samchain/econo-pairs-v1 huggingface dataset:
Smith explained that “when the division of labour first began to take place, this power of exchanging must frequently have been very much clogged and embarrassed in its operations.” 13 He was referring to the absence of what economists call a ‘double coincidence of wants’: the hunter wants arrows and the arrowmaker wants meat. Without that double coincidence exchange cannot take place through barter. Promissory notes, or ‘IOUs’, can act as promises to deliver in the future. And they could, in principle, circulate – we could then exchange with people whose own produce we don’t actually want. Imagine Smith’s primitive arrow-maker doesn’t want meat. He can still exchange his arrows for a promise of meat from the hunter. But he will do so only if he is sure that others, whose output he does want, will accept the hunter’s IOU. And that depends on whether the arrow-maker believes that others will trust the hunter’s promise to pay. Once future delivery is part of the exchange, trust is essential. So we need to be able to trust in the promises of others to pay. In large commercial societies, where the ‘I’ is remote from the ‘U’, relying on our own human “sympathy” is unreliable – debtors would be tempted to default with those they have never met. We recognise that we need a social institution. One such is a legal system that can be used to enforce IOUs. But enforcement is costly. These problems encouraged us to build another institution – money.

Coase understood the existence of firms to be a manifestation of how market based exchange between employers and employees was not efficient (see his 1991 Nobel lecture, for example). More recently, economists like Kiyotaki and Moore (an example is their 2002 paper) and many others have built models in which debt markets are incomplete because it is costly to enforce contracts, and which constrain the amount individuals can credibly borrow and pay back. These models can also be used to explain how money comes to exist, as I discuss below. Another body of work that seeks to study the institutions that underpin market exchange is the subject that has come to be known as 'law and economics'. Scholars in this field study the economic origins and consequences of the legal system. See, for example, many works by Gary Becker, Ronald Coase and Richard Posner. BIS Review 102/2006  3  laws, and to abolish the unhelpful ones. And it is that challenge of institutional design to which I now want to turn. As Governor of the Bank of England, you will not be surprised to learn that money is a social institution close to my heart. It is crucial in facilitating exchange and therefore, in allowing the division of labour.
These changes should have no impact on the reform agenda and so I won’t pursue them further in this lecture. The PRA Board is independently responsible for delivering the PRA’s statutory objectives. It does this by making policies and rules, supervising authorised firms, giving directions, issuing guidance and carrying out other legislative functions. In practice the Board is the senior supervisory committee in the PRA, but delegates some of its functions to the PRA Chief Executive who in turn delegates to the management and staff. In 2014/15 the Board met physically 32 times and had one additional teleconference. That’s enough scene-setting. Let’s get on to the reforms themselves. Capital: banks Arguably the single most important objective of a prudential regulator is to make sure that firms have an appropriate level of capital. The objective is two-fold. First, there must be sufficient capital to absorb the losses that a firm might make, even under relatively pronounced stress. Second, after the stress, there should be sufficient capital left such that the firm can either (a) carry on its critical economic functions, with customers and market counterparties believing it remains safe and sound, enabling market access to funding and capital or (b) be safely wound up. It was evident during the financial crisis that the point at which a financial firm is no longer trusted by customers or counterparties can come before it runs out of capital completely or even approaches that level.

Niklaus Blattner: The financial system and the regulatory challenges in securities clearing and settlement systems Speech by Prof Dr Niklaus Blattner, Member of the Governing Board of the Swiss National Bank. at the Seventh Conference of Central Securities Depositories, Lucerne, 12 June 2003. The references for the speech can be found on the Swiss National Bank's website. *  *  *  Ladies and Gentlemen I would like to talk to you about some basic issues and some regulatory and oversight challenges in securities clearing and settlement systems. Judging by the growing number of reports, the way your industry performs has been closely scrutinised over the last few years. Considering, for example, the G-30 Report on Global Clearing and Settlement or the second Giovannini Report, it strikes me that the emphasis has not only been put on the identification of potential difficulties and issues. In addition, responsibilities to resolve these difficulties are assigned and timetables are established. The debate has thus gained a new dimension. I shall start from a rather academic perspective, but nevertheless please count on my devotion to a number of very practical issues. I shall first discuss one of the basic functions of a financial system, which is the provision of clearing and settlement services, and its contribution to welfare. However, as we live in a less than perfect world, I shall focus on a number of important imperfections that tend to affect the smooth functioning of a financial system.
Since July, this applies also to some of the larger euro area countries such as Italy and even Germany. Moreover, the model indicates that the spillovers from Greece are persistent and are thus likely to dissipate only slowly in the presence of favourable developments. Another model co-authored by ECB staff assesses the effect of an increased probability of default of one country on the likelihood of default of other countries in the euro area, controlling inter alia for the fact that the degree of interconnectedness in the system changes over time.8 Let me emphasize that these default probabilities are estimated strictly on the basis of the CDS premiums quoted in the market, irrespective of whether the probabilities priced-in by the market are in line with the assessment made by official institutions. On the basis of historical CDS data, these models, for example, find that a default in Greece increases the probability of Portugal defaulting on its public debt by 30 percentage points. The results of this model may be interpreted as providing some indication of sovereign contagion effects from Greece to other euro area countries. In sum, both descriptive and model-based evidence point to the presence of significant sovereign contagion in the euro area. Moreover, these contagion pressures have recently intensified, as they have spread beyond the euro area’s periphery and have started to affect larger economies. Following up on my earlier discussion on the policy-relevance of contagion, policy makers need to address this.

The UAE-based energy company declared that its USD700 million sukuk was no longer Shariah-compliant – and thus unenforceable – because the scholarly consensus was said to have shifted since issuance in 2003. Now, let’s move on to the future – we need continued certainty. We have come a long way in setting in place the strong foundation of a legal framework. The law review and harmonisation committees have done good work in ensuring that Shariah principles can be imported into Malaysian law in a way that is effective and seamless. The progress of the past has positioned us with both opportunity and challenge at present. To navigate these well, we need to promote continued certainty as we move into the future. This will require excellence at both the institutional and individual levels. Institutional excellence At the institutional level, the judiciary plays a vital role in upholding legal certainty. Judges – along with arbitrators – ensure that disputes are settled by the application of the law, rather than unbounded discretion. The courts also ensure that these laws are intelligible, clear and also predictable. For Islamic finance, the Shariah Advisory Councils (SACs) of Bank Negara Malaysia and the Securities Commission play a complementary role to the courts – by providing Shariah certainty. It is important to note that this role does not [in any way] substitute the function of the judiciary in upholding legal certainty.
Growth has been supported by buoyant domestic demand and a pick-up in net exports. Financing conditions for firms have been very favourable, supporting investment, while private consumption has benefited from low levels of inflation. [Slide 3] This steady economic growth has translated to the labour market bringing close to 8 million workers [7.8m] back to employment since 2013, more than offsetting the losses experienced during the crisis. Annual growth in employment has reached its highest level since 2008 and the unemployment rate fell to 8.7% in the fourth quarter of 2017, the lowest rate for nine years. Looking ahead, unemployment is expected to further decrease to reach 7.2% in 2020, in spite of an increase in the participation rate. [Slide 4] In France, GDP growth is robust, averaging 2.0% in 2017. Expansion is expected to continue at a sustained pace in 2018, supported by strong domestic demand and a notable increase in exports. Investment should remain robust thanks to favourable financing conditions and the positive business outlook. Net exports are expected to pick up in 2018 and be supportive of growth. The upswing is expected to continue in 2019–2020 with a GDP growth rate which should remain above-potential growth, despite a slight slackening in global demand. [Slide 5] In France too, the ongoing recovery has led to a strong decline in the unemployment rate which fell to 8.9% in the fourth quarter of 2017.

Further, under this Act the CNB has at its disposal practically all the tools known to advanced market economies. BIS Review 25/1997  -6-  At the beginning of the transformation process, the main tools of monetary policy were, quite naturally, direct ones. Credit limits, interest rate ceilings expressed as maximum deviations from the discount rate and refinancing loans (in 1991 represented for small, new banks on the average 60 per cent of total sources but for big banks 5-10 per cent only) were used. Credit and interest rate ceilings were abolished in 1992 which can be regarded as a transition year towards indirect control of monetary developments. After credit ceilings on the minor banks were removed in April 1992 and on the major banks in October, central bank control of monetary developments was effected through discount rates, minimum reserve requirements, auction refinancing credits and central bank bills. My predecessors behind this chair, the governors of the central banks from Germany and Switzerland, underlined the role of money supply targets in the kit of tools. In this respect the Czechoslovak and the Czech practice can enrich the experience. Since 1990 the intermediate targets have been set in the form of planned changes in credits or money. For 1990 the target was “to keep the development of credits in total within the scope of -2 per cent to +1 per cent related to the level at the end of 1989”.
The purpose of the strategy is to improve the retail payments market, promoting the use of electronic payment instruments and broadening the financial inclusion of the population. The strategy will be implemented through the improvement of the legal and the regulatory frameworks, through improvements in infrastructure and financial education. Other activities In the field of statistics, the Bank of Albania continued its work for the methodological approximation of statistics with international standards and their alignment with the acquis communautaire. In cooperation with INSTAT and with expertise from the European Union, the Bank of Albania coordinated the work to develop indicators of macroeconomic imbalances for Albania. During 2018, the EUROSTAT carried out an evaluation mission of the Statistical System in Albania, which assessed that the statistics of the Bank of Albania are in line with the principles of the European statistics Code of Practice. As at the end of 2018, the international reserve reached EUR 3.4 billion, sufficient to cover 6.7 months of imports of goods and services and 156% of the short-term external debt. In order to 6/8  BIS central bankers' speeches  increase the flexibility of managing the needs for foreign currency liquidity, an agreement was finalised with the Bank for International Settlements for a foreign currency credit line. The agreement constitutes an important mechanism available to the Bank of Albania in the event of an emergency situation. Research continued to support the decision-making process for formulating and implementing Bank of Albania’s policies.

Our risk-based Minimum Liquid Assets framework requires every bank to hold a minimum percentage of its qualifying liabilities in liquid assets. We are now looking to adopt the Basel III LCR rules, with some enhancements to suit domestic conditions. •  Although Basel III applies the LCR framework only to internationally active banks, we propose to extend the LCR requirement to all banks in Singapore in the first instance and grant various reliefs on the basis of risk-mitigating circumstances. •  We will also have a tighter definition of what qualifies as eligible liquid assets and not recognise equities and mortgage-backed securities. MAS has issued a consultation paper on the implementation of the LCR framework and will carefully consider industry feedback. Constraining leverage The third important area of reform is in constraining the build up of excessive leverage. At the height of the crisis in 2008, the banking industry was forced by markets to reduce leverage in a manner that led to downward pressure on asset prices, which in turn led to losses, declines in bank capital, and contraction in credit. Even banks with high risk-based capital adequacy ratios were found to be excessively leveraged. Basel III’s leverage ratio seeks to set a 3% floor for the amount of Tier 1 capital that a bank needs to hold relative to its total exposure. The ratio is designed as a non-risk based measure to complement the risk-sensitive capital adequacy ratios.
Figure 4: WW2 U-Boat Campaigns  Figure 5: War Games  Source: IWM Collections (public domain). Torpedo fired on a merchant ship (image available here). Source: GSC Game World (GNU FDL) (Image from ‘Cosacks: European Wars’ (image available here). The US Air Force has an agent-based model known as Systems Effectiveness Analysis Simulation (SEAS). The SEAS package models the entire surface of the earth and its satellites. Each agent has a specific longitude and latitude to a resolution of one millimetre. In order to allow interaction, SEAS agents are equipped with sensors, communications, and weapons allowing co-operative or competitive behaviour (Brooks et al (2004)). Most recently, the work on ABMs in a military context has taken on a new direction. As autonomous vehicles such as drones are used in war, they add a new dimension to ABM simulations. In a world of human agents, ABMs could only approximate agent behaviours. In a world of military automata, these simulations come closer to replicating real-world warfare (Sanchez and Lucas (2002)). A more benign military application of ABMs has been in the context of war games. Military ABMs were a forerunner of many of today’s computer war games: Eve Online, World of Warcraft and Command and Conquer are all popular, sophisticated ABM-based games which mix computer and human controlled agents. (c) Physical Sciences  As the Large Hadron Collider illustrates, modern physics is heavily computational in certain fields. This arises in part because even simple systems can quickly exhibit complex behaviours.

For the euro area and the US, we have revised our growth forecasts slightly upwards. Economic recovery and convergence with the inflation target are most advanced in the US. This prompted the US Federal Reserve to carry out a number of interest rate adjustments and to initiate the reduction of the balance sheet this year. The coming quarters are likely to see a gradual continuation of monetary policy normalisation in the US. By contrast, the European Central Bank intends to pursue its asset purchase programme until at least September 2018, and to leave its key rates unchanged beyond that horizon. In Japan, too, monetary policy is expected to remain expansionary. Alongside the global economic baseline scenario, the risks also need to be taken into consideration. In the short term, global growth could be stronger than projected in the baseline scenario, due to the significant upturn in household and business confidence. In the medium term, however, risks for the international economy are still to the downside. These risks include ongoing structural weaknesses, political developments in certain countries, and potential international tensions. Furthermore, the normalisation of monetary policy in the advanced economies presents challenges. An abrupt rise in the currently very low capital market interest rates and risk premia, in particular, could negatively impact the global economy. Swiss economic outlook  I shall now turn to the economic outlook for Switzerland. GDP grew in the third quarter at an annualised 2.5%, lending further momentum to the economic recovery.
The Migration of credit transfers and direct debits under the SEPA requirements, will not resolve all payment-related issues which will be on the agenda of the Euro Retail Payments Board. Because of that, the Board is expected to  1  2  Hasan, I., Renzis, D. T. & Schmiedel, H. (2013) Retail Payments and the Real Economy. European Central Bank Working Paper No. 1572. BIS central bankers’ speeches  intensify its efforts for further integration in the field of card payments, innovations and security. Seventh, during the course of this conference we will also discuss virtual currencies, taking into account the public interest about the effects that these currencies have on the payments. Although these currencies are not economically significant and therefore, do not pose a risk to the price and financial stability, they do however pose significant risks to the individual users of the currencies. These risks, however, could impair the reputation of central banks given the fact that virtual currency schemes operate as retail payment systems, but are not regulated and monitored. Please allow me to briefly conclude that this conference on payment and security settlement systems has grown into a platform of active cooperation between the central banks, both in our region and beyond, in Europe, and we hope to continue hosting it in the future to assure faster and complete integration in the European Union.

We also cautioned repeatedly against the positions taken by some Member States – particularly those who traditionally uphold the independence of monetary policy – and ultimately reflected in 2/3  BIS central bankers' speeches  the draft amended text of Article 22 discussed by EU legislators. Under this approach, the ECB would have had no competence over EU CCPs, contrary to its mandate as central bank of issue for the euro, which calls for powers over all euro clearing regardless of its location. The ECB would have been given an exhaustive list of specific and circumscribed powers – replicating the present and future provisions of EMIR II – in respect of some systemic third-country CCPs, as designated by the European Securities and Markets Authority (ESMA). This would have been uncharacteristic and overly granular for the ESCB Statute, which is primary law and gives the ECB broad discretion in the exercise of its monetary mandate, and it would have violated the ECB’s functional independence. This was compounded by a requirement that ECB measures be “in alignment with” legislative acts and measures taken under those acts. Given these grave legal concerns, the Governing Council concluded that the final text seriously distorted its recommendation and interfered with fundamental principles of the Treaty, including the independent exercise by the ECB of its monetary policy. The recommendation to amend the Statute was therefore withdrawn, which is a matter of regret.
According to the United Nation Office on Drugs and Crime (UNODC), that translated to 800 billion to 2 trillion US dollars in current GDP. UNODC acknowledged that the margin between those figures is huge but we will agree that even the lower estimate underlines the seriousness of the problem. Money laundering is directly linked with crimes as crimes are largely motivated by money. In Malaysia, for the period between 2011 and 2012 alone, total amount investigated for serious crimes by our law enforcement authorities stood at RM13.1 billion. This is the amount that has the potential to be laundered through our system. We recognize that the actual extent of money laundering is difficult to measure. Certain type of crime may not be even reported, let alone investigated. For example, in the case of corruption, if both the giver and taker are willing giver and willing taker, the case will not be reported unless there is report from third party. It also acknowledged by the international convention, that for every 10 crimes committed, only one will get reported. Crimes and money laundering jeopardized socio-economic development of the country Crimes and money laundering would jeopardize socio-economic development our country. Serious crimes such as drug trafficking, corruption, tax evasion are intrinsically damaging to the country as they can weaken the economy. Not taking sufficient enforcement measures on the proceeds of crimes will perpetuate more crimes in the country as the benefits from the proceeds would incentivize perpetration of more and bigger crimes.

BIS Review 58/2003  1  The oversight of payment and securities settlement systems in practice In future, the National Bank will be taking a risk-oriented approach, i.e. we will deploy our resources in those specific areas in which the risks are particularly high. The National Bank Law stipulates a three-tier oversight process. The first tier is an obligation on the part of operators of payment and securities settlement systems to provide statistical information. The National Bank will use the data it collects to gain an overview of the breadth and importance of the systems and instruments for the clearing and settlement of payments and securities trades that are available in Switzerland. The second tier is a more wide-ranging disclosure obligation that is imposed upon the operators of securities settlement systems and those payment systems which process payments in excess of 25 billion Swiss francs a year. With payment systems of this size and larger, the National Bank will look in greater detail into the extent to which they might jeopardise the stability of the financial system. Finally, the National Bank Law provides for powers on the part of the National Bank to impose minimum requirements on systemically important financial market infrastructures as a third tier of oversight. Detailed implementation provisions for oversight will be laid down in an ordinance to be issued by the National Bank. In early November 2003, the National Bank submitted a consultation draft of this ordinance to interested parties. The draft itself can be found on our website.