samchain/econo-pairs-v1 huggingface dataset:
The degree of intrusiveness in regulatory requirements will swing from one end of the pendulum to the other, before settling somewhere in the between. This process can often be disruptive and unproductive, not only to financial institutions, but also to the wider economy. This leads me to my next point on the broader social and economic consequences of weak compliance. In most banks, the compliance function has mainly served to ensure that a bank is operating within permitted legal and regulatory boundaries. In such cases, the compliance function effectively does little more than constrain a bank from activities that increase compliance risks. So rather than work with business units and customers to close gaps that contribute to heightened risks, compliance officers are seen as gatekeepers rather than partners. This is an important distinction with potentially significant consequences for a bank’s risk-taking activities. I can give you at least three examples of this. When we issued revised standards on loan provisioning, one of the requirements was for banks to classify loans as “impaired” if the loans were restructured or rescheduled following an increase in credit risk. Rather than focus on how banks might strengthen internal assessments to better identify and measure changes in credit risk, many banks simply withdrew altogether 2/5  BIS central bankers' speeches  from entertaining requests from borrowers to restructure and reschedule their loans. SMEs were hit the hardest, requiring Bank Negara Malaysia to intervene.

Muhammad bin Ibrahim: A broader view of compliance in banking and financial sectors Remarks by Mr Muhammad bin Ibrahim, Governor of the Central Bank of Malaysia (Bank Negara Malaysia), at Bank Negara Malaysia's Compliance Conference 2017, Kuala Lumpur, 18 May 2017. * * * The topic of compliance has become a widely discussed topic in recent times, often headlined by massive regulatory fines slapped on financial institutions for compliance failures. Banks globally are estimated to have paid over USD320 billion in regulatory penalties since the global financial crisis for multiple failures ranging from market manipulation to money laundering and conduct failures. On the bright side, these fines signal a continued, if not increased, priority given by authorities to strong enforcement. But the fact that such failures occurred at all, and were allowed to reach such extensive proportions to the detriment of the public, should worry us. There is no doubt that the compliance burden has increased significantly. And for good reason. Even though the debate will continue to rage on over the relative benefits and costs of compliance, it is unlikely this question will be settled in the foreseeable future. Given our experiences from the various discoveries that institutions continue to push the boundaries of what constitutes a fair and ethical practice, there is clear evidence that we need to do more to improve compliance. The industry has made some important strides.
Policy makers in Asia are well aware of the complications and costs involved in sustaining their current regimes. Many are moving toward permitting more flexibility against the dollar, and even in their effective exchange rates. Few however are comfortable with the prospect of accepting large short-term volatility and large movements over time in their effective exchange rates. They are looking for a world in which they can have more monetary policy independence, progressively more financial integration with the globe, and face less risk of large destabilizing moves in the major currencies and less vulnerability to acute pressure on their own currencies. The exchange rate system among the major currencies provides a desirable degree of flexibility in real exchange rates. Although the process of cooperation among the G-7 has not eliminated the large swings in exchange rates associated with large changes in fundamentals among the major economies, it has had some modest success in avoiding more damaging movements. This cooperative framework, characterized by a pragmatic approach to promoting greater stability in exchange markets, offers a reasonable model for cooperation among the major currencies and those of the emerging world. The challenge ahead is to help manage the transition to the monetary system that provides for more flexibility in the exchange rates of all the major economic areas, and this has to be handled with care.

In the national economies of those not yet prepared to allow more flexibility in their effective exchange rates, it creates the risk of growing distortions in the allocation of resources, conflict with domestic monetary policy objectives, and the risk of larger and more abrupt future movements in the exchange rate. These four broad forces will have substantial implications for the macroeconomic performance of the world economy over the medium term. This combination of fiscal sustainability problems, large external imbalances, and the tension in the existing exchange rate system creates the risk of unanticipated shocks to financial prices, even in a context where monetary policy credibility is strong. The probability of these shocks may be low, but it is higher than it has been, and higher than we should be comfortable with. These shocks could be large enough to lower future growth outcomes. The world’s economies have very different capacities to comfortably manage the inevitable adjustments. Without policy action commensurate with the challenges, we face some risk, it may not be high, but it is material, of a world with somewhat lower growth performance and higher volatility. Although the United States has the distinction of presiding over the more awkward combination of imbalances, it is in many ways in a better position than other countries to manage successfully through this period. Our underlying fiscal position is stronger, our debt to GDP burden lower, our demographic cliff more moderate, and our trend growth rate substantially higher than that of the other major economies.
So does the responsibility for breaking off talks lie entirely with Greece? The decision to interrupt discussions was taken by the Greek authorities. That also surprised us, for we were coming to the end of some quite focused and fruitful exchanges. You are talking about proposals in the past tense. Does the ECB consider that the question to be put to the Greeks in the referendum is already null and void, since the assistance arrangement will no longer be relevant from the evening of 30 June? The programme will indeed formally expire on Tuesday evening. Having said that, if the response is “yes” I have no doubt that the euro area authorities will find the means, one way or another, to honour the commitments that have been made. The question is a political one. It’s the Greeks who hold the answer to that question. And if the Greeks say “no”… That would be to refuse the offer made by the other 18 members of the euro area. It would then be very difficult to revive the political dialogue. The Eurogroup clearly considered that the proposals of the three institutions had reached the limits of what was acceptable. Alexis Tsipras feels that Europe has not lived up to its commitments on debt restructuring… The debt question was indeed a priority for the Greek government.

But since 20 February the Eurogroup ministers have said that this discussion would only come in a second phase and that it was necessary first of all to decide on a credible reform programme. Greece has chosen to break off talks before the second part of the sequence. BIS central bankers’ speeches  1  Doesn’t that debt have to be restructured to make the Greek economy viable? First of all, it has been adjusted three times since 2012. Adding up the exchange and the buyback of private debt, coupled with the revision of the maturity and the interest rates on European loans, that represents more than 100% of GDP in terms of debt reduction that has been approved. The Greek debt burden represents 4% of GDP, less than in Italy or in Spain. The question is not therefore to know if restructuring the debt is necessary but whether restructuring it a fourth time would help Greece. The most important thing for the future of Greece is for it to return to growth. To achieve that, it’s necessary to remove the rigidities of the Greek economy, the tariff barriers and vested interests, all of which impede economic activity and weigh down on the purchasing power of employees, of whom much has been asked. The Greek executive has never made these questions the focal point of the talks and that has been a real disappointment from a government which everyone expected to be very committed to combating vested interests.
2  BIS Review 25/2003  Kielland’s description of a financial crisis and the consequences were realistic. There was speculation then and there is speculation today, but in other kinds of financial instruments than at that time. The 1899 banking crisis in Kristiania was the most serious of the regional crises. The crisis was particular to Norway, following in the wake of the strong property boom and the subsequent crash in summer 1899. The next two banking crises, in 1920-1928 and 1988-1992, were far more severe than the earlier crises. There were particular reasons for each of the last three crises, but they also have much in common: 2 Asset prices rose quickly prior to crises. Each cyclical upswing had its speculation objects. Property prices and share prices for property companies rose to a very high level in the last half of the 1890s. Share prices, particularly in shipping and whaling, rose dramatically during the First World War, then fell markedly afterwards. In the 1980s, prices for dwellings and commercial property increased rapidly. Households and enterprises increased their debt more than their nominal income in the periods of expansion before the crises. High debt made them more vulnerable to loss of income or increases in real interest rates. The debt burden increased less in the 1890s and during the First World War due to a strong increase in nominal income. Under the gold standard, however, periods of growth in nominal income were normally followed by periods with a fall in nominal income.

For Norwegian households, changes in house prices will therefore probably have a greater impact on consumption than changes in equity prices. In Norway, it became more common to own equities for all income and age groups in the 1990s. This was to a large extent reversed last year as a result of the fall in equity prices. We should nevertheless not rule out the possibility that fluctuations in equity prices in the future may have stronger effects on the real economy than we have witnessed so far. Developments in various asset prices may also influence investment. High equity prices may make it easier to gain access to capital to finance the acquisition of new machinery and buildings. A rise in property prices provides scope for raising larger loans against collateral in the asset. Possibilities for increased credit may contribute to higher demand for goods and services. The process may be self-reinforcing since part of the available credit can be used to purchase dwellings and other property. Similarly, bubbles in the stock market can result in overinvestment. When equity and property prices start to fall, companies are left with too much real capital and investment declines. This may lead to or amplify an economic downturn. There may be several factors that imply that particular emphasis should not be placed on financial imbalances in the conduct of monetary policy. First, it may take a long time before imbalances are triggered. The uncertainty surrounding developments so far ahead is considerable.
To reach that wider audience, to close those trust and understanding deficits, central banks will need new tools and techniques. A New Frontier for Central Bank Engagement  Which tools and techniques? Were this simply a case of producing more, trust and understanding problems would have been long since solved. It is not. As philosopher Onora O’Neill has argued, simply adding to reporting does little for accountability and trust-building. 63  If reports are mostly unread or unreadable,  smothering people in more words and numbers could even detract from trust and accountability. In one sense, this is not a new point. Claude Shannon, the grandfather of information theory, did not define information by words or digits. Instead he defined it by whether uncertainty was reduced on the part of the receiver. 64  If receivers are overwhelmed by the depth, discouraged by the density and bamboozled by the  complexity, reporting can be disinformation on Shannon’s criterion. For a chunk of society, the very volume of reporting may be increasing uncertainty and impairing information, understanding and trust. Even the term “central bank communication” – a mainstay of central banking and a centrepiece of academic studies of central banks – may fail as a description of what is these days required to build trust and improve understanding. The quest to improve communications makes sense. But it has more than a hint of better sermons to the assembled congregation, enhanced education of an inattentive audience, a smoothlyswinging one-way door. Communication means mouths.

This success shows that regulation of crypto players and  Page 3 sur 5 crypto assets and more broadly of payments is one course of action where a “pragmatic” or “focused” multilateralism can, and must, still deliver. To avoid further payments fragmentation, there are two imperatives: (i) let us keep coordinated. I am sometimes impressed by the growing number of international bodies which play in the “crypto-regulations” orchestra; we need a strong, single conductor, and that should be the FSB (ii) let us implement in all jurisdictions. The current moment calls less for further global reflection or ever refining of taxonomies of financial tokens, and more for decisions and the monitoring of basic, consistent and robust national regulations. II. Central banks have their own driver’s seat in innovation Digital technologies are profoundly transforming finance: from artificial intelligence, API and mobile apps for the development of open banking and of the “banking-as-a-service”, to distributed ledger technology and smart contracts. We are certain to see a significant development of tokenised and decentralised finance. In such a context, our stance at the Banque de France is both to support regulatory reforms and to play an active innovative role. The Banque de France has been using blockchain for several years now. In 2017, we were the very first central bank worldwide to implement a blockchain solution to manage, together with commercial banks, a repository of creditors.
Let me focus in the minutes I have at my disposal on several economic issues. Our debate is so more important for it takes place at a time of some economic slowdown all over Europe and of an erosion of multilateralism, of spreading trade conflicts. The prospect of a hard Brexit is very annoying for all of us and I still very much hope that such a denouement would be avoided. Likewise, it is high time to strike a deal on the Multiannual Financial Framework so that the great challenges the Union is facing (protection of borders, cyber fare, climate change, conflicts in near and more remote neighborhoods, etc.) find proper conciliation with the need to preserve the cohesion of the Union and avoid further fragmentation. I also trust that EU leaders will find the right balance to address key institutional and policy related weaknesses of the Euro area. I mention this, for Romania, like other Non-member States, is bound by EU accession treaties to join the single currency area eventually. And hopefully, this will happen in the not too distant future. In this regard I wish to mention that two major documents on Romania’s path to the Euro area (an analytical report and a Plan of action) have been recently completed and have been subjected to the scrutiny and approval of the political parties and the Parliament. I was one of the vice-chairs of the National Commission which guided the completion of the two documents.

I should say that we are not oblivious to what it takes for accession to be a success. No matter how much one wishes to put accession on a fast lane, success hinges on having achieved a critical mass of real and structural convergence with the Euro area. The lessons of the Euro area crisis remind us starkly this reality. The more robust the Euro area turns, as a result of institutional and policy reforms, the better for us. When it comes to reforms of the Euro area, I would highlight the respect for rules and their 1/3  BIS central bankers' speeches  enforcement, on one hand, and the introduction of risk-sharing schemes on the other. Among the latter I range a collective deposit insurance scheme (EDIS) which, together with a much stronger Resolution Fund (SRF) would complete the Banking Union, and the introduction of instruments that can help member states deal with asymmetric shocks. A euro area budget does make sense in this respect. Let me make a few remarks on the macroeconomic scene in Europe. The economic recovery of recent years has been heavily dependent on non-standard operations of the main central banks and very low interest rates. There are still large public and private debts, which are especially burdensome in the Euro area – and which complicate the mission of policy normalization, of unwinding special operations of the ECB. Fortunately, some countries in our region (including Romania) enjoy a much better situation in this respect.
However, when the adjustment is over, we should not be faced with persistent inflation, and it is the chief role of monetary policy to try to ensure that inflation does not become entrenched. The Central Bank published a new macroeconomic forecast yesterday, as well as announcing the Monetary Policy Committee’s interest rate decision. The highlights are as follows: •  GDP will contract by about 8½% in 2009 and by almost 2½% in 2010. •  The contraction for 2009 is rather smaller than previously forecast. •  Private consumption has declined less sharply so far in 2009, probably because disposable income rose more in 2008 than previously forecast, and because of pension fund payouts amounting to some 1½%of GDP in 2009. •  In addition, unemployment has risen less than previously projected. •  Recovery will begin in early 2010, in the sense that quarter-on-quarter GDP will begin to grow. 4  BIS Review 146/2009  •  At that point, however, Icelanders will still consider the situation unfavourable, and it will keep deteriorating for a while, as unemployment and the output slack will continue growing well into the year, as will the contraction in private consumption. •  As the second half of the year progresses, these factors, too, will begin to improve. •  As always, these projections are uncertain, and the economic recovery could prove stronger or weaker.

Már Guðmundsson: Monetary policy objectives and developments in the Icelandic economy Speech by Mr Már Guðmundsson, Governor of the Central Bank of Iceland, at a breakfast meeting of the Iceland Chamber of Commerce, Reykjavik, 6 November 2009. *  *  *  In general, monetary policy is conducted under conditions of uncertainty. The future is always uncertain, of course, but so are the present and the recent past – at least, when one is assessing the state of the economy. This is axiomatic to anyone who has had to wait for national accounts figures in order to estimate current GDP growth and has then seen statistics revised repeatedly over a period of several years. Another source of uncertainty is the effect of monetary policy instruments on other interest rates, exchange rates, asset prices, demand, and inflation. Naturally, we know a great deal about the relationships in the economy, but we don’t know what the correct model of it is, and we probably never will, as economic structures change over time. Furthermore, expectations play a key role in the entire process, and while they may remain reasonably stable for a time, other periods of time will come, and expectations will become unhinged. The relationship between interest rates and exchange rates under conditions of free cross-border movement of capital is different to the relationship that exists under capital account restrictions. In general, the monetary policy transmission mechanism depends on the maturity of the financial markets.
Chart 18: UK banks hold only a small fraction of CLOs  Chart 17: Corporate gearing still well below peak but has grown recently Per cent of earnings Other corporate debt Commercial real estate debt 400  EA Banks US Banks Japanese Banks  300  US Insurers Pension funds  200 100 0 1998  02  06  10  14  18  Sources: Association of British Insurers, Bank of England, Cass Commercial Real Estate Lending survey, Deloitte, LCD, an offering of S&P Global Market Intelligence, London Stock Exchange, ONS, Preqin, Deals Business Intelligence from Refinitiv and Bank calculations. Indicative Bank staff estimate. For further detail, please see Chart F.5 in the November 2018 Financial Stability Report. UK Banks  These types of investor would typically hold the riskier tranches  SMAs  Other investors (mainly Open‐ended international) funds Hedge funds Structured credit funds  UK Insure  EA Insurers  Other SMAs  CLO managers  Sources: BarclayHedge, Bloomberg Finance L.P., FCA Alternative Investment Fund Managers Directive (AIFMD), Firm public disclosures, LCD, an offering of S&P Global Market Intelligence, Morningstar, National Association of Insurance Commissioners, Securities Industry and Financial Markets Association, Solvency II submissions, and Bank calculations. Indicative estimated holdings of CLOs by global investors. 1 square = 1% of $ billion global CLO market. For further detail, see footnotes to Chart F. 8 in the November 2018 Financial Stability Report.

There are also particular reasons why, in this case, levels of debt may have been poor indicators of cross-country risk. In the United States, for example, many mortgages were “non-recourse” – it was lenders, not borrowers, who were liable for any negative equity in the event of default. This increased both the borrower’s incentive to walk away from the loan and the  1  British banks certainly lost much less on domestic mortgage lending during the last financial crisis than they had in the early 1990s – when, as it happens, the level of debt was lower than in 2007. Most losses during the financial crisis were on banks’ overseas assets. 2  All speeches are available online at www.bankofengland.co.uk/speeches  2  lender’s subsequent loss. All else equal, this would mean the same level of debt was riskier in the US than in the other two countries. Thanks to the tax regime the opposite was true in the Netherlands. Mortgage interest was fully deductible from taxable income and interest receipts were only lightly taxed. This encouraged so-called “round-tripping”. By ramping up both sides of their financial balance sheet – funding extra deposits with higher mortgage debt – the more highly taxed households could reduce their overall tax bill without adding to financial risk, either individually or collectively. Yet it turns out that the superior predictive power of growth rates of debt, over levels, is a more general phenomenon.