samchain/econo-pairs-v1 huggingface dataset:
This is a reflection of the increased ability of upgraded monitoring systems to detect suspicious transactions on the one hand, and the willingness of banks to report suspicion where they see it as well as to take robust actions to mitigate the risk on the other hand. But these same developments have also resulted in “casualties” – a clear example of which is the “de-risking” phenomenon – and this has led to financial inclusion being one of the priorities for the current FATF Presidency. This is also something that we in Hong Kong are very committed to addressing. 15. The reality is that we often see institutions implementing more capable AML systems, and in that process collecting a lot more information on customers or including more scenarios in transaction monitoring. This is all good, but this may not always translate into greater effectiveness, and too often there is not a sufficient focus on answering the questions of : “Does it deliver the right results or outcomes?” And “Is the system more effective in detecting and preventing criminals from abusing the institution?” 16. So I would highlight in particular three issues as having the potential to significantly change how effective we are in this work and which are being discussed at this event. 17. The first issue is technological innovation - both in the form of financial technology and regulatory technology. Regionally, technology is making our financial institutions and their customers more connected than ever. Technology is an enabler, while it also brings risks along with rewards.

And I hope very much that my remarks will offer you some food for thought about the issues and challenges that we all face. I wish you all fruitful discussions on these issues. And once again, thank you very much to ACAMS for inviting me here today. 4/4  BIS central bankers' speeches
Miroslav Singer: Czech central bank head sees lowered risk of deflation – interview in The Wall Street Journal Interview with Mr Miroslav Singer, Governor of the Czech National Bank, in The Wall Street Journal, conducted by Paul Hannon on 11 October 2014. *  *  *  The threat of a slide into deflation or a long period of very low inflation in the Czech Republic has diminished, the head of the country’s central bank said Saturday, although he intends to maintain the weak-koruna policy at least into the start of 2016. In an interview with The Wall Street Journal during the annual meetings of the International Monetary Fund in Washington, Miroslav Singer said he had been encouraged by the stimulus measures announced by the European Central Bank since June, since he had expected it to take longer to react to very low inflation rates. Mr. Singer also said that he was confident the central bank could bring its weak-koruna policy to an end without risking a “snapback,” or a sharp strengthening of the currency. The Czech Republic is a member of the European Union, but has chosen not to use the euro. It does have close economic ties to the currency area and particularly Germany. As a result, low growth and low inflation in the eurozone have been a big problem for the central bank.

I regret this somewhat as it would have been useful for us. Is the French banking system still sufficiently robust? In fact, French banks are increasingly robust as they are reducing their risks and increasing their capital. The reduction of risk has resulted from the selling-off of business lines, often abroad, and a scaling-back of some market activities; the increase in their capital reflects the setting aside of profits that remain substantial thanks, in particular, to the resilience of retail banking in the face of the economic slowdown. Their core tier 1 capital grew by 0.5 percentage point in the second quarter and they have exceeded the target set by the EBA. In terms of liquidity, they have managed very well the withdrawal of US money market funds last year by adjusting their assets, as well as the rebalancing of their sovereign bond portfolios. This goes to show that, if it is based on a sound internal model, the universal banking model works well. 2  BIS central bankers’ speeches  Do you remain opposed to the separation of investment and retail activities? I really do not understand the benefit of this principle of separating activities. The only thing I wish to see is the outright prohibition of speculative activities and stronger internal controls for the risks associated with market activities. Otherwise, banks should be able to serve their customers, whether they are private individuals, companies or institutions, in all of their operations – on bond markets, forex and hedging operations, and creating savings products.
The associated shifts in market power, too, might plausibly have altered some of the key macro-economic relationships in the economy (De Loecker and Eeckhout (2017)). They may have influenced the pricing and provision of goods and services in the economy and hence the Phillips curve. And they may have influenced the amount of investment and innovation undertaken by firms and hence the aggregate demand curve (Aghion et al (2005)). They, too, might thus have a bearing on the setting of monetary policy. These structural shifts in product and labour markets may, in some cases, have had common cause. For example, network economies of scale and scope could potentially have increased some companies’ market power both over their labour inputs (through monopsony effects) and product outputs (through monopoly effects). This could show up in both a falling labour and a rising profit share, with potential macro-economic implications for activity, costs and prices (Autor et al (2017), Barkai (2017)). 1  As Blanchard (2008) said, “How mark-ups move, in response to what, and why, is however nearly terra incognita for macro.” Some notable papers that discuss the impact of product market developments on the macro-economy include Cacciatore and Fiori (2016) and Eggertsson, Ferrero and Raffo (2014). 3 Unlike many other advanced economies, it is worth noting that the UK labour share has not been on a downward trend.

Consequently, one of the key response from the authorities was to develop the BASEL III Reforms Package that aims to strengthen global supervision of international banks and banking systems. While the global banking supervisors have been working hard to improve banking supervision, the financial crisis has mutated into a fiscal crisis in some markets in Europe, once again threatening the viability of some global banks and causing the risk of contagion to other financial institutions and markets. Consequently this drives home the lessons that strengthening banking supervision alone is not sufficient and that prudent fiscal and monetary policies are essential for a sound and resilient banking system. Before I talk about Basel III, I would like to revisit the evolution of the Basel II framework which was published by the Basel Committee in June 2004 with a tentative full implementation date of 1st January 2007. Consequently in 2007 a pertinent question was that why did Basel II fail to prevent the financial crisis. The response was that apart from its slow and uneven implementation in the advanced markets, Basel II was a flawed standard that had failed to address some of the major supervisory weaknesses. These included the lack of a common definition of quality of capital, no limits on leveraging, no common standards for liquidity and a failure to recognize the excessive market risks embedded in trading and derivative transactions that had risen very sharply among the major banks. Therefore, Basel II would have not done the job it was required to do.
However, improvements in many leading indicators are still tentative, problems across credit markets linger, and employment remains in a precarious state, all suggesting that recovery is likely to be anemic and protracted. Figure 1: Revisions to GDP Forecasts in Advanced Economies in the Last Three Months (Seasonally Adjusted, 2008Q2=100) 104 102 100 98 96 94 92  USA (Sep09)  USA (June09)  Euro Zone (June09)  Euro Zone (Sep09)  90 2  3  4  1  2008  2  3  4  1  2009  2  3 2010  4  1  2 2011  Source: Consensus Forecasts, June and September. 1. Inflation developments  Distinguished Members of the Press, Inflation developments observed in the first three quarters of 2009 were shaped around the framework that I have already mentioned. The crisis was characterized by a steep drop in economic activity, which was mainly driven by shrinking external demand, tighter financial conditions, and rising precautionary saving. The sharp contraction in economic activity and the collapse of commodity prices have brought down inflation rates across the world,  BIS Review 143/2009  1  including Turkey. In this respect, after displaying a sharp decline in the first half of 2009, annual inflation maintained a downward trend in the third quarter to become 5.27 percent breaching the lower limit of the uncertainty band set (Figure 2).

Partly because the Matching Adjustment benefit to holding sub-investment grade bonds is low, the great majority of these bonds are investment grade. The overall credit quality of the investment-grade bond universe has deteriorated significantly over the past decade. The share of BBB-rated bonds in the sterling market, for example, has increased from under 10% to nearly half since 1998 (Chart 5). Within this BBB-rated segment, analysts have drawn attention to potential ‘fallen angels’ at risk of downgrade to sub-investment grade or even default. These issuers may be at risk because of a combination of excessive debt, structural change in the economy and poor management. Insurers face a risk of reduced Matching Adjustment benefit if issuers are downgraded and financial loss if they default. They should be reviewing the credit quality of their corporate bond investments and focusing in particular on any lumpy exposures. It is reassuring that the proportion of BBB-rated bonds in UK insurers’ aggregate Matching Adjustment portfolios has remained more or less unchanged notwithstanding the increasing share in the wider market. These proportions do vary considerably across individual insurers, however (Chart 6). Firms with higher proportions of BBB assets should be stress testing to make sure that they can comfortably absorb downgrades at a time when markets may be less liquid and they cannot easily rebalance their assets. We will explore this in our upcoming Insurance Stress Test.
The economic downturn and unemployment which often follow when the bubble bursts will primarily affect the most vulnerable segment of the labour force and have very negative distributional effects. Monetary policy cannot and shall not steer price developments in the housing market or other asset markets, but a monetary policy that inspires confidence will curb wealth effects because the potential for the emergence of bubbles is reduced. Nominal stability is the best contribution monetary policy can make to the distribution of income and wealth. Interplay between economic policy components - the role of monetary policy The basis for achieving stable economic growth is created through a successful interplay between the various components of economic policy, ie between fiscal policy, monetary policy, the system for income settlements and other measures aimed at improving the functioning of the economy - often referred to as structural policy. The Norwegian economy is vulnerable to abrupt shifts in the global economy. We cannot fully shield ourselves against external shocks, but we can curb the effects to ensure that economic developments are optimal in the long term. Fiscal policy in Norway has had an important role in stabilising demand and production. The Petroleum Fund shelters the mainland economy from the effects of oil price fluctuations to some extent. Developments in the real economy are of importance to price and cost inflation and hence for Norges Bank’s setting of interest rates.

The decentralised set-up of the Eurosystem - with the ECB representing the hub of the system and the national central bank its spokes - has contributed to the acceptance of the euro as the single currency of more than 300 million citizens, as in particular the national central banks are well-equipped, in terms of knowledge of language and national backgrounds, to communicate to the general public. Contrary to the public perception about other European institutions, the Eurosystem is being perceived as relatively close to the heart of the public. I am very pleased to chair tomorrow’s meeting of the Governing Council here in Rome. The fact that the Governing Council meets in Rome is symbolic, in many aspects. First, Rome is regarded as the cradle of the European-Christian civilisation, as we know it nowadays. The Roman Empire was the first attempt to create a unified Europe. Although this period in history has greatly contributed to the development of the European continent, this experience has also made clear that Europe cannot be unified by means of force, with some nations or peoples subordinated to others. Unfortunately, this was a lesson, which Europe had to learn the hard way. It took us almost 2,000 years to realise that the continuous perils of war and oppression had to end.
Monetary policy The European Central Bank (ECB), which will be accountable for EMU’s single monetary policy as of next January, was established on July 1st. The monetary policy objective is price stability. The objective has not yet been defined more specifically but statements suggest that there will probably be an intermediate money supply target and that price stability will be represented by an inflation rate of 2 per cent or less. The latter has raised the question of whether Sweden ought to revise its inflation target. The question is somewhat premature in that the ECB’s target formulation has still to be finalised. Moreover, the suggested formulation is in line with what has applied in Germany, where on average in recent decades monetary policy has not resulted in a rate of inflation below 2 per cent. In view of this, together with the advantages of an inflation target that is symmetrical, there are no grounds at present for considering any change in Sweden’s inflation target. The ECB has been given a high degree of independence in fulfilling the price stability target without any short-run political considerations. The institutional conditions for monetary policy credibility are accordingly good. By itself, however, this is not enough. Credibility must also be achieved continuously, through a responsible monetary policy that is properly understood and supported by society in general. At first there may be considerable uncertainty about how the single monetary policy functions and how signals from the ECB should be interpreted.

Each country is also to allow continuous monitoring of its government finances by the other EU countries. A government budget deficit is normally not to exceed 3 per cent of GDP, though there is room for certain exemptions. If a country in the euro area does have a budget deficit above 3 per cent and this cannot be explained by factors that are exceptional and temporary, sanctions are to be imposed. EU countries outside the euro area are not liable to sanctions, however; they are only included in the monitoring provisions of the Pact. The task of establishing price stability in the euro area will be facilitated if low inflation in the area is also promoted by fiscal policies. The importance of fiscal policy lies both in creating sustainable government finances, which contribute to the general credibility of economic policy, and in countering tendencies to excessive price pressure in the economy. In that the single monetary policy is to be constructed in relation to the overall situation in the euro area, more will be required of fiscal policy in the context of national stabilisation policy - fiscal instruments will still be available for stabilising national economic trends. But this in turn does presuppose that there is room for manoeuvre in the national budgets. Partly on this account, the Stability and Growth Pact’s medium-term objective of a government budget balance or surplus is reasonable and it is highly important that the countries meet this undertaking.
[28] Other central banks have followed similar principles to reduce price distortions from their asset purchases. [29] While the concept of market neutrality is related to the Treaty principle[30] of “an open market economy with free competition, favouring an efficient allocation of resources”, it is not per se a rule in primary law. The ECB already now deviates from market neutrality in several instances. For example, the application of eligibility criteria for purchases implies that the ECB’s bond holdings are not necessarily proportional to market capitalisation. [31] Furthermore, under the public sector purchase programme (PSPP) and the pandemic emergency purchase programme (PEPP), sovereign bond purchases are guided by the ECB’s capital key rather than market capitalisation. As I have argued before, the existence of climate externalities implies that we have to reconsider the notion of market neutrality. [32] In the presence of market failures, adhering to the market neutrality principle may reinforce pre-existing inefficiencies that give rise to a suboptimal allocation of resources. [33] The Treaty clearly stipulates that the ECB should pursue its mandate by favouring an efficient allocation of resources. [34] If the market misprices the risks associated with climate change, adhering to the market neutrality principle may instead support a market structure that hampers an efficient allocation of resources. In view of such market failures, it seems appropriate to replace the market neutrality principle by a market efficiency principle. Such a principle would explicitly recognise that a supposedly “neutral” market allocation may be suboptimal in the presence of externalities.

I believe that after the removal of the conversion limit, it will become more convenient for Hong Kong residents to participate in Shanghai-Hong Kong Stock Connect and other RMB financial transactions. In addition, following the principle that offshore RMB businesses should be conducted according to the rules and practices in the offshore market, the prevailing restrictions on RMB cashnote conversions and banks’ RMB lending to Hong Kong residents will no longer be applicable. This will facilitate the launch of RMB investment products by financial institutions in Hong Kong, and raise the position of Hong Kong as an offshore RMB business centre to new heights. BIS central bankers’ speeches  1
Nyman, R, Kapadia, S, Tuckett, D, Gregory, D, Ormerod, P and Smith, R (2018), ‘News and narratives in financial systems: exploiting big data for systemic risk assessment’, Bank of England Staff Working Paper, No. 704. Obstfeld, M and Rogoff, K (2001), ‘The Six Major Puzzles in International Macroeconomics: Is There a Common Cause?’, NBER Macroeconomics Annual, Vol. 15, MIT Press. Popper, K (1934), Logik der Forschung, Akademie Verlag. Popper, K (1959), The Logic of Scientific Discovery, Routledge. Rotemberg, J (1984), ‘Interpreting the Statistical Failures of Some Rational Expectations Models’, American Economic Review, Vol. 74, No. 2, pp. 188-193. Sabouni, H (2018), ‘The Rhythm of Markets’, mimeo. Schonhardt-Bailey, C (2013), Deliberating American Monetary Policy: A Textual Analysis, MIT Press. Schwab, K (2017), The Fourth Industrial Revolution, Portfolio Penguin. Shiller, R (2017), ‘Narrative Economics’, American Economic Review, Vol. 104, No. 4, pp. 967-1004. SINTEF (2013), ‘Big Data, for better or worse: 90% of world’s data generated over last two years’, ScienceDaily, 22 May. Stiglitz, J (2018), ‘Where modern macroeconomics went wrong’, Oxford Review of Economy Policy, Vol. 34, No. 1-2, pp. 70-106. Tuckett, D and Nyman, R (2017), ‘The relative sentiment shift series for tracking the economy’, mimeo. Turrell, A, Speigner, B, Thurgood, J, Djumalieva, J and Copple, D (forthcoming), ‘Using Online Vacancies to Understand the UK Labour Market from the Bottom-Up’, Bank of England Staff Working Paper. 17  All speeches are available online at www.bankofengland.co.uk/speeches  17

When the  2  BIS Review 125/2008  markets deteriorate or cease to function in this way, individual financial institutions are also hit hard, especially the banks. We have seen the consequences of these developments now during the autumn, causing central banks and governments to take powerful measures to avoid a full-scale systemic crisis. Although most banks have satisfactory solvency levels today, the turmoil has developed into a serious liquidity crisis, based on distrust of the banks' ability to survive in the future. The entire problem can actually be summarised in a single word; confidence. Currently there is a lack of confidence in the financial sector as a whole. So what needs to happen to restore confidence? Before I attempt to answer that question, I thought I would say a few words about the situation in the Swedish financial system and about the role of the Riksbank and other Swedish authorities. The situation in the Swedish financial system Even if the situation has worsened in recent weeks it is important to remember that the Swedish financial system is far from the epicentre of the crisis. According to Finansinspektionen (The Swedish Financial Supervisory Authority) – and according to our own assessment – the Swedish banks continue to have strong balance sheets. Their capital situation is strong, credit losses are low and profitability has reached historic highs. The Swedish banks have been relatively conservative in their lending, and have not been exposed to any great extent to the worst-hit markets or institutions.