introduction of the euro, would have increased the spreads on government bond yields across Member States with adverse effects on countries with large debt ratios. 14 In all likelihood, therefore, a currency crisis in Europe may well have arisen, with speculative attacks on weaker currencies leading to large devaluations.

First, I would like to touch briefly on the Bank of Thailand’s latest view on domestic growth in short and medium term. Then I will delve more deeply into concerns in the U.S. and the Eurozone, along with the likely implications on Thailand’s recovery. Ladies and Gentlemen, I would like to first share with you the Bank of Thailand’s latest economic projection and our outlook for the Thai economy. Despite the fact that we have less than two months to go for 2011, the Bank has just revised down its growth projection for the Thai economy this year, from 4.1 percent in July’s assessment to only 2.6 percent in October’s. This significant downward revision reflects the severity and the broad-based impacts of the flood, which has brought about a halt in agricultural and manufacturing production in affected areas, and has also disrupted production chains in other areas as well. The automobile industry, which has just recovered from supply chain disruptions following natural disasters in Japan earlier this year, is once again terribly affected. And in the big picture, we have sharply lower consumption and investment spending that will require some time to resume their normal trend. But even in the face of this hardship, and amidst the external environment that is quite unpredictable given heightened risks and uncertainty from the U.S. and the Eurozone, we still expect Thailand’s growth outlook to be favorable next year.
Minouche brings immense international, managerial and economic experience from a career that has spanned academia, the public service and the IMF. She will help lead the Bank’s efforts to reshape core markets and the Bank’s relationship to them. Second, through its intellectual leadership and international relationships, the Bank can help complete the G20’s ambitious programme of financial reform including building resilient financial institutions, ending too big to fail, making derivative markets safer and transforming shadow banking to market based finance. Sir Jon Cunliffe, one of the original architects of the Financial Stability Board, is leading this effort. The job is too big for one person and requires a well-resourced and focused international strategy that draws on all areas of the Bank. That is why we are pooling our prudential policy teams in a single directorate and bringing together our international teams to increase insight and impact. By acting as One Bank we can increase our international impact and ensure that the UK’s financial sector can be both a global good and a national asset. Building on the success of the past 25 years On the face of it the recent enlargement in the Bank’s responsibilities represents a return to the broader role of the Bank of the past. If there are some similarities in roles, how we will discharge them will be fundamentally different.

The model used for monetary policy of decisions being made by a committee made up of both Bank of England executives and independent experts has been expanded to financial stability with the creation of both a Financial Policy Committee and a Board of Prudential Regulation. As I have argued, those policy committees will be more effective if they have access to the broadest range of the Bank’s analysis and information and are as well informed as possible about each other’s reaction function. The now very wide range of the Bank’s responsibilities also creates a need to strengthen the oversight arrangements for the Bank as a whole. For delivery of our statutory objectives, the Bank is accountable to the public, through Parliament’s Treasury Committee. That accountability is being reinforced. Parliament has created an Oversight Committee of 8 non-executives who are in the Bank but not of the Bank. The Government has today announced the appointment of Anthony Habgood to lead the Bank’s Court of Directors and the Oversight Committee. I welcome the appointment of someone of his depth and breadth of corporate experience. Independent oversight by the committee he will chair can strengthen the Bank’s legitimacy and effectiveness. The Oversight Committee has access to internal papers, is able to observe meetings of policy committees, and is responsible for reviewing all aspects of the conduct of the Executive of the Bank, including the delivery of policy, the design of and adherence to rigorous processes and procedures, and the monitoring of our transparency and openness.