samchain/econo-pairs-v1 huggingface dataset:
Bearing these two requirements in mind, we invest our assets according to the criteria of liquidity, security and return. What does that mean specifically? First, our portfolio must be as liquid as possible. This is crucial, particularly as regards our objective of being able to use the balance sheet for monetary policy purposes. We have to be in a position to buy and sell assets quickly in crisis situations. It should always be possible to expand or reduce the SNB’s balance sheet if necessary. At the end of 2016, the SNB held approximately 70% of its foreign exchange reserves in foreign government bonds. A substantial proportion was invested in the world’s most liquid bond markets, where liquidity does not dry up even during a crisis. This ensures the SNB’s ability to act at any time. Second, the SNB’s portfolio must be as secure as possible. We regard security in this context as a comprehensive concept, aimed at preserving the value of the currency reserves in the long term. One of the first prerequisites for ensuring that a portfolio is as secure as possible is to make sure we invest in bonds with a high credit rating. In this way, we minimise the risk of large-scale defaults. Another prerequisite is to diversify as broadly as possible. This is why we spread our investments, not just over different currencies, but also over different investment categories. We are continuously expanding our investment universe.

To avoid potential conflicts of interest, we do not invest in equities of international mid-cap and large-cap banks or bank-like institutions. The SNB also does not buy any shares of companies that produce internationally condemned weapons. Furthermore, we exclude companies which seriously violate fundamental human rights or systematically cause severe environmental damage. Our exclusion policy is based on clearly defined principles and is applied unequivocally. To identify the relevant companies, we rely on the recommendations of recognised external experts. As you can see, the SNB pursues a clear policy in its investment activity and takes into account a long list of criteria and requirements. These are geared towards helping us to fulfil our monetary policy mandate. They are intended to ensure that our balance sheet can be used at any time for monetary policy reasons, and that our currency reserves retain their real value. Current challenges  To conclude the subject of investment policy, I would now like to look at two key challenges facing us. The first is to cope with the present growth in the balance sheet and to facilitate further growth, should this be necessary. The SNB has continuously adapted its investment policy to changing circumstances. It has steadily expanded its investment universe in terms of investment category, investment market and currency. This means that foreign currency purchases can be quickly absorbed. Furthermore, the addition of new investment categories enables broad diversification, which helps to preserve the value of the currency reserves. This is particularly true of equities.
If the channel is thought to work through broad money, as transactions balances, 22 then of course it is the supply of bank lending that matters. Essentially, when “liquidity” is plentiful, it may be undervalued. That may build a bridge to the literature on how the supply  18  See Cochrane, J, “Financial Markets and the Real Economy. 19  See Tucker, PMWT “Reflections on Operating an Inflation Target”, Bank of England Quarterly Bulletin, 2006 Q2 pp 212-224. 20  See Tucker, PMWT (2007) “A perspective on recent monetary and financial system developments” Bank of England Quarterly Bulletin 2007 Q2 pp 310-316. 21  Including the current G of the BofE and myself; see King, M (2002) “No money, no inflation – the role of money in the economy” Bank of England Quarterly Bulletin 2002 Q2 pp 162-177. 22  See Thornton, D. L, (2008) “Monetary policy: Why monetary matters and interest rates don’t”, Federal Reserve Bank of St Louis Working paper 2008-011. 10  BIS Review 112/2008  of credit from the banking sector can influence the liquidity of asset markets. 23 This echoes my earlier discussion of the potential utility, as indicators, of the data on money and credit quantities when the degree of credit rationing shifts. We’d do better at making sense of those issues if we had a better understanding of the determinants and macro-significance of risk premia in the first place.

5  Typically, policymakers think about that in terms of the “output gap”, reflecting firms’ capacity utilisation and slack/pressure in the labour market. By contrast, in the academic literature – notably Michael Woodford’s Interest and Prices – the benchmark is to set monetary policy in order to offset the frictions in the economy, so as to obtain the conditions that would prevail if prices, wages etc were fully flexible. Policymakers and academics need to resolve how big the gap is between those two approaches. BIS Review 112/2008  3  that the textbook policymaker knows how the degree of slack in the real economy acts on future inflation (or the slope of the Phillips curve). The two forces sweeping through the world economy test the way policymakers typically apply various elements of this set up in more routine circumstances. For example, how do the commodity price rises and, separately, the credit crunch affect the “equilibrium” short-term real rate? Is the actual short real rate still an adequate proxy measure of monetary conditions? Is the “normal” relationship between economic slack and future inflation intact? The cost shocks, and monetary conditions Although they have fallen by nearly $ since the peak reached in July, oil prices are still up more than 200% since the middle of 2003; and, indeed, around 3% since the beginning of this year.
There is no doubt that in the past few years saving has been particularly high in the Asian economies. In part, this reflects their wish to build up large balances in US dollars to protect themselves from financial crises that several of them experienced in the 1990’s, and also to maintain competitive exchange rates to allow export industries to absorb surplus labour. For example, although China invests an extraordinary 45% of its national income each year, it saves even more than this - 49% of national income in 2004. The resulting current account surpluses have been saved overseas, much of them in US government bonds. So, rather surprisingly, capital is flowing from some of the poorest countries of the world to some of the richest. Moreover, the rise in oil prices has raised the incomes of oil-producing countries, which have also chosen to save much of their additional revenues in overseas financial assets. Those surplus savings have depressed long-term real interest rates. In the industrialised world, consumers have realised that this is a good time to borrow and spend, resulting in the “imbalances” evident in the current account deficits of both the US and the UK. Whether long-term real rates around 1% are sustainable is an interesting question, and that uncertainty poses serious questions for monetary policy. On the one hand, the increased propensity to save across the world could start to unwind.

As their people become more prosperous, domestic demand in China and elsewhere in Asia will become the primary driver of those countries’ growth, so they may want to save less. And business investment in the developed economies, which has been weak in recent years for reasons we do not fully understand, may pick up as in previous recoveries. The resulting rise in real interest rates and implied fall in asset prices would encourage the industrialised world to save more. That would mean a shift of resources in those countries away from domestic demand to net trade accompanied by a change in real exchange rates. The “imbalances” in the world economy would start to unwind. Where that would leave sterling and the outlook for inflation in the UK is impossible to know in advance. On the other hand, it is quite possible that real interest rates could remain low for some time. Although there are signs of a pick-up in business investment in the US and Euro area, investment remains weak in the UK and a recovery of world investment spending is not assured. The growing recognition that increasing longevity will mean we need to save more for retirement may sustain or even lift world saving rates. And pension funds are now matching the risks of their assets with the risks of their future liabilities, thus raising the demand for safer long-term financial assets such as index-linked government bonds.
Aver age o f Em erging Coun tries* *  65 G ener al Go vern ment Debt  G ener al G overn m ent Deb t  90  70  20 12  -2  0  2  4 Bu dget Defic it  6  8  10  * Dashed lines indicate forecasts. **Includes Hungary, Mexico, Romania, Argentina, Brazil, Bulgaria, Czech Republic, India, Indonesia, Israel, Malaysia, Poland, Singapore and South Africa. Source: IMF. Turkish data is taken from the Ministry of Finance, Undersecreteriat of Treasury, Medium Term Program (2010-2012) and Program for 2009. Under current economic circumstances, in order to reinforce the optimism about sustainable macroeconomic stability in the medium term and to ensure effective expectations management, it is crucial that government budget deficit and debt should be kept under control through commitments with a strong institutional background. In this regard, attaining the targets set out in the MTP through institutional and structural improvements rather than by tax and price adjustments, is critical for further enhancing gains already achieved in terms of country risk. Esteemed Guests, 30. In the last part of my speech, I would like to mention the monetary policy strategy that we implemented in this atmosphere of uncertainty created by the global economic crisis. I will, first of all, give an evaluation on inflation developments and monetary policy implementations within the scope of the inflation targeting regime.

At this point, I would like to emphasize that we closely monitor pricing behavior as inflation hovers around high levels, albeit for a temporary period. I would like to hereby remind you that we will provide public with the updated evaluations and forecasts on medium-term inflation outlook along with possible risks and policy measures, more extensively in the Inflation Report to be published on 29 April. BIS Review 68/2010  13  Distinguished Guests, 37. Throughout 2009, as the Central Bank, we focused on policies oriented towards containing the adverse effects of the crisis on the economic activity and on financial stability while also overseeing price stability. Thanks to the experience gained from domestic crises in the recent past, we were able to make prompt and effective decisions, thus we were able to do our part to minimize the adverse impacts of the global crisis. In this period, the soundness of the financial system in addition to the relatively limited deterioration in the risk premium provided monetary policy with an extra room for maneuver. 38. Accordingly, envisioning that undershooting the inflation target at year-end has been more likely, we continued the rate cut cycle that we initiated in November 2008 by pursuing a front-loaded monetary policy in early 2009.
Now it could of course also be argued that the extension of the “single passport” to most aspects of the provision of financial services foreseen by the Financial Services Action Plan could well expose the accession countries to new risks, particularly those emanating from within the EU itself, with which  3  Caviglia, G., Krause, G & C., Thimann. 2002. Key Features of the financial sectors in EU accession countries, in Financial Sectors in EU Accession Countries. ed., C. Thimann C. Frankfurt: European Central Bank. 4  Claessens, S., Demirguc-Kunt, A & H. Huizinga. 1998 (rev 2000). How does Foreign Entry Affect the Domestic Banking Market? World Bank Working Paper No. 1918. Washington: World Bank. these countries are already closely integrated. Indeed, the ECB has itself recently stated that the integration of financial markets in the region could increase the chances of systemic disturbances 5 affecting more than one Member State. In this regard, Dr Buch’s paper on the implications for financial stability of foreign bank entry should help to place the discussion in an empirical context. Another important aspect of financial market integration relates to regulation and supervision. As the process intensifies, the distinction between different types of financial institutions and markets will become increasingly blurred.

As the size and importance of financial systems have grown, so have the sources of potential threats to their stability. Apart from the magnitude of short-term private funds which move across the globe daily, financial stability stands to be undermined by the emergence of such factors as asset price bubbles and by the blurring of the erstwhile distinction between financial markets and institutions, developments which complicate the task of the authorities charged with overseeing the financial system. Clearly, “financial stability” has assumed a much broader meaning than that implied by the terms “financial supervision” and “banking stability”, with which it used to be associated in the past. These wider ramifications of the concept are well captured, I believe, by the definition proposed by Mr Malcolm Knight, the Senior Deputy Governor of the Bank of Canada who is soon to take over as General Manager of the Bank for International Settlements. He defines a stable financial system as one in which all economic agents - households, business firms, financial services firms and government - can confidently hold and transfer financial assets without experiencing serious risks of 2 disturbances that undermine financial values or repayment prospects. The notion which this definition conveys very clearly is that risks to stability need not originate within the financial system itself. In particular, while a sound clearing and payment system and regulatory framework remain vital prerequisites, a healthy macroeconomic environment characterised by stable prices, interest rates and exchange rates is equally necessary for financial stability.
Muhammad bin Ibrahim: Malaysia and Turkey – the new silk route in Islamic finance – strategies for collaboration, cooperation and smart partnership Opening remarks by Mr Muhammad bin Ibrahim, Deputy Governor of the Central Bank of Malaysia, at a business seminar on Islamic finance Istanbul: “Malaysia-Turkey Islamic finance cooperation: new solution – preferred partner”, Istanbul, 29 September 2011. *  *  *  I have the honour today to welcome distinguished guests to the Business Seminar organised by Bank Negara Malaysia, held in this beautiful and historic city of Istanbul. The theme “Malaysia and Turkey: The New Silk Route in Islamic Finance – Strategies for Collaboration, Cooperation and Smart Partnership” was chosen as a reflection of our desire to strengthen economic and business ties for the mutual benefits of both countries. The emergence of the “Silk Route”, a term coined by Governor Dr Zeti in 2006 opens up exciting prospects for countries and businesses. The new “Silk Route” not only carries traditional trade of goods and services of old but also manufactured goods, technological innovation and know-how, portfolio flows, private equity investment and mobility of human capital and knowledge. Today, Islamic financial products and services are truly “new” additions to this trade. Let me first express our heartfelt appreciation to His Excellency Tun Dr. Mahathir Mohamad for accepting our invitation to speak at this event, sharing his thoughts on Islamic finance. Tun Dr. Mahathir needs no introduction.

Among his many achievements was the time he steered the country during the 1997 – 98 Asian crisis. His unorthodox policies then have become mainstream now. Under his leadership, Malaysia experienced modernisation and economic prosperity, a development most profound for my generation. That modernisation included the early development of Islamic financial system. From the seeds planted during Tun Mahathir’s time, we are now seeing the maturing of the Islamic financial system in Malaysia that is innovative, competitive and increasingly internationalised. What was once a novelty has become an alternative means of conducting business. We owe this very much to Tun Dr. Mahathir’s foresight and wisdom. Not many people today realised that one of the first actions that Tun Dr. Mahathir took when he came to office in 1981 was to set up a National Steering Committee to implement Islamic banking in Malaysia. The report of this committee on the viability and strategy of the Islamic banking, was the impetus for the creation and robust development of the Islamic financial industry in Malaysia. The rest they say is history. Global economic challenges and Islamic finance The world is transforming and its transformation is way beyond what we had seen before. This is an era of radical change, new rules are being formulated, standards and best practices that were in vogue hardly 5 years are now considered insufficient.
Alongside expenditure, it is important to identify and resolve any inefficiencies in the use of the public funds earmarked for education. The AIReF is already doing this in various autonomous regions. Recent reforms in this area (laws governing education, vocational training and the university system) should also be assessed. The third factor limiting productivity is the regulatory environment, which affects activity and the efficient allocation of resources among firms. The evidence points to a significant accumulation of capital in low-productivity firms between 1995 and 2007 in Spain.14 This allocation has barely become any more efficient in the most recent period.15 To a certain extent, this situation has come about because firms’ access to financing seemingly depends less on their productivity and more on the collateral available to them.16 In this respect, in spite of significant improvements in financing in recent years, Spanish firms – in comparison with firms in the euro area – continue to be heavily reliant on bank loans and have relatively limited access to venture capital. This funding structure, which is closely linked to the collateral available, restricts not only firms’ growth possibilities and their capacity to respond to potential shocks, but also negatively affects their ability to carry out innovation projects, which, by their very nature, have a relatively high risk profile. Improvements in this area will also require initiatives at European level, such as completion of the capital markets union, for example.

In particular, there has been extensive deleveraging by Spanish households and firms; an increase in the solvency and liquidity of the balance sheets of credit institutions; an improvement in competitiveness (which has enabled a current-account surplus to be maintained since 2012, even after the outbreak of the pandemic and the energy crisis); and a reduction in the share of construction investment in activity to levels similar to those seen in the euro area as a whole. However, certain structural vulnerabilities remain, which shape the outlook and sustainability of economic growth going forward. Notable among them is that arising from the high level of public debt (up by more than 80 pp of GDP since the start of the financial crisis), which is also accompanied by a considerable structural budget deficit. In addition, the Banco de España, along with other institutions and analysts, has in recent years highlighted the vulnerabilities stemming from the increase in certain aspects of inequality in Spain, in particular in the area of opportunities. With this backdrop in mind, what lies behind this failure to converge and what role does productivity have to play in this process? First, it should be pointed out that the comparatively low productivity of Spain’s firms is a widespread problem, unrelated to the sectoral specialisation of the economy or the size of such firms.
Mark Carney: The future of financial reform Speech by Mr Mark Carney, Governor of the Bank of England and Chairman of the Financial Stability Board, at the 2014 Monetary Authority of Singapore Lecture, Singapore, 17 November 2014. *  *  *  Accompanying tables and charts can be found at the end of the speech. Introduction It is now more than seven years since the first tremors of the earthquake that was to rock the financial system in 2008. After the blood of the crisis, years of sweat and toil from authorities across the globe, and not a few tears from the financial sector, the job of agreeing measures to fix the fault lines on which the financial system had been built is now substantially completed. The financial system today is vastly different from its pre-crisis self. That change didn’t “just happen”: it is the intended, positive result of the G20/FSB reform agenda. The Brisbane G20 Leaders’ summit just completed was a landmark. The prudential requirements and supervisory framework for banks are largely settled. There will be adjustments, if necessary, but from a prudential perspective, banks now know what they need to do. It is now a question of implementation. The result of the agreed reforms will be that: The system is safer. Banks were woefully undercapitalised – many of the largest banks were levered 40 to 50 times. They are now much more resilient.

3/4  BIS central bankers' speeches  It has been said that regulators are pessimists in our DNA and always inclined to worry about things going wrong – and certainly, we cannot ignore the possibility of the failure of key FMIs no matter how remote, and this may occur in FMIs overseas. I started my speech this morning, noting the increasing connectedness between markets. This is true in the ‘life’ of a CCP - and can be true in its ‘death’ too. The failure of an internationally active CCP, that provides critical services in multiple jurisdictions, will have significant cross-border impact. When a CCP fails, its members are inevitably affected. Such members are likely to also have relationships with other financial institutions, or may trade and clear on other trading venues and CCPs. Through these network of interdependencies, the default of a CCP can trigger destabilising effects not only in the home market it serves directly, but outside of it. It is therefore important for authorities of jurisdictions that may be affected by a CCP’s failure to participate in that CCP’s resolution planning. Similar to the establishment of Supervisory Colleges to support ongoing supervisory co-operation, setting up Crisis Management Groups (CMG) for CCPs will allow the cross-border impact to be considered in resolution planning. In a failure situation, when resolution actions are time-sensitive, it may be necessary to limit the size of a CMG to enable efficient and effective discussions. But in normal times, resolution planning can benefit from a broader participation of relevant authorities.