samchain/econo-pairs-v1 huggingface dataset:
Before EMU, it was common practice for institutional investors to make geographical diversification their first priority, and, secondly, to select securities in accordance with a sectoral diversification pattern. There is some evidence that the “home bias” has weakened since the introduction of the euro. For instance, assets held by pan-European investment funds represented 8 25% of total assets at the end of 2000, up from 12% in 1998. The development of a genuine panEuropean approach is also illustrated by the introduction of various European stock indexes. The turnover on options based on these indexes - for instance, the volume of options traded on the Eurostoxx50 contract - now matches the turnover of options based on well-established domestic indexes such as the CAC in France. This provides evidence that large investors are looking for - and actually have recourse to - hedging products that are suited to a cross-border oriented strategy. However, this evidence of a strong impetus towards integration does not necessarily support the argument that a brand new asset allocation is overwhelmingly dominant. Let me emphasise two aspects. First, pan-European sectoral strategies have also embraced non-euro area stocks in order to reach an appropriate level of diversification. This is the case in sectors such as pharmaceuticals, or telecom equipment, with stocks listed in non-euro area countries such as Switzerland, the United Kingdom and Sweden. This is in line with some theoretical assumptions, which are stating that currency risk is outweighed by the risk-return parameters, as far as investing in equities is concerned.

This contribution is bound to further increase given these countries’ considerable potential for growth. I thank you for your attention. BIS Review 2/2003  9
Page 1  Monetary policy: prices versus quantities - speech by Ben Broadbent Given at the National Institute of Economic and Social Research  Page 2  Published on 25 April 2023  In this speech Ben asks whether the transmission of monetary policy is better understood in terms of its impacts on interest rates and bond yields, on the one hand, or monetary aggregates on the other. He considers the relationship between those aggregates and inflation, both over the past and more recently. He also explains how the MPC takes account of “QT” in its forecasts. Ben Broadbent Deputy Governor, Monetary Policy  Speech Introduction and summary Good morning! An old question in economics is this: is it right to think of the stance and effects of monetary policy in terms of interest rates and asset prices – or are these things better measured by the size and growth of banks’ balance sheets, whether that of the central bank (“narrow money”) or commercial banks (“broad money” [1])? Old it may be, but this question throws up a couple of others that are relevant today. First, is the inflation we’re experiencing mainly the result of the growth in broad money in 2020 – and were both the “inevitable” result of the QE conducted that year, as some have said? Second, how does the MPC take account of asset sales (“QT”) in its economic forecasts – does that not require an additional and explicit estimate of its impact on activity and inflation?

Since I will essentially concentrate on the first possibility, i.e. incentives, let me recall, by a way of contrast, a recent study by Fahlenbrach and Stulz (2011). These authors show that the losses of the banks whose managers’ incentives were most closely aligned with the long-term interests of the firm they managed were at least as large, in the last crisis, as those at the financial institutions where governance was more obviously lacking. This suggests that wrong incentives were not the only factor in the behaviour and decisions that led to the crisis. Knowledge and competence were also at play. ... or a misalignment of incentives? Incentives are an important component in risk and risk-taking. If there is an important lesson in economics and finance that has not been invalidated by the financial crisis, it is that incentives really do matter. The excessive risk-taking that was observed prior to the financial crisis is likely to have been – among other things – the result of the fact that key decisionmakers were not provided with the right incentives to carefully analyse and balance the possible consequences of the risks they agreed to take. Let us take a bank as an example. The main relevant stakeholders are the depositors, the shareholders, the managers and the bondholders.
Demand from emerging markets One factor that has definitely been important is that emerging markets with a large population such as China and India have been increasingly integrated into the world economy. This was something that dampened inflation for a long period. Industrial nations were able to import cheap goods from emerging markets. At the same time, the increased international competition held back price rises on many domestic products. In this way the central banks were helped in keeping inflation at bay. For some central banks, including the Riksbank, the  BIS Review 57/2008  1  problem was rather how to get inflation up to target level. But now there appears to have been a turnaround. The emerging markets’ demand for energy and metals, but also food commodities, has grown and global inflation is beginning to be pushed up instead. This development is reinforced by some of these countries having price regulation that prevents the high world market prices from having an impact on the domestic market. Supply effects and alternative use of agricultural products But there are more explanations as to why prices have risen. Supply has not managed to keep up with demand. There were probably few who predicted the very rapid growth in the new economies. In addition there are natural rigidities regarding increasing supply. Quite simply, it takes time to progress from prospecting to mining. It is also possible to point to specific supply shocks. Poor harvests in many areas, such as Australia, have affected food prices.

In addition, the indices of business activity and household confidence has clearly turned upward again, even if they remain at historically low levels. The combined effect of all these developments leads us to modify our risk assessment but does not substantially affect our scenario for the global economy. We still believe that positive growth could set in within the US in the second half of the year and in Europe at the beginning of next year. We continue to expect a modest global recovery, so that the considerable under-utilisation of production capacities will not be eliminated in the next few quarters. Consequently, unemployment is likely to increase further in the developed countries as a whole. BIS Review 77/2009  1  Swiss economic outlook As expected, the Swiss economic situation continued to deteriorate in the first months of the year. In the first quarter, GDP contracted by 3.2% in annualised terms. However, this figure obscures a much sharper drop in final demand. As in the preceding quarter, part of production was, in effect, absorbed by an increase in stocks. External demand again plummeted and the level of capacity utilisation fell substantially in the manufacturing sector. Final domestic demand by private entities stagnated, and is most likely to weaken in the months ahead, since companies will reduce their equipment investment and household expenditure will be checked by growing uncertainty in the labour market.
Instead, it can issue warnings and recommendations to national authorities and to EU institutions. These warnings and recommendations can be either public or private. The effectiveness of its recommendations will depend on the attitude of the addressees to the “comply or explain” principle. This principle simply says that either you do as recommended or you explain why you have chosen not to comply. To work, it requires respect for the institution issuing the recommendations. BIS central bankers’ speeches  3  Figure 6 The structure of the ESRB  Secretariat (about 20 people)  ECB  General Board (65 members, 37 voting members)  Steering Committee (14 members)  Advisory Technical Committee (62 members)  Advisory Scientific Committee (16 members)  The ESRB is unique in that it brings together representatives from central banks and financial supervisory authorities from all 27 Member States, as well as representatives from the three European supervisory authorities and from the European Commission. However, this also makes the General Board a large body consisting of 65 members – 37 voting and 28 non-voting. Decisions are taken by simple majority, but a majority of two thirds is needed to adopt recommendations or to make a warning or recommendation public. The fact that ESRB decide by voting rather than by consensus is important, since blocking minorities can be avoided. The majority of voting rights are held by the national central banks (27 voting rights) while the national financial supervisory authorities have one non-voting representative per Member State in the General Board.

Locally incorporated banks and significant life insurers are required to comply with the Corporate Governance Regulations which are mandatory as opposed to the Code which is applied on a "comply or explain" basis. The Corporate Governance Regulations also impose more stringent requirements regarding the composition of Boards and Board committees. MAS is in the midst of reviewing the Corporate Governance Framework for locally incorporated banks and insurers. The review will focus on the effectiveness of risk management at the Board level, including the role played by Boards in safeguarding the safety and soundness of their institutions and in addressing market conduct risks. This would include a review of the Board's role in setting remuneration policies to manage risks effectively and the need for the Board to comprise members with relevant expertise and  BIS Review 147/2009  3  experience in the technical, financial and operational aspects of risk management of the various lines of business of the financial institution. MAS will also review the need to further tighten the definition of independence by requiring the Nominating Committee to consider the length of service on the Board as an additional criterion in determining the independence of a director. With regards to remuneration practices, MAS has done an initial assessment of the practices of our local banks against the Principles for Sound Compensation Practices issued by the Financial Stability Board. We support the idea of aligning compensation with appropriate risktaking.
At the same time, MAS recognises there could be potential benefits offered by innovative retail CBDC solutions in the future. MAS is therefore embarking on Project Orchid – to build the technology infrastructure and technical competencies necessary to issue a digital Singapore dollar should Singapore decide to do so in future. MAS will pursue Project Orchid in close partnership with the private sector,building on the rich findings from the Global CBDC Challenge that MAS launched earlier this year.We have received more than 300 proposals from over 50 countries in response to the problem statements we posed. This afternoon, the finalists of the Global CBDC Challenge will demonstrate their solutions to an international judging panel. PLUTUS AND THE ERA OF DIGITAL FINANCE Not to be outdone, Plutus, the god of finance, has not been idle. Finance is becoming increasingly digitalised, with new types of financial service providers, business models, and collaborations. I will highlight two developments that are shaping the future of Finance: • the quest for real-time cross-border payments; and • the rise of collaborative data platforms. 4/8  BIS central bankers' speeches  Real-Time Cross-Border Payments and Settlements Five years ago, MAS began experimenting with blockchain technology and wholesale CBDCs through Project Ubin, to make cross-border payments cheaper, faster, and more efficient. The success of Project Ubin has inspired Partior – a blockchain-based interbank clearing and settlement network jointly established by DBS Bank, JP Morgan, and Temasek.

With the growing importance of this industry in recent years, Swiss regulators are easing regulatory restrictions to facilitate not only investment control of these asset pools by Swiss financial institutions but also the legal registrations of formal fund of funds vehicles under Swiss law. Moreover, Swiss financial firms have become leaders in financial engineering to structure underlying hedge fund asset pools according to differing client demands. The example of managed asset pools in the hedge fund industry illustrates that Swiss financial firms are competitive and capable to respond to market demands, particularly in the area of asset management. In the future, Swiss financial firms will have to rise to new challenges to secure the position of Switzerland as a leading global financial center. One such opportunity might be to provide a wide range of trust-related services to its global wealth management clients. Regulators have an important and difficult role to play. Their primary responsibility is to safeguard the integrity of Switzerland as a financial center, thus bolstering its global standing. At the same time, they must not become an obstacle to innovation by impeding competitive Swiss financial firms to respond to rapidly evolving market developments in a vibrant global financial industry. 2  BIS Review 34/2004
It is true, however, that economic activity has begun to regain momentum as the lockdowneasing plan has moved forward. Should this momentum continue, it would open the way for a more favourable performance in the second half with year. Nonetheless, this is subject to considerable uncertainty. Reflecting this uncertainty, the latest Banco de España projections include several scenarios. The first, “early recovery” scenario depicts a situation in which no significant obstacles would emerge in the coming quarters. Under this scenario, output would fall by 9% in 2020. The second, “gradual recovery” scenario incorporates a more persistent impact of the decline in activity during the lockdown phase and includes fresh outbreaks of the disease of moderate intensity. That would lead to an 11.6% drop in GDP this year. In both cases, we would be before the biggest fall in activity in a single year, and this despite the fact that GDP will grow at a very marked quarter-on-quarter rate in the second half of the year. These forecasts also point to persistent effects in the medium term. In 2022, GDP will stand, respectively, around 4 pp and 6 pp below the level projected in December 2019; the unemployment rate will hold at over 17%; and the public debt/GDP ratio will be between 115% and 120%. Further, we cannot rule out other, more adverse scenarios, resulting, for instance, from the disease unfolding more adversely or from greater harm being inflicted by the crisis on the productive system.

3/8  fact, Norway has scored particularly favourably in recent years by managing to sustain productivity8 growth at a strong level. We seem to have avoided this symptom of Dutch disease. Restructuring in the Norwegian economy in the 1990s, changes in the tax system, broader and deeper financial markets, deregulation in trade and service markets and the use of the market mechanism in the telecommunications, postal and transport sectors appear to have contributed to a more efficient use of resources. This is a fourth positive result. Another wealth effect could be lower labour force participation and higher welfare spending. In Norway, labour force participation is relatively high after lagging behind our neighbouring countries up to the 1990s. The labour force participation rate has declined somewhat in recent years, but is still at a high level. This is a fifth positive result. However, the average number of person-hours worked is lower than for the other Nordic countries, and this difference seems to have increased through the 1990s to date. The increase in the labour force participation rate during the period does not seem to be the explanation. Reducing working hours is one way of spending income and wealth gains. We could also spend wealth gains by reducing the retirement age. OECD figures show that the difference between the official and effective retirement age is wider in Norway than in other comparable countries. Developments in expected retirement age are a cause for some concern. A working 40-year-old can now expect to retire at around 63.
This balanced approach seeks to optimize synergies between monetary policy, foreign exchange intervention, and capital account policy. Allow me to elaborate. Our monetary policy, under the current inflation targeting framework, can take care of exchange rate as long as there is no conflict with inflation. And, foreign exchange market intervention is conducted only to smooth excessive volatility in the market. As for the capital account policy, I firmly believe that key is the right pacing and sequencing of capital account liberalization, with a view to ensuring a more balanced structure of capital flows into and out of Thailand. On the capital inflow side, we are still maintaining the URR or unremunerated reserve requirement for the time being. This capital control measure has proven a useful tool for reducing the chance of prolonged financial misalignment with economic fundamentals, especially on occasions when most market participants are offside in the same direction. As for the outflow side, we have further liberalized our capital account during the last two months. These measures included the relaxation of FX holdings by juristic persons and individuals. In fact, at the beginning of this year, we also expanded the limits of Thai direct investment and portfolio investment abroad. Even though we all agree that financial openness is needed for long-term economic efficiency, going forward, the appropriate degree of opening or pacing through time will remain an issue for controversial debate. Ladies and Gentlemen, The third part of my talk today focuses on “international rules of the game”.

Moreover, the FSAP assessment also strongly supports our goal to ensure that our regulatory and supervisory responses keep pace with the financial intermediaries and the products they offer. In this endeavor, the Bank of Thailand has put emphasis on robust stress testing, enhanced counterparty risk management, and safe and efficient market infrastructures. Our financial and legal infrastructures will continue to be strengthened particularly through the introduction of a number of legislations and amendments. The new Deposit Insurance Act and the Financial Institutions Business Act are in the pipeline. Specifically, the Financial Institutions Business Act will stipulate prompt corrective action and grant the Bank of Thailand power to conduct supervision on a consolidated basis. In addition, it will also foster supervisory independence and the ability to supervise a broader set of systemically important institutions, including non-banks, as well as provide the central bank with a clear and transparent mandate on consumer protection. On financial sector development policy, as you may already know, our current Financial Sector Master Plan (FSMP) will move into its second phase. This second phase will put emphasis on increased competition and consideration on potential entry of new players to further enhance financial efficiency and resiliency.
If these are not of sufficient quality, we will be criticised (for example by the Norges Bank Watch, of which Petra Geraats was a member in 2004). Public scrutiny disciplines the internal process and, I believe, results in better monetary policy. BIS Review 94/2008  5

Impact of macro conditions on the global hedge fund industry The macro economic environment has left global institutions, including hedge funds, grappling with historically low interest rates, volatile financial markets, and an environment that has grown averse to risk taking. As hedge funds cope with a more demanding operating and economic environment, the industry will have to deal with two key challenges. Firstly, soft returns amidst the volatile environment. The average hedge fund returns across strategies was negative 4.6% in 2011, with most of the losses occurring in 3Q 2011 when global equities declined by around 17%. 3 Whilst hedge fund performance this year-to-date as at end-August 2012 was up 3.8%3, the outlook remains uncertain and I think hedge funds may struggle to provide consistent returns over time. Secondly, a more challenging fund-raising environment. Business and compliance costs have increased due to more stringent manager selection criteria by investors and enhanced global regulatory standards. As a result, funding gestation periods have lengthened and failure rates have increased. Hedge funds now require larger assets under management to breakeven and remain economically viable. Managers without a strong track record will be in for a hard time. Against this backdrop, some consolidation of the global hedge fund industry is to be expected. 1  MAS: Recent Economic Developments in Singapore – Sep 2012  2  IMF: World Economic Outlook, October 2012. 3  Hennessee Hedge Fund Indices.