samchain/econo-pairs-v1 huggingface dataset:
In this sense, just as the leveraged lending issue is akin to the UK mortgage risking-up issue, these margin loans have an echo of the problems we’ve been tackling on capitalisation of equity-release mortgages – complexity creates a weakness in the system. Another area our scanners are always interested in is the border zone between different industries – and in our case, in particular the border zone between banking and insurance, given we oversee both of these industries. There are a number of cross-border activities which we are keeping an eye on. One is the use of credit insurance to optimise capital positions of banks. This is a perfectly legitimate business and not one that we object to on either side of the border. But we do of course need to be satisfied that a risk which disappears from a bank’s capital requirement has genuinely been moved across the border 2, and that the receiving insurer is properly reserving and capitalising for that liability. Another area of interest is where insurers are taking on illiquid or structural risks from banks, for instance assuming the risk on long-dated inflation swaps. It is natural that some of these risks should gravitate towards the parts of the financial system which can bear them more efficiently. But we need to be sure that this isn’t just because regulation on one side of the border is missing something which has been captured on the other.

For example, the recent reports issued by the Senior Supervisors Group (SSG), which is composed of regulators from five major countries, indicated that the banking regulators both here and abroad should have been tougher in the assessment of the quality of management, of governance, and in terms of these banks’ risk management  1  There is a growing body of economics literature on this issue that links monetary policy to leverage. See, for example, Tobias Adrian and Hyun Shin, manuscript in preparation for the forthcoming Handbook of Monetary Economics, volume 3, currently circulated as Federal Reserve Bank of New York Staff Reports, No. 398, October 2009. 2  BIS Review 161/2009  capabilities. 2 We should also have pushed harder for better management information systems and more simplified corporate organizations and structures. We should have done more to identify best practices in terms of risk management, liquidity, capital, and compensation and pushed harder to force the laggards to move to best practice standards. We are learning a lot about how to do supervision better and are working aggressively to apply those lessons to our current practices. The Supervisory Capital Assessment Process or SCAP is an important example of the value of broad, horizontal examinations. In the SCAP, the Federal Reserve worked in conjunction with other U.S. regulators to assess the impact of a stress economic environment on the 19 largest banking organizations in the country simultaneously. This approach made the SCAP a particularly powerful exercise.
He did not seek to reduce the amount of capital held by the banking system but rather sought to increase the stability of the global financial system – a goal that would benefit not just banks, but more broadly businesses and consumers. To work toward greater financial stability, the Basel Committee is blending several policy approaches to replace the existing capital framework. As I have mentioned, Basel II consists of three mutually reinforcing pillars. The first pillar aligns the minimum capital requirements more closely to banks’ actual underlying risks. Qualifying banks will rely partly on their own measures of those risks, a rule that helps to create economic incentives for banks to improve those measures. The second pillar – supervisory review – allows supervisors to evaluate each bank’s assessments of its own risks and to determine whether those assessments seem reasonable. The third pillar, market discipline, strengthens external incentives for prudent management. It strengthens the ability of marketplace participants to reward well managed banks and to penalise poorly managed ones by enhancing transparency in banks’ financial reporting. One might say that Basel II seeks an “efficient frontier” of policy objectives through the three pillars. Each pillar provides something that the other two cannot. Each is essential to achieving our overall objective of financial stability. The three pillars represent a far more sophisticated view of risk and a far more comprehensive approach to supervising bank capital than the “one-pillar” approach contained in the 1988 Basel Accord.

Of course, the Committee hopes that, over time, more and more countries will adopt the framework. We do not want them to do so before they are ready. And, when they are ready, we want them to adopt the options and approaches that are most appropriate for their circumstances. For a country that wishes to adopt Basel II but may not yet be ready, I would suggest a three-stage approach to the transition to Basel II. These stages could be categorised as (1) strengthening the supervisory infrastructure; (2) introducing or reinforcing the three pillars; and then (3) making the transition from the 1988 Accord to Basel II. This three-stage process recognises that Basel II is not intended simply to ensure compliance with a new set of capital rules. Rather, Basel II is intended to enhance the quality of risk management. To achieve this goal, Basel II must be built on the foundation of a sound supervisory system. Such a foundation includes having successfully implemented the Basel Committee’s “Core Principles for Effective Banking Supervision,” including the provisions on operational autonomy of the supervisory authority, adequate supervisory resources, regulatory and remedial powers, and a sufficient legal framework. Likewise, sound accounting and provisioning standards are critical to ensuring that the capital ratios - however calculated - reflect meaningfully the bank’s ability to absorb losses. Establishing a solid foundation of sound supervisory, legal, and accounting systems constitute the essential first stage of the process of moving to the new supervisory framework.
Jaime Caruana: Consequences of Basel II for SMEs Address by Mr Jaime Caruana, Governor of the Bank of Spain and Chairman of the Basel Committee on Banking Supervision, to the European Parliament Workshop on the "Consequences of Basel II for SMEs", Brussels, 10 July 2003. *  *  *  Introduction Good afternoon. I would like to thank the European Parliament for organising this important workshop on the New Basel Accord and its implications for small- and medium-sized enterprises in Europe, and for inviting me to participate. I’m privileged to join you as the new chairman of the Basel Committee on Banking Supervision, and I welcome this opportunity to offer our views. As you know, the Basel Committee was founded almost thirty years ago to help promote safety and soundness in the banking sectors. We believe that, when banks are adequately capitalised and wellmanaged, they are better able to promote growth by providing credit to consumers and businesses alike. But more broadly, when banking systems worldwide are adequately capitalised and wellmanaged, the international financial system becomes more stable, better able to promote sustainable growth, and more resilient during periods of distress. Of course, simply providing credit does not guarantee growth. Indeed, how credit is applied matters greatly to the development of an economy. And in every economy, small businesses have long been the true engines of economic growth. Small and medium-sized enterprises traditionally produce much, or even most, of the technological innovations in business and industry.

All these initiatives, coordinated with other policies, have proven effective. Inflation remains subdued and in check, inflationary expectations are anchored, macroeconomic environment is steady and financial stability is consolidated. Looking ahead, the Bank of Albania holds that the Albanian economy will continue to face the above-cited concerns over 2013 and beyond. Although improving, economic activity is expected to remain below its potential, followed by low inflationary pressures, creating premises for maintaining stimulating monetary conditions in the future. Likewise, our  BIS central bankers’ speeches  1  projections suggest that external balances of the economy are expected to improve. On the other hand, slow economic growth rates may generate pressures on debt stability indicators, unless they are identified and taken into consideration in fiscal policy decisions. In Bank of Albania’s view, growth rate recovery will require combining the cyclical stimulus of the economy with structural measures that expand the growth potential. Regarding the cyclical aspect, the Bank of Albania holds that macroeconomic policies are rightfully stimulating. In the absence of space, fiscal policy should continue to be oriented towards long-term stability of debt indicators. The monetary stimulus is expected to be transmitted more completely in the upcoming period. We continue to underline our message that businesses and consumers should have a more realistic approach on sound perspectives for the country’s development as well as revise up their consumption and investment plans.
Today I will talk about the surveys of households and market participants we conduct: the Survey of Consumer Expectations (SCE), the Survey of Primary Dealers (SPD), and the Survey of Market Participants (SMP). These surveys highlight the innovative and cutting-edge research conducted at the New York Fed and represent the culmination of the Bank’s decade-long investment in the collection of better policy-relevant expectations data. As I will now explain, much of this investment has been directed toward introducing probabilistic survey questions, but we have also learned other important lessons about question design and survey mode, particularly regarding the measurement of inflation expectations which I will also discuss. In some cases such as results of the SPD and SMP the underlying probabilistic nature of survey questions is immediately apparent, in the case of the SCE as I will describe the underlying probabilistic question is not so apparent for many of the results. 4  Data on subjective expectations can also be used to improve the efficiency of model parameter estimates, refine posterior estimates of agents’ unobserved types, and help researchers estimate latent variables in macroeconomic models. 5  Of course it is also possible that survey respondents have beliefs that do not satisfy these conditions. I will discuss some evidence on this. 2  BIS central bankers’ speeches  Why use probabilistic survey questions? A key feature of the New York Fed surveys is their focus on collecting rich quantitative data on subjective expectations.

Extending a practice with a longer tradition in the field of psychology and in surveys of professional forecasters, economists, and other financial experts, our surveys rely heavily on a probabilistic question format to elicit the likelihood respondents assign to different future events. This approach builds on a large and growing body of research, led by econometrician Charles Manski, that has demonstrated survey respondents’ willingness and ability to answer questions expressed in this way.6 Traditionally, surveys ask respondents to express their answers in one of a few ways: for example, using a Likert scale (specifying whether an event is “very likely,” “likely,” or “not too likely”), selecting the outcome they consider most likely (“Do you expect the unemployment rate to be higher or lower than today?”) or giving a point response (“By what percent do you think prices will increase over the next year?”).7 A problem with the Likert scale is that it does not allow comparisons across respondents, because different respondents may interpret the scales differently. A well-known illustration of the problem was provided by Daniel McFadden, who looked at a health status measure that used a Likert scale ranging from “excellent” to “poor.” While 62 percent of Danish men reported their health to be excellent, only 14 percent of French men did so, despite their enjoying two more years of life expectancy. A problem with questions asking for the outcome considered most likely – that is, questions asking for the modal outcome – is the ambiguous information content of the responses.
Government oil revenue spending is expected to be brought back into line with the fiscal rule when cyclical conditions eventually normalise. We assume that prospects for higher unemployment, a fall in house prices and a high level of debt will induce households to build up financial buffers and reduce debt. The saving ratio  10  BIS Review 37/2009  is expected to increase considerably. Net lending is projected to be positive this year after being negative since 2004. As household borrowing has been considerable in recent years, deleveraging in the household sector is important to long-term stability in the economy. The outlook ahead, and monetary policy assessments  In Norway, inflation will be curbed by lower capacity utilisation. The marked increase in unemployment now envisaged will result in lower pay increases this year and next. Prospects of weaker growth and lower inflation imply a lower interest rate than presented in the interest rate projection from our last forecast in December. There is also a risk that the global downturn will be deeper and more prolonged than expected. If this proves to be the case, growth in the Norwegian economy will not pick up as quickly and inflation will fall more sharply than we currently assume. The objective of avoiding a pronounced downturn indicates in isolation that the interest rate should be rapidly reduced to a low level. On the other hand, we have already made substantial reductions in the key policy rate.

The key policy rate should be in the interval 1-2 per cent in the period to the publication of the next Monetary Policy Report on 17 June 2009, unless the Norwegian economy is exposed to new major shocks. Thank you for your attention. BIS Review 37/2009  15
The scorecard incorporates non-sales performance indicators, such as providing suitable product recommendations and making proper disclosures of material information to customers. 3/5  BIS central bankers' speeches  In all of this, the tone from the top is critical. Senior management and supervisors at all levels must make clear to their staff that meeting revenue targets must never be at the expense of treating their customers with fairness and honesty. This will go a long way in strengthening public trust in finance. Third, and more fundamentally, we must foster a culture of good conduct underpinned by strong standards of ethics. Regulations and controls can only go so far in shaping behaviour. Be it being alert to money laundering risks or dealing fairly with customers, mere compliance with regulatory requirements or internal rules is not enough. Ultimately, how professionals in the financial industry conduct themselves is shaped by the shared values, attitudes and norms in their organisations – in short, the culture. Rules can only tell us what we cannot do, it is values that tell us what we should not do. Those who work in financial institutions must look beyond the question: “Is this legal?” to “Is this right?” “Have I checked the box?” to “Have I checked the risk?” This is why some regulators, including MAS, have intensified their supervisory emphasis on the culture and conduct within financial institutions.

Mary will say a lot more about this in her keynote address, so let me highlight briefly some of what MAS has been doing on this front. MAS has conducted a stocktake of culture and conduct practices across selected financial institutions. Our supervisors had extensive one-on-one conversations with not just the management of these financial institutions but staff across the ranks. These conversations allowed our supervisors to gain insights on the staff’s perceptions of culture and their level of risk awareness. They helped us develop a keener sense of: whether the tone-from-the-top echoed from the bottom; and whether the organisational values plastered on the walls of the board room were practised on the ground. What have we found? Culture and conduct practices are uneven in the industry. Many financial institutions still struggle to articulate the conduct risks they face. Many are only starting to develop tools and indicators to obtain a holistic, cross-functional view of the culture within their organisation. What’s next? MAS with the banks have set up a steering group to identify emerging trends in conduct and behaviour as well as share best practices in “getting the culture right”. MAS has also set up a small behavioural sciences unit to build up our capabilities in this 4/5  BIS central bankers' speeches  area and support our supervisors with methodologies to get a better understanding of culture and conduct issues in the institutions they supervise. Let me conclude. Financial institutions have restored their capital, but not public trust.
These efforts have helped to avoid retrenchment of staff who might otherwise be displaced, and contributed to the steady decline in retrenchments in the financial sector, from the peak of 2,300 in 2016 to 1,300 in 2019.7 However, given the accelerated pace of digitalisation, we need to do more, and at scale. We are now experimenting an Artificial Intelligence (AI) platform with 13 FI partners to automate the process of identifying adjacencies in jobs and skills, so that more workers can benefit from reskilling and pivot into suitable roles. We hope to share more about the platform early next year. Creating Opportunities Our second priority is to expand opportunities for those aspiring to enter or reenter the financial sector workforce. 9. The National Jobs Council has been set up to mobilise tripartite partners’ resources to create opportunities amidst the weak labour hiring conditions. I am pleased to note that the financial sector is one of the top contributing sectors to 2/6  BIS central bankers' speeches  the jobs and traineeships programmes, offering a wide range of opportunities, including in technology and innovation, retail and corporate banking. Close to 60 FIs have offered about 1,300 SGUnited Traineeship positions for fresh and recent graduates in this challenging job market. As of end July 2020, 50 FIs have committed to hiring 900 Singaporeans over the next 3 years to be groomed for future leadership and specialist roles under structured talent development programmes supported by MAS.

Retrenchments in the sector have to-date been modest. Based on data from the Ministry of Manpower (MOM), retrenchment in 1Q 2020 for Finance & Insurance services4 was similar to the average quarterly retrenchment in 2019. 4. However, the economic environment continues to be challenging. We have to expect that new job creation in the financial sector will slow, while retrenchments are likely to pick up. The Singapore economy shrank by 13.2% on a year-on-year basis in the second quarter of this year. For the full year, GDP growth is projected at -7% to -5%.5 The economic downturn has directly impacted the labour market. MOM’s preliminary data shows the overall unemployment rate rose to 2.9% in June6 . Retrenchments more than doubled in Q2 from the previous quarter, mainly in the wholesale trade and transport equipment sectors. The performance of the financial services and the sector’s employment situation could continue to be creditable under current challenging circumstances, but we cannot be complacent. We must press on with the sector’s transformation efforts, in investing in the workforce for the future. 5. MAS has three priorities to support the local workforce in our financial sector. These are: 1/6  BIS central bankers' speeches  Protecting Livelihoods, Creating Opportunities, and Strengthening the Singapore Core. Protecting Livelihoods 6. Our top priority is to keep workers employed while deepening their capabilities. Labour market conditions will become more challenging, with some firms downsizing and others imposing hiring freezes.
Inflation has also remained on an upward trajectory in Malta, despite the generous subsidies which kept wholesale and retail fuel and electricity prices at 2019 levels, hitting 7.4% in September and remaining at that level in October. Still, they are nowhere near the level of prices experienced in most other euro area countries. The assessment of Malta's HICP excluding energy is even less encouraging. While since the start of the year, food inflation has been only moderately below that in the euro area, non-energy industrial goods (NEIG) and services inflation have exceeded the corresponding euro area averages. In particular, services inflation in Malta averaged 5.8% since January, far above the rate of 3.4% recorded for the euro area. In part this reflects the higher cost of imported inputs used to generate services, but it also reflects domestic inflation processesthat have been triggered by the strength of demand for services – the latter in the context of a tight labour market, households' strong balance sheet and considerable fiscal support. While domestic economic activity can be expected to gradually slow down during the current and coming quarters, the European Commission's forecasts that Malta isstill expected to have the second highest rate of growth in the euro area. In our view, even this forecast is quite cautious given the resilience of the economy, as shown, for example by the unemployment rate, which is still below the lowest rate  1/5  BIS - Central bankers' speeches  recorded pre-pandemic.

We have been intervening since the beginning of 1990 to develop the Hong Kong dollar debt market, again because the market was considered essential for effective financial intermediation, and, regrettably, the private sector was not able to develop one that is properly structured. The linked exchange rate system is also a product of the policy of positive non-interventionism. The Government intervened to fix the exchange rate because we found out in 1983, and since, that there is a need for a monetary anchor. In the absence of such an anchor, the value of our currency will be, in mathematical terms, an indeterminate. In other words, it is not something that the free market can determine in the best interest of the community without intervention. We have had four speculative attacks on our currency since the outbreak of financial turmoil in the region in the middle of last year. BIS Review 67/1998  -3It is very well known to almost everyone in the market that a handful of hedge funds have on each occasion conducted a double play in the stock futures market and the currency market. We have come to realise how this double play works, although it has only become apparent, at least to us, in the third and fourth attacks in June and August this year respectively. On each occasion, interbank interest rates were pushed higher, to varying degrees, with a view to engineering a sharp fall in the stock index futures.