samchain/econo-pairs-v1 huggingface dataset:
One explanation for the increase may be that Icelandic companies have been undervalued by the markets, for example relative to comparable businesses in other countries, and another that bold and determined investment ventures have driven up their value. But risk and gain often go hand in hand. Sometimes the stakes may be raised too high. It has long been customary to pay a premium for attractive investment options. Such goodwill used to be depreciated in companies’ accounts over a long period and rarely affected their operations. The situation has changed whereby companies now need to make impairment tests of the goodwill they enter on the asset side of their balance sheets. If their original ventures fall flat, the goodwill must be depreciated accordingly. Thus there is a risk, if conditions deteriorate, that this rule could amplify a company’s negative results at the worst possible time. Goodwill totalling more than 500 b.kr. was entered in the financial statements for 2006 of companies listed on Iceland Stock Exchange, and at certain companies, goodwill and other intangibles account for more than half of the total assets on their books. This is a cause for some deliberation. Although the Central Bank’s main function on occasions such as this is to draw particular attention to causes for concern, it should of course take note, like everyone else, of the factors conducive to strengthening the long-term economic outlook. Iceland’s economy is advanced, transparent and vibrant.

It was as if the engagement was held in Bucharest and now, the official marriage is being celebrated here, in Tokyo. It was not an easy journey. The National Bank of Romania has shown its support and loyalty from the very beginning. Many of you, present here, played an essential role in making it happen: Minister Jan Kees de Jager, Governor Knot, Executive Directors Menno Snel and Ruud Treffers. I want to extend my thanks to them and to each and every one of you. Now we are a big family where trust is vital. I wish we have the opportunity to meet again in the future, look back on this day and be proud of our accomplishments. Thank you. 2  BIS central bankers’ speeches
The point estimate of x over the second sub-sample is 0.94.25  24  Because the estimation expected values up to five periods ahead, the estimates only run to 2004. 25  Various robustness checks were conducted. These included dropping gearing from the estimation of the risk premium and varying the effects of taxes. These did not alter significantly the empirical estimates. 10  BIS central bankers’ speeches  Table 5 Short-termism estimates for the US and UK Year  x  Standard error  Evidence of short-termism? Full sample (1985–2004)  0.937  (0.004)  Yes  1985–1994  1.001  (0.008)  No  1995–2004  0.938  (0.005)  Yes  Notes: The significance column refers to a test of x<1 at the 5% confidence level. Table 6 shows estimates of x over the same three samples on a sectoral basis. It echoes the message from Table 5. There is statistically significant evidence of short-termism in the second half of the sample for all seven industrial sectors. And in all of these sectors except health and materials, x is lower in the second half of the sample than the first – in those two sectors x is below unity throughout the sample. Although short-termism appears to be a consistent theme across industrial sectors, there are nonetheless some interesting patterns in the degree of short-termism across sectors. For example, the financial sector does not appear especially short-termist over the full sample. By contrast, the health and materials sectors exhibit short-termism throughout.

The rational discount uses an average risk free rate from our cross sectional data sample (1.085). This is illustrated even more clearly if we consider payback periods. Under rational discounting, payback occurs in 9 years (Chart 7). Under upper bound myopic discounting, the investor today would erroneously assume that payback would never be made. These differences have the potential to alter radically project choice. The net present value of this  12  BIS central bankers’ speeches  project evaluated over 50 years falls from $ under rational discounting to a loss of $ under extreme myopia. In other words, a NPV-positive project would be resoundingly rejected. To put the point more starkly, Table 7 asks at what point in the future the residual value of a future cash-flow hits a level of 10%, 1% and 0.1% of its face value, under rational and myopic discounting. Under rational discounting, cash-flows even 50 years ahead retain more than 1% of their face value. Under strong myopic discounting, this residual threshold is reached after 25 years. Virtually zero weight – less than 1000th of the face value of the cashflow – is placed on projects with income streams much beyond 35 years. The long is dramatically shortened. This is a market failure. It would tend to result in investment being too low and in longduration projects suffering disproportionately. This might include projects with high build or sunk costs, including infrastructure and high-tech investments.
That immediately highlights two major problems of using this concept in real time: GDP figures are frequently revised; and our view of the economy’s capacity and its trend rate of growth has to be estimated as it cannot be measured directly. Both of these problems are particularly acute in the aftermath of a recession, when early estimates of GDP may be less reliable than normal and when we are more likely to see structural changes in the economy which may change our view of the level of capacity in the economy and its growth rate. On the question of GDP data revisions, I well remember the experience of the early 1990s recovery, when I was working as Economics Director at the CBI. Initial estimates of GDP growth were much weaker than the picture that we now have of that recovery. And we have already started to see something similar happening over this recovery too. The first GDP growth estimate which signalled the economy was coming out of recession – for the final quarter of 2009 – has already been revised up from 0.1% to 0.5%. For this reason, I would caution against putting too much weight on the initial estimate of GDP growth for the first quarter of this year which we will receive tomorrow. Such early estimates of GDP need to be interpreted alongside the other evidence we already have about the performance of the economy – including business surveys and employment data.

Andrew Sentance: Key issues for UK monetary policy Speech by Mr Andrew Sentance, Member of the Monetary Policy Committee of the Bank of England, at pro.manchester members’ lunch, Manchester, 26 April 2011. *  *  *  I would like to thank Tomasz Wieladek and Adrian Chiu for research assistance and I am also grateful for helpful comments from other colleagues. The views expressed are my own and do not necessarily reflect those of the Bank of England or other members of the Monetary Policy Committee. It is a great pleasure to be giving this speech here in Manchester, ahead of my last meeting as a member of the Monetary Policy Committee, and I am very grateful to Pro-Manchester for hosting this event. Manchester is one of Britain’s great industrial cities and it also played a key role in the development of economic thinking in the 19th Century, as the centre of the “Manchester School” of political and economic activists who promoted the virtues of Free Trade. The process of reducing barriers to trade and the development of an open trading system has been a key factor underpinning the unprecedented period of economic growth and rising prosperity enjoyed by many economies around the world since the middle of the 19th century. And over the past two decades, the global trading system has expanded to include China and India with their vast populations, as well as many other developing and emerging market economies.
An improvement in the balance of the economy was also achieved last year from another source - a welcome easing in the strength of sterling which itself had been a reflection of the persistent weakness of the euro. As the euro has recovered somewhat over the past year, and sterling has moved back from its peak levels, this has, at least in degree, eased some of the pressures faced by exporters and by businesses most exposed to import competition. The result is a better balance between the externally-exposed sectors of the economy and domestically-orientated businesses, between manufacturing and services, and between different regions of the country. Two other clouds that had threatened the sustainability of our growth performance also receded somewhat last year. One was the impact throughout the economy emanating from the steep rise in oil prices, which abated as oil prices fell back from their peak levels. The other concern was that share prices had risen to levels which many felt were not sustainable in terms of reasonable expectations of future corporate profits. The fall in share prices during last year was not a comfortable experience falling asset prices rarely are - but it removed some of the sense of unreality.

Self-regulation doesn’t work if there is no clear and consistent allocation of responsibility for the public interest objectives of financial regulation to public bodies that are answerable to the government and to parliament. But likewise, public bodies cannot seek to take on the responsibility of managing within firms, something that has to be the responsibility of boards and management. The senior managers and certification regime is vital here because it creates the framework to establish effective responsibility within firms, while maintaining the role of the public authorities, the PRA and FCA, for supervising and enforcing the public interest. A very good example of how this should work can be seen in the recommendations of the Fair and Effective Markets Review, which provide a means to establish and maintain high conduct standards in financial markets. Structural reform I want now to turn to structural reform and ring fencing. This is a subject in its own right, but I can assure you that I intend to be brief on this one tonight. We are now well into implementation. Last week we issued our second consultation paper on implementing the regime, and we plan one more such paper which will be more in the form of a wrap up of points raised and a few outstanding actions. Any structural reform measure involves complex implementation, the devil is always in the detail, and we need to get that right. I read from time to time that we are apparently watering the regime down via the implementation.
6  See Financial Stability Board (2013), “Progress and Next Steps Towards Ending “Too-Big-To-Fail””. 7  For example, at the FDIC Systemic Resolution Advisory Committee Meeting on 10th December 2012. The webcast for the meeting is available online at: http://www.fdic.gov/about/srac/2012/2012_12_10_agenda.html  BIS central bankers’ speeches  3  (5)  The resolution agenda is not just about banks and dealers. It is about central counterparties too, for example  Banks became TBTF by accident. The G20 Leaders having mandated that standardised OTC derivatives must be centrally cleared, there is a risk that central counterparties (CCPs) will come to be seen as too important to fail as a matter of policy. That makes it incredibly important that CCPs are robust, effectively managed, effectively supervised, and have first rate recovery plans. And, beyond that, they absolutely must be subject to a credible resolution regime. I worry that CCPs are “for profit”, or are typically part of “for profit” groups. If a CCP fails and it turns out that its risk management was slack, this point is bound to come up in the public response. Policymakers should think about that now in the context of the governance structure they want for CCPs embedded in vertically integrated groups. Meanwhile, work is underway in CPSS/ IOSCO8 on loss-allocation rules. Unlike banks, CCPs are essentially rule-based machines for netting and allocating risks. Those rules need to be enriched so that it is clear what happens when, due to a member’s default , both the initial margin and default fund are exhausted.

My final point, therefore, is that the authorities will have no excuse if they don’t solve the TBTF problem through resolution regimes and reforms. The necessary technology is clear. The necessary restructuring of firms is clear. The necessary degrees and forms of cross-border co-operation are clear. It is a matter of: just do it. 8  Committee on Payment and Settlement Systems (CPSS) and International Organization of Securities Commissions (IOSCO). 4  BIS central bankers’ speeches
While measures to reduce financial exit costs have met with some success in reducing switching barriers within the financial industry, responding to other factors that discourage consumers from switching to a superior product or financial service has been more challenging. Such factors include the additional effort required to switch financial service providers or products arising from the higher marginal cost of switching. Finally, the measures to strengthen redress mechanisms are also contributing to the enhanced capability of financial consumers, by providing an expedient and cost–effective means for consumers to assert their rights and protect their interests. Effective redress mechanisms also increase consumer confidence in using financial services, while serving to strengthen market discipline. Looking ahead, strategies to further strengthen these foundations are likely to be significantly influenced by two important developments. The first is the broader application of behavioural finance so as to better understand and identify the levers that contribute to better financial decisions in the different circumstances. Recent insights from the study of behavioural finance suggest that emotional and psychological associations with finance are as powerful as the intellectual grasp of how to make wise financial choices. This will have important implications for the design and implementation of both consumer protection policies as well as financial capability strategies. We have found that providing consumers with relevant information in Malaysia did not always lead to better decisions. This was frequently because it was not easy to understand the information and there was also too much of it.

How climate risk is relevant to the fund What does this approach to managing the fund mean for the fund’s climate risk? With a wide spread of investments, we are protected against events that affect specific companies or sectors. But we cannot protect ourselves against events or trends that affect everyone. The fund is exposed to two kinds of climate risk: physical risk and transition risk. Transition risk is about how the companies we invest in handle the transition to a low-carbon economy. The size of this challenge differs widely between sectors and companies. Chart: Transition risk and the fund The fund’s equity investments can be categorised by transition risk as measured by analysis firm MSCI. The blue columns in the chart show each category’s share of the value of the portfolio. The white columns show their emissions. Companies in the “transition” category have high emissions and therefore need to make the biggest changes. These make up 14 percent of the equity portfolio. The remainder are companies considered either to have neutral exposure or to contribute positively to the transition. These last companies are therefore part of the solution.1 Physical risk is linked more directly to climate change. The most obvious example is acute events such as extreme weather, but more gradual changes such as higher temperatures, droughts and rising sea levels may also impact individual investments, both negatively and positively.
Prasarn Trairatvorakul: Attributes of quality global citizens in the next decade Speech by Dr Prasarn Trairatvorakul, Governor of the Bank of Thailand, at the International Conference on General Education “Roles and Experiences in Cultivating Global Citizens”, Bangkok, 11 January 2012. *  *  *  Distinguished panelists and moderator, Ladies and Gentlemen, It is an honor and pleasure to be invited to share my views on the issue of global citizenship in the next decade. On this issue, I wish to focus on two important dimensions, namely driving forces and readiness. First, I will look at the progress of ASEAN integration as the major driving force toward global citizenship. And second, I will briefly discuss the necessity to develop global competencies to ensure the readiness of local talents with an aim to integrate with global talents. On the first issue, I should stress that global citizenship is linked to the relationship between an individual with the state. Since we now live in a virtual world connected by technology, today’s global relationship should perhaps be better defined as an association with economic opportunities available to an individual irrespective of physical presence. Moreover, global citizenship implies the shift from domestic focus to global focus with the ultimate aim of attaining global standards in terms of operating environment and resource management. At this juncture, however, I see it as unrealistic to think about global citizenship without first attaining regional citizenship.

Factors which might influence banks simultaneously are in focus, for instance the emergence and bursting of financial bubbles, excessive debt leverage in a certain economic sector or structural changes leading to reduced revenues or increased risks. The purpose is to identify conceivable risks and present an analysis that will influence the behaviour of market participants. A first and very relevant question is whether a stability report really would help to prevent a crisis. Will the financial sector read and listen to what the central bank has to say? Will this kind of moral suasion be sufficient? Could we have written a report in the late 1980s that would have made the banks see what they did not see? We do not know. But at least as long as managements have a memory of the last crisis, they are likely to listen. And if the crisis develops slowly, there are certainly things to be done. I shall return to this question when I talk about crisis management. Let me now turn to the main elements of a stability report as I see them. First, we look at the banks’ borrowers, because as long as they are healthy the banks usually are as well. Borrowers are analysed in terms of the corporate and household sectors in general, with particular reference to levels of debt and the future ability to pay. The real-estate sector is considered separately because lending to this sector is in most countries a major part of banks’ total lending.
Although the targets for Net Domestic Assets and Net International Reserves had been met until midNovember 2000, the Central Bank had to inject substantial liquidity to the markets due to the shortage arising from the turmoil in the banking system in November 2000. The liquidity, which was injected by means of open market operations, amounted to TL. 3.9 Quadrillion between 22 and 30 November 2000. The target for Net Domestic Assets was overshot due to excess liquidity. In addition, the Central Bank sold US dollar 6 billion to the banking sector in view of the rising demand for foreign exchange. These developments prompted us to revise the targets for Net Domestic Assets and Net international Reserves. In December, the Supplemental Reserve Facility extended by IMF and the additional measures taken by the Government provided a partial relief to the financial markets. The revised postcrisis targets were met as end of the year. It has become clear that, the crisis in November 2000 should not be simply regarded as a liquidity crisis. Rather, it started as a banking crisis, which later transformed itself into a liquidity crisis. As stated in the economic literature, banking crises, which cause huge liquidity demand, may begin either by a run on banks or by the inability of some banks to meet their economic or legal liabilities. And then comes “a currency attack”, as we can observe in many emerging markets, where the currency peg system is in practice and foreign exchange liabilities of the banking system reach high levels.

In 2000, although the inflation targets that were envisaged in the program could not be reached, significant progress was made in the fight against inflation, which reached its lowest level ever in the last 14 years. In addition, the fiscal balance improved considerably, and the structural reforms were underway. Interest rates came substantially down in 2000 as a result of the decreased exchange rate risk and the improved foresight of public. Declining interest rates reduced the cost of the Treasury’s domestic borrowing. Rising domestic debt stock was put under control. After the recession in the economy in 1999, falling interest rates boosted the deferred consumer demand, particularly for durable goods. Moreover, increased demand for credit, driven by the banks’ favorable consumer loans, put the economy back on the growth track. Besides the decreasing tendency in interest rates, the stable exchange rates and the private sector’s renewal investments, directed to productivity increase, also contributed to the growth in the economy. As a result, the GNP grew by 6.1 percent in 2000. However, the economic expectations became confused in the second half of 2000. Starting from May 2000, the gap between the optimists and pessimists in the CBRT’s Business Tendency Survey began to decrease and in November, the pessimist expectations started to gain ground. It is observed in this survey that also the expectations for inflation, employment and exports began to deteriorate in the same period.