samchain/econo-pairs-v1 huggingface dataset:
The largest financial institutions are big players on these markets, which operate according to private and decentralised mechanisms. Total notional liabilities on OTC derivative markets rose from USD 72,000 billion in June 1998 to USD 88,000 billion at end 1999. The average daily turnover on these markets increased by 50% between April 1995 and April 1998. •  Users’ desire to improve efficiency has also driven the evolution in market structures. Planned links between stock markets, particularly in Europe, and the consolidation of delivery-vs-payment systems testify to these concerns. Domestic trading floors with regular working hours are gradually giving way to electronic international markets open around the clock. And the official trading systems of the various financial centres are in turn being challenged by private trading systems such as Electronic Communication Networks. Third: new demands for transparency and profitability in the financial industry Spurred on by this competitive pressure, the principles of corporate governance and value-adding have taken root, in particular under the impetus of fund managers. These principles force players to meet new requirements in terms of transparency and profitability. Such requirements encourage participants in the global market to adopt new investment behaviour, in particular with the spread of index-linked management or massive recourse to leveraging. These objectives also result in the use of fairly homogeneous risk management techniques, such as the definition and use of limits, risk management with value-at-risk models and the development of stress testing.

As regards the European Union, the integration of national financial systems within a large, efficient market is the ultimate objective of the regulatory harmonisation. Since 1977, when the first banking coordination directive was laid down, two key principles have constantly been applied: •  On the one hand, the “European passport” gives the right of establishment and freedom to provide services within the area. •  On the other hand, supervision on a consolidated basis entrusts the consolidated supervision of banking groups to the home country, in cooperation with the host country. These are the two pillars of our European prudential framework. They are the basis for a clear definition of the respective roles of and close cooperation between national supervisors. Thanks to these principles, prudential supervision within the EU has for many years been conducted in a decentralised and cooperative manner which has proved its worth. In this respect, national supervisors are well prepared for the integration of the different national financial systems. BIS Review 85/2000  6  The same principles broadly apply for the supervision of insurance companies and insurance firms. As for cross-sector pan-European complex institutions, we believe that a similar combination of specialisation and intense cooperation is the best solution.
Investors in stock market are interested in businesses that are merging in order to gain size, increase their market share, and squeeze out their smaller rivals. In some cases, this leads to monopolistic power, with ability to take even more advantage of their customers and consumers. 2  BIS Review 43/2006  The younger generation places importance on success measured by numbers and quantity rather than quality, value, and merit. The government, which is supposed to be a role model for the public in general, seems to be concerned only with high GDP growth rates – the higher the better. Issues such as mega projects and the rally in the stock index are more welcomed. All success factors are tied-in with increases in monetary value, or in other words, “only money matters”. Under this environment of “only money matters”, and with growth and profit as key determinants of success, the business sector naturally strives to achieve these goals without regard to what is destroyed or lost along the way. For example, many tourist destinations have been created at the expense of local natural habitats and environments. In order to minimize their own costs, industrial factories release untreated wastewater into our waterways, creating adverse consequences for our communities. In the retail sales business, Western influences have attracted us to large chain stores and franchises, such as Tesco-Lotus supermarkets or 7-11 convenience stores. At the same time, traditional family-run businesses and mom-and-pop stores are fast disappearing.

The sake of efficiency, however, should not be a reason to allow large enterprises to take over businesses that produce products or provide services for domestic and local consumers, if it has a detrimental effect of destroying jobs and livelihoods of these people or the local customs and ways of life. The traditional mom-and-pop stores have no impact on our competitiveness at the international level; they do not need to rely on “know how” of the western model of trade to improve their efficiency, which is usually at the expense of tradition. We can now only hope that authorities will not allow the impact of globalization, brought about through hasty FTAs, to destroy the livelihoods of local people in small businesses, such as barbers, restaurants, truck drivers, and farming. The process of globalization, which began with the industrialized nations of the West, has had important influence on our values, as I have mentioned earlier. If our government is in favor of this creed of globalization without reservation, there will be no one to stop globalization from eventually overtaking our local businesses. More importantly, social values which give us a sense of satisfaction and happiness will be gradually eroded. It is up to the government, who is tasked with the management of the country, to selectively choose which technology to be brought in to improve efficiency, and only where necessary and appropriate. They should take heed not to allow new developments to overwhelm local traditions and livelihoods.
On the contrary, combining flexibility and skill adaptability will lead to a higher job turnover, but also to a better allocation of labour and a lower structural unemployment. Currently, the French lifelong training system is unable to provide the appropriate skills, as shown by the disconnection between job vacancies and the unemployment rate, here on an inverted scale. Unfilled vacancies represented more than 200 000 lost jobs in 2017. Apprenticeship is insufficiently developed, resulting in a high youth unemployment rate. Lifelong training and the apprenticeship system are currently being reformed, with ambitious and accurate proposals by the government. The lifelong training reform will strengthen training rights, especially for the least qualified and the unemployed. It will simplify arrangements for businesses and streamline the governance and financing of the system, while 14bn € will be dedicated to it in the 5-year investment plan. Add the announced bold plan for primary and secondary education, as well as for the access to University, and you can really expect that the French labour market and skills will dramatically improve. [slide 13] My final illustration is the interaction between labour and product market reforms. Labour and product market reform both imply an alleviation of red tape and ease business activity. 3/4  BIS central bankers' speeches  There has been significant progress in the past, as reflected by the decrease in OECD’s Product Market Regulation or network industries regulations indicators.

There is a practical reason for such a review: we need to formulate the monetary policy that will take over from the IMF programme because the current arrangement will not suit once the capital controls have been lifted and Iceland has re-established its financial links with other countries. But there are also lessons to be learned from monetary policy implementation during the upswing and in the run-up to the financial crisis. The inflation target and the floating exchange rate did not cause the banks to collapse; after all, if they had, many more banking systems around the world would have fallen. But monetary policy was part of the chain of events here in Iceland, and a  8  BIS Review 39/2010  number of difficulties emerged in monetary policy implementation under the conditions then reigning. There will be opportunities to discuss this in greater depth later, but in my view, the inflation target as such was not the problem, as studies show that countries with inflation problems are likelier to be hit by banking crises, and fare worse in the event of such a crisis, than their counterparts without problem inflation. The problem was rather that the various elements of economic policy did not interact as they should have, and it has come to light that implementing a floating exchange rate regime is complex and difficult in very small, open economies with strong financial ties to other countries.
Central banks have one or sometimes two well-defined tasks, namely to maintain stable prices and often also to safeguard the stability of the financial system. For that purpose, the central banks have primarily one instrument, the instrumental rate, sometimes supplemented by other means of exercising control. The objectives for central bank activities are thus simple and clear, their arsenal of tools is limited. This cannot in any way be compared with the complex tasks of governments, their decisionmaking situations with conflicting goals and a continually changing agenda. In Sweden, a small part of the public policy has been removed from the Government and the Riksdag to the Riksbank by the Riksdag’s own decision, namely responsibility for stable prices and financial stability. Everything else remains on the Government and Riksdag. The tasks and policies of the central banks are thus not in any way comparable with government policy as regards importance and degree of complexity. However – having said this – I should like to strongly emphasise the importance of there being a high level of confidence in the Riksbank. It can perhaps be said that the most important variable we have to comply with is the public’s inflation expectations. After all, it is these expectations that reflect confidence. If disturbances affect the economy through, for instance, an oil price shock, so that inflation exceeds the Riksbank’s target of 2 per cent, a return to the target can take place more quickly if public expectations remain at the 2 per cent target.

?/2001  3  Financial savings in different sectors in US, per cent of GDP 8,0%  6,0% Private sector 4,0%  2,0%  0,0%  Current account  -2,0%  -4,0% Public sector -6,0%  -8,0%  The earlier optimism about the American economy also made it attractive to invest in American assets. This resulted in the dollar appreciating greatly despite the large deficit in the current account - the strong demand for investments in American companies and shares resulted in the effects from the current account deficit being counteracted. When optimism has reduced in the past six months, interest in American investments has also been reduced and the dollar has weakened. Although there is fundamentally a lot to indicate that the American economy will continue to be able to grow for a period to come at a historically high rate, there is also an evident risk that there will first be a fairly strong downturn. There is also a risk that uncertainty about the future will drastically reduce households’ consumption and increase their low saving, that investments will drop and that the dollar will clearly weaken because other countries are no longer willing to finance the gigantic current account deficits. The dollar could then drop considerably in value and there would be a risk of considerably poorer growth. The current account deficit is large – almost 5 % of GDP – and particularly large in relation to the United State’s limited foreign trade.
Our Sandbox is unique as it is the first to include Islamic finance. Thus, industry players can be assured of the regulatory support by the Bank in expanding their frontiers of innovation. We would therefore expect to see more technological platforms to be introduced and infusion of technology to take place not only to disrupt the way we do things, but at the end of the day, to be able to significantly enhance values and experience for the consumers. The third and final key area relates to the measurement of the industry’s contribution to society and the wider economy. Islamic finance has more to offer beyond the confines of the conventional parameters of Sustainable, Responsible and Impact Investing (SRI); as well as the Environmental, Social and Governance (ESG) considerations. A natural alignment between Islamic finance and SRI already exist, given that the principles of fairness; equality; and ethics are embedded in Islamic finance which are associated with social well-being of the people. Given these common core values, there are certainly vast opportunities for Islamic finance to broaden its investor portfolio to access the global SRI funds that stands at more than USD3 trillion. In broadening the horizon of Islamic finance by tapping into socially-conscious investments, the industry can actively spearhead efforts to promote and reach out to investors whom are value driven. We envision that investments through Islamic finance products would meet the aspiration and needs of this group of investors.

At a time when globalisation may leave many behind in advanced economies, when the debate about inequalities is coming back to the forefront – and these are real challenges behind the populist wave –, now is not the moment to give up our social model. Europe and Japan are quite close in their choices. How to move forward: four accelerators of the Economic Union. The assets that I have presented constitute a valuable achievement for Europe. Now, we must actively build on them, and not lazily rest on our laurels. I will now present some avenues of improvement. Indeed, we have clearly succeeded in building a Monetary Union, but this is not sufficient. It is now time to make concrete progress on Economic Union, on which we have not been very effective yet. We are in agreement on the "why". Monetary policy cannot be the only game in town, and therefore we should not overburden it. Furthermore we aim at greater stability, to counter the risk of a new crisis befalling an unprotected euro area, with all its damaging political and economic repercussions; and  Page 5 sur 6 greater growth, to catch up our past lag on the United States and finally treat the fatal disease of mass unemployment in Europe. As for the “when”, we obviously have a unique historic opportunity: with the economic recovery; with the new French President and also stable governments in the Netherlands and hopefully in Germany.
There is thus some forecasting performance for GDP growth and CPI inflation up to one year ahead, but  5  S. Öberg, “The Riksbank’s forecasting performance”, 26 November 2007 and M. K. Andersson, J. Svensson and G. Karlsson, “An evaluation of the Riksbank’s forecasting performance”, Economic Review, 2007:3, Sveriges Riksbank. 6  See D. Kjellberg and M. Villani, “The Riksbank’s communication of macroeconomic uncertainty”, Economic Review, 2010:1, Sveriges Riksbank. 7  The calculations are based on forecasts from 1999 to 2010. 2  BIS central bankers’ speeches  no forecasting performance in the longer run. At two and three years ahead we had on average made equally good forecasts if we had used the average growth or inflation rate instead of our own forecasts.8 Unemployment – better forecasting ability than for GDP and inflation Unemployment is more sluggish than GDP growth. If unemployment is very high to start with, it is probable that it will also be high in a year’s time. This should mean that the forecasting ability for unemployment, and other measures of resource utilisation, are better than for GDP growth and inflation. Our forecasting performance with regard to unemployment is quite rightly slightly better, with a forecasting error one year ahead that is 30–40 per cent lower than the forecasting error for the naïve forecast (see Figure 7).9 However, there is still no forecasting ability two and three years ahead.

Today, numerous countries -- including Ireland and the United States -- are considering which paths to follow in reforming and modernizing their banking industries. These deliberations are of great importance, because a well-functioning and stable banking and financial system is a critical foundation for long-run growth and prosperity of an economy. And such reform is inevitably difficult, for reasons which are a classic blend of political and economic considerations rooted in the crucial functions the banking system must perform in a market economy. Moreover, banking system reform is made all the more challenging by the fact that such reforms cannot be viewed in isolation from reforms in the central bank, or independent of those in the capital markets. In fact, the greatest challenge may lie in forging these individual pieces in such a way that they fit together in a cohesive whole that serves the dictates of stability, growth, and public confidence. For a financial system to mobilize and allocate a society’s savings successfully and facilitate day-to-day transactions, there must be a class of financial institutions and instruments that the public views as safe and convenient outlets for its savings. Of course, the single dominant class of institution that performs this crucial dual role as repository of a large part of society’s liquid savings, and the entity through which payments are made is the commercial bank.
The first round effects of exchange rate pass-through are expected to continue in the short term. Inflation in CPI excluding food, energy and tobacco items remained flat over the previous quarter and remained at 4.8 percent, confirming that the rise in inflation can be mostly attributed to factors beyond the control of monetary policy (Figure 5). The recent rise in core inflation indicators has reinforced the risks related to second-round impacts of previous shocks. Figure 5: Main Inflation Indicators and Policy Rates 18  11  17  10  16  9 8  15  7  14  6  13  5  Policy Rate H (right axis) H exc. Processed food (right axis)  12 11  4 3 03/08  12/07  09/07  06/07  03/07  12/06  09/06  06/06  03/06  2 12/05  10  H: CPI excluding unprocessed food, energy, alcoholic beverages, tobacco and gold. Source: TURKSTAT, CBT. 4  BIS Review 62/2008  Dear Members of the Press, Elevated prices of crude oil, food/agricultural products and other commodities continue to exert inflationary pressure (Figure 6). As a result, inflation has recently been rising worldwide (Figure 7). Inflation in developed economies edged up in the last quarter of 2007, while emerging economies with inflation targeting have faced an upward trend since June 2007. By the end of the first quarter annual inflation in Turkey was 9.2 percent, which is below its end2006 level of 9.7 percent.

These developments have spurred the necessity of our having to better understand and perform more analysis on banking risks. After all, banks do live and prosper by accepting risks, but these risks have to be managed with proper care. As we have all seen, well-managed banks have tended to stay resilient to the banking crisis and provided a backbone for restoration of financial stability. We must therefore, continuously adopt new techniques and technologies in risk analysis to ensure appropriate risk management of all financial institutions in the future. Of course, prevention is always better than the cure. As financial regulators, one of our main tasks is to provide a prudential framework ensuring the overall improvement of risk management of financial institutions. In the case of Thailand consolidated supervision as well as prompt corrective action will be introduced under the new Financial Institutions Act. Study is also on the way to prepare ourselves for the implementation of the BIS New Capital Regime, and we look forward to their conclusion for an explicit framework that will complement our current practices where we ask the Board to understand the nature of their organization’s business activities and risk appetite in order to provide an adequate internal control system to monitor and mitigate risks. Risk-based supervision represents yet another endeavor to tackle the effectiveness of risk management of financial institutions as transaction testing may no longer be an effective approach to examine the ever-more complex financial institutions of today.
Doing so will require an understanding of the network of connections between firms, which at present is lacking. Lesson 4: Banks cannot “pass” a stress test Over the past six months, stress-tests have moved from the back-offices of risk managers to the front offices of the world’s media. Assessments of the balance sheet consequences of tail macroeconomic risks are now in the bloodstream of financial policymakers. They also appear, belatedly, to be entering the bloodstream of financial firms. That is real progress. But as with all technical progress, there is some danger of an overshoot. While the inputs to, and outputs from, stress-testing are statistical, the inferences reached from them are necessarily subjective. Stress-tests are probabilistic and state-dependent judgements. Two of the key judgements are, first, what prescribed stress scenarios are appropriate inputs; and second, what thresholds for satisfying these stress-tests are set. Both are fiendishly difficult. On the first, a stress scenario is just one point in a probability distribution. Which point to choose – indeed, which distribution to choose – is a matter of judgement. Consider the two distributions for UK GDP growth shown in Chart 6, one taken from the ten years to 2007, the other across a longer 150-year sample. 2 The standard deviations of these two distributions differ by a factor of 4.5. For a financial firm that is 30-times leveraged, that can easily be the  2  See Haldane (2009a), “Why Banks Failed the Stress Test”.

Lesson 7: Banks’ profits were the problem – but are now the solution The shock to global banks’ profitability from the crisis has been sharp and severe (Charts 11). Judging by the response of banks’ equity prices, it may also be prolonged. Despite the recent recovery, the market capitalisation of global banks has fallen by $ trillion since the crisis began. In part, this is a reflection of banks’ business models having been reassessed. But it also reflects fears of future intervention to curtail banks’ risk-taking and profit-seeking. As unfashionable as it may sound, it is important that banks’ profitability picks up, sharply and durably, in the period ahead. From a systemic perspective, this is in the interests of both the financial system and the real economy. In the short term, lending by banks is a necessary condition for recovery in the real economy. And a recovery in lending is best achieved if banks believe new loans will be profitable. Some of the pre-conditions for profitable lending are already in place. For example, margins on new lending have widened fairly sharply, as new lending terms have been re-priced (Chart 12). In other industries, this would serve as the price signal inducing existing banks to begin lending and for new banks to enter the lending market seeking market share. Over the medium-term, global banks have a hefty repayment schedule to governments and central banks. Encouragingly, the flow of repayment has already commenced for some banks.