samchain/econo-pairs-v1 huggingface dataset:
As you know, the GIC recently committed to subscribe to CHF 11 billion of a mandatory convertible bond which will be issued by UBS in an effort to raise capital in the aftermath of losses on large sub-prime mortgage positions. Subject to the UBS shareholders’ approval, the GIC will in due time become a significant shareholder in UBS. In the process, UBS will significantly strengthen its balance sheet and thereby maintain a substantial capital cushion relative to the regulatory minimum. A strengthened capital cushion is to be welcomed. First and foremost, it serves as a confidence-building measure. Moreover, in uncertain times, a solid capital cushion provides insurance against a further potential deterioration in the global macroeconomic environment. Who is this new Asian investor in the largest Swiss bank? The GIC was set up in May 1981 with an original seed capital of several billion dollars from the Monetary Authority of Singapore (MAS). 28 The central bank reserves had grown steadily throughout the 1970s as a result of public sector surpluses. The GIC’s objective was to invest the portion of foreign reserves, which was surplus to the needs of the central bank for its monetary policy management, in longer-term assets. The mandate of the GIC is to preserve at a minimum the international purchasing power of its assets against inflation and global exchange rate risk. The objective of the GIC is commercial, focusing on long-term investment returns. In many ways, it is similar to the objectives of the large European public pension funds.

6  BIS Review 150/2007  more they have recognised their obligation to be accountable to the public. Typically, more accountability has meant more transparency. An independent central bank is therefore likely to be transparent about how it pursues its mandate. The same may turn out to be true for SWFs. There are a number of difficult questions that need to be addressed before a set of SWF guidelines can become operational. What exactly do we mean by a non-political investment mandate? How do we gauge to what extent there might or might not be political interference in the pursuit of such a mandate? Will there be a need for a referee to determine whether a SWF complies with a particular set of guidelines? What happens if a SWF initially signs up to a code of conduct but subsequently fails to comply with its guidelines? As you can see, much work remains to be done and the timeframe is tight. Ideally, a first set of guidelines will be agreed upon jointly between the G7 countries and the most prominent SWFs by the 2008 spring meetings of the IMF and the World Bank. If well designed and agreed upon, such a set of guidelines could serve as a basis for determining which SWFs will continue to enjoy full market access in mature economies. 5. Conclusion  Before I conclude, let me say a few words about the capital participation of the GIC in UBS that was recently announced.
This is not a cause for concern because it is the foreign currency value of the reserves that matters. •  Financial stability. Our financial system is sound. It will be resilient against a normalisation of global monetary conditions. But household balance sheets are a source of concern – not at the aggregate level, but a significant minority could be over-leveraged. Hence, the variety of macroprudential measures we have taken over the last three years. •  Financial supervision. We are fully compliant with international standards, and have taken strong measures to ensure we remain a clean and trusted financial centre. We have stepped up to meet enhanced global standards on information exchange and have intensified our supervision of financial institutions to ensure we keep illicit money out from our financial centre. •  Financial development. The key drivers of future growth in our financial centre are showing good promise. The asset management industry has reached a new peak. We are now clearly the insurance and reinsurance hub in a growing Asia. And we are off to a good start to building a vibrant ecosystem as an offshore RMB hub. 8  BIS central bankers’ speeches

Stefan Ingves: The Riksbank and the Swedish economy Speech by Mr Stefan Ingves, Governor of the Sveriges Riksbank, to the Swedish Association of Local Authorities and Regions, Tylösand, 28 May 2007. *  *  *  Introduction Firstly, thank you for the invitation to come and speak to this assembly. Today I will talk about my views on the role of the Riksbank and about the current monetary policy situation, roughly as expressed in the discussion at the May monetary policy meeting. International economic activity remains good Sweden is a very open economy and large parts of the business sector are dependent on being able to sell their products to customers abroad. If the economies in countries around us are doing well, then the Swedish economy also does well. In recent years global growth has been extremely high. We believe that the growth rate will slow down slightly in 2007 and 2008, but will nevertheless remain high. After many years of high growth the US economy has now entered a slowdown phase. Economic activity has been dampened above all in the housing sector, but also in the manufacturing industry. Productivity growth is lower. The earlier upturn in house prices has slowed down and residential construction has declined. The problems have been aggravated by the fact that it has been easy for people with low incomes to obtain large loans for housing. As yet the problems in the housing market do not appear to have spread to the rest of the economy.
Foreign banks also went on a lending binge in Asia in the years leading up to the crisis in 1997, and just as surely accounted for the bulk of the sudden withdrawal of capital in the two years that followed. Had Asia relied more on bond and equity financing, it would have had alternative sources of financial intermediation, and the subsequent credit crunch in the banking system would have had a smaller impact on the real economy. Bonds and equities offer significant advantages over bank borrowing. They are a means of long-term financing and investment to corporates, unlike short-term credit lines which mean funds being pulled out of a company at the first sign of trouble. They facilitate asset-liability management. They mobilise savings and widen the range of investment alternatives for both institutional and retail investors. They create transparent market-determined assessments of creditworthiness. Singapore believes there is good potential for developing domestic bond markets, and an Asian bond market. We have actively promoted the growth of the bond market in Singapore, as one of the centres for the Asian bond market. Previously, MAS did not allow foreign entities to borrow in Singapore dollars, whether from banks or through bond issues, except to finance economic activities related to Singapore. This was to deter the internationalisation of the $ But last year we reviewed this policy, and issued new guidelines, a Notice (MAS 757) that made it easier for foreign entities to list $ shares and issue $ bonds, subject to safeguards.

Conclusion Beyond the immediate Y2K issue, it is clear that Asian bankers face many serious challenges. They need to keep abreast of changing developments, and anticipate new trends. They must significantly improve their corporate governance. Technological innovations will continue. Policymakers have a full agenda to liberalise prudently, while tightening standards of supervision and enforcement. As financial liberalisation proceeds, new market opportunities will emerge and there will be a demand for more differentiated products and services. Capital markets should grow in Asia, providing an alternative means of intermediation for regional economies. If Asian financial systems can do these things and respond to new opportunities, they will be a source of strength, and not weakness, to their countries as the new millennium dawns. BIS Review 130/1999  5
These strong economic links are expected to deepen once Malta accedes to membership of the EU. Malta was officially recognised as a candidate country at the 1999 Helsinki summit and has consistently met the Copenhagen accession criteria, which include the existence of a functioning market economy able to withstand competitive pressures within the Union. Negotiations began in March 2000 and since then 23 chapters have been provisionally closed, including those on Economic and Monetary Union (EMU) and on the free movement of capital. Accession is expected in 2004, subject to the outcome of a referendum to be held early next year. Apart from its political and social dimensions, EU membership offers Malta the opportunity to become fully integrated into the world’s largest regional economy. Membership will guarantee unimpeded access to our major market and requires the implementation of internationally recognised norms and standards, both of which would increase Malta’s attractiveness as an investment location. Moreover, as in the case of other candidate countries, the accession process has spurred market-oriented reforms. As a result, EU accession should contribute to faster economic growth, leading to an acceleration of the process of real convergence and to a steady improvement in living standards. EU membership also entails a commitment to participate in EMU. Before accession, Malta will, therefore, have to adopt key elements of the acquis communautaire related to EMU. This process is well underway.

In 2017, Per Scholas NY enrolled 502 students and 406 graduated, of which a substantial majority reported being placed with an employer with an average starting wage of more than $ an hour.2 Earlier this year, the New York Fed partnered with Per Scholas NY to support our own Diversity & Inclusion efforts focused on career paths in IT, cybersecurity, and data science in the financial services industry. I am proud to say that the New York Fed was recognized by Per Scholas as a Major Partner in its recent 2018 annual update report. I mention these two examples as they reflect the theme of today’s event and the book— workforce development is about investing in work, workers and systems leading to greater employment opportunities for all. Employer Engagement by Community Colleges in New York State Another important issue is the role of employer engagement with community colleges. By working directly with local employers, community colleges can more effectively prepare students for available jobs, and at the same time, help employers find and retain workers with the skills they need. In an effort to better understand the level and types of employer engagement activities taking place in our region, the Federal Reserve Bank of New York recently conducted a survey of all of the community colleges in New York State. Next Wednesday, we will be releasing a report that details our findings. Our report does show that employer engagement by community colleges in New York State has become the norm.
In response, the US and other major industrial countries introduced a series of extraordinary measures from late 2008, which successfully stabilised and prevented the collapse of the global financial system. However, these extraordinary measures, including quantitative easing policies, do not seem to be very effective in stimulating economic growth and creating jobs. In the US, for example, the sharp fall in housing prices has significantly damaged household balance sheets. Such kind of balance-sheet driven recession has substantially impaired the responsiveness of the economy to monetary stimulus, as consumption and credit growth will remain sluggish until household balance sheets are repaired. I believe that US households still have some way to go in repairing their balance sheets through de-leveraging, before they regain confidence in consumption and investment. At the same time, the US fiscal conditions have deteriorated since 2008 and this has restricted the headroom for the government to launch further fiscal packages to stimulate growth and create jobs. The situation in Europe is in no better than the US. The sovereign debt problems of the Eurozone have already spread to Spain and Italy, and have even threatened the stability of the debt markets in the core countries of the Eurozone. It now appears that the rescue package announced by the European Union in late October is no longer sufficient, and hence the market is expecting the European Union Summit tonight to introduce stronger and more effective solutions to resolve the European debt problems.

This has encouraged both individuals and companies to take greater risks to enhance financial returns. Besides, companies have an incentive to rely more on debt than equity because many countries permit the deduction of interest expenses from tax liabilities. These are all causes of the problem of over-leveraging. 4. But there is another cause of this over-leveraging problem that I would like to draw to your attention – it is market failure. By this I mean the market had been sending out wrong signals to the borrowers, be they households, companies or governments, that increased indebtedness was nothing to worry about. A prime example is the experience of Greece. In the 1990s, the Greek Government had to pay on average 1,550 basis points above German bunds for 10-year funding from the capital market. However, after Greece joined the Eurozone, the market supplied funds to Greece at interest rates very close to the triple-A rated Germany. In 2005, 10-year Greek sovereign bonds were traded at only about 20 basis points above German bunds. Because of this extended period of serious market failure, Greek nationals and their government were under the wrong impression that they would be  BIS central bankers’ speeches  1  able to roll over their debts perpetually. Of course, we now know that such an illusion could lead to catastrophic consequences. 5. The ever increasing leverage in the US and Europe eventually came to an end following the burst of the US housing and credit bubbles in 2007, triggering the Global Financial Crisis.
Even if the MPR is kept at this minimum level for a long time, the CBC Board will continue to take every measure necessary to promote the proper functioning of financial markets and the achievement of the Bank’s inflationary and financial stability objectives. From this Report onwards, we have decided to implement a more explicit communication policy regarding possible future paths for the MPR, in what we call the “MPR corridor”. This is in line with international best practices and with the recommendations of the Independent Evaluation Panel that evaluated our policy framework last year. A box in the Report describes the range of trajectories consistent with the baseline scenario, which includes the baseline forecasts and sensitivity scenarios that are consistent with expansions of activity at the upper and lower limits of the projection range, but which may require different MPR trajectories to achieve inflationary convergence within the policy horizon. This corridor underlines the uncertainty surrounding three dimensions: (a) the initial reading of the economy, (b) the future developments of the macroeconomic scenario and its impact on inflation convergence, and (c) the level of the MPR’s long-term equilibrium. We adopted this change under the conviction that it will contribute to communicate the rationale of monetary policy decisions, enhancing their effectiveness and accountability to the public. We estimate that there are scenarios in which growth may be within the projection ranges, but the convergence of inflation to the target requires a different MPR trajectory and/or new measures to safeguard the proper functioning of the credit channels.

We will most likely still be producing petroleum in 40 years’ time, but oil production has declined in recent years after peaking in 2000. Gas production is rising, but not at a pace sufficient to sustain overall petroleum production. The idea of an oil fund was raised in the beginning of the 1980s 3. It was intended to be a buffer fund to smooth variations in government oil revenues. The Act relating to the Government Petroleum Fund was adopted in 1990 in the midst of the deepest economic downturn in Norway since the Second World War. Those at the Ministry of Finance working on the law at the time were probably in doubt as to whether any savings would ever be accumulated in the fund. And initially the fund structure was only an exercise in accounting. Government petroleum revenues were deposited in the fund, but the entire amount was transferred back to the central government budget to cover some of the non-oil deficit. But the Norwegian economy rebounded. See chart “First deposit in the fund” at the end of the speech. It took a generation from the discovery of the first oil field in the North Sea until it became possible for the government to set aside a portion of the economic rent. The first net transfer to the fund of close to NOK 2 billion was made in 1996.
Fact number three: on the securities side, the potential for serious market dislocation had been building up. While the turnover in our stock market fell quite substantially as financial turmoil in the region intensified, activity in our stock index futures market grew sharply and disproportionately. A thin cash market, coupled with an ultra-active futures market, is a recipe for market dislocation, if not disaster, beyond the realms explainable by economic fundamentals. Furthermore, at least before the recent changes to the rules on shorting stocks, in terms of the financing cost there has always been a structural bias in favour of shorting stocks. The cost of borrowing stocks was low and there were rather lax settlement requirements that BIS Review 85/1998  -3-  specified T+2 but said at the same time that you could have a few days’ grace if you did not have the stocks on settlement day, even though going “naked” short in stocks was against the law. Indeed, along with increasingly heavy bets being placed in the futures market there had been continuous shorting in the cash market. Fact number four: there had been an abundance of bad news, bad numbers and rumors. In July and the first half of August, an unusually large number of investment houses published research papers on the Hong Kong dollar’s link with the US dollar, predicting that the link would soon be broken. There were also many articles predicting the Renminbi’s devaluation.

From the beginning of this year to the middle of August, over $ billion of one and two-year money were raised through the issue of debt paper in Hong Kong. The issuers were the multilateral institutions such as the World Bank, the Asian Development Bank, the Nordic Investment Bank, the European Investment Bank, the European Bank for Reconstruction and Development, the Council of Europe, etc. We welcomed these multilateral issuers making use of, and therefore helping to develop, the debt market in Hong Kong. But the real borrowers behind these Hong Kong dollar debt issues were predominantly the hedge funds, providing, through swaps arranged by intermediaries, attractive US dollar funding at below LIBOR to the multilateral institutions. To use less jargon, as I said the hedge funds have been borrowing and sitting on large amounts of Hong Kong dollars. They of course do so for a purpose. But since I am talking about facts I do not wish to venture a guess here. All I would like to point out is that the cost of running a $ billion position, with an interest rate premium over the US dollar that had been driven up to about 5 percentage points, is over $ million a day. And I would only add that the hedge funds are not exactly in the habit of throwing money away for nothing and that they do not seem to have been using the money to buy up Hong Kong stocks.
This group is responsible for promoting the consistency and quality of implementation of the New Accord and facilitating the exchange of information among national supervisors about bank and supervisory practices. Through the AIG, senior line supervisors - that is, the people who actually assess banks’ risk profiles - are seeking ways for examiners to validate and supervise internal risk assessment processes in a more consistent fashion across jurisdictions. Implications of Basel II on the supervisory approach We’ve also continued to think about how we should adjust our method of supervision to incorporate the tenets of the new framework, which brings me to the third and final area that I would like to address today. Naturally, allowing banks to rely on internal models in determining their capital requirements has led, and will continue to lead, to changes in our supervisory process. Fortunately, we have the benefit of some experience already at our side. In 1996, under the “market risk amendment” to the original Basel Accord, qualifying banks with large market risk positions were first permitted to incorporate internal estimates of the associated risk in their regulatory capital requirements. When determining whether a bank may rely on its market risk model for capital purposes, our examiners have had to evaluate the technical underpinnings of the model, as well as the risk management and control processes surrounding its implementation and use.

In doing so, we have endeavored to ensure that the “New Basel Accord” is not merely another set of rules, but rather a framework that recognizes the important innovations in risk management that banks have achieved and encourages continued improvement over time. In my remarks today, I’d like to share with you some thoughts on how bank supervisors have worked to embrace and encourage those developments. My remarks will cover three related areas. I’ll begin with thoughts on how enhancements in banks’ risk management processes, driven by business imperatives, have concurrently led supervisors to move to a more process-oriented, risk-focused approach to supervision. Next, I’ll spend a few moments discussing how provisions in the New Basel Accord - or “Basel II” - support further changes in our supervisory approach, and promote further enhancements in risk management. Finally, I will describe how these developments will be coming together in our supervisory approach going forward - particularly in terms of our supervisory expectations for management of market risk, credit risk, and operational risk by large banking organizations. While I will offer my views as a former banker and now as a bank supervisor, I believe that many of the themes offer insight for other sectors of the financial services industry as well. BIS Review 5/2003  1  Complementary effort by Banks and Supervisors to Assess Risk Let me begin by sharing some thoughts on the efforts banks themselves have undertaken to develop a more forward-looking approach to risk management.