samchain/econo-pairs-v1 huggingface dataset:
As of today, the lower limit for trade execution appears to be around 10 micro-seconds. This means it would in principle be possible to execute around 40,000 back-to-back trades in the blink of an eye. If supermarkets ran HFT programmes, the average household could complete its shopping for a lifetime in under a second. Imagine. It is clear from these trends that trading technologists are involved in an arms race. And it is far from over. The new trading frontier is nano-seconds – billionths of a second. And the twinkle in technologists’ (unblinking) eye is pico-seconds – trillionths of a second. HFT firms  3  Mackenzie (2011) provides a brilliant recent account of the role of HFT, in particular in the context of the Flash Crash. HFT is a sub-set of a broader class of algorithmic trading strategies. See also Aldridge (2010). BIS central bankers’ speeches  3  talk of a “race to zero”. This is the promised land of zero “latency” where trading converges on its natural (Planck’s) limit, the speed of light. 4 The race to zero seems like a million miles from the European coffee shop conversations of the 17th century and the noisy trading floors of the 18th, 19th and 20th centuries. The dawn of electronic trading coincided with the dusk for floor trading. Physical proximity lost its allure. As soon as computers processed faster than traders talked, the time was up for human interactions on physical exchanges. Trading became virtual, distance a dinosaur. Or so it seemed.

That frontier is defined by speed. The average speed of order execution on the US NYSE has fallen from around 20 seconds a decade ago to around one second today. These days, the lexicon of financial markets is dominated by talk of High-Frequency Trading (HFT). It is not just talk. As recently as 2005, HFT accounted for less than a fifth of US equity market turnover by volume. Today, it accounts for between two-thirds and three-quarters. The picture is similar, if less dramatic, in Europe. Since 2005, HFT has risen from a tiny share to represent over 35% of the equity market. In Asia and in emerging markets, it is growing fast from a lower base. What is true across countries is also true across markets. HFT is assuming an ever-increasing role in debt and foreign exchange markets. In some futures markets, it already accounts for almost half of turnover. In the space of a few years, HFT has risen from relative obscurity to absolute hegemony, at least in some markets. HFT itself is far from monolithic, comprising a range of strategies. 3 Some involve high-speed liquidity provision, which is akin to market-making. Others involve statistical arbitrage, using trading algorithms to detect and exploit pricing anomalies between stocks or markets. Because these anomalies tend to be eliminated quickly, HFT algorithms have to be highly adaptive, not least to keep pace with the evolution of new algorithms. The half-life of an HFT algorithm can often be measured in weeks.
Domestic economic activity in much of Asia will inevitably be subdued, with knock-on effects elsewhere, and major imbalances are likely to emerge in international trading patterns. It is too soon to have any very clear view about the likely scale or duration of these economic effects. The IMF, in its Interim World Economic Outlook, based on information available to early December, has tentatively estimated that world gdp growth this year - at 3½% - might be around 1% lower than it had expected in the autumn. They expected much of the impact to fall on the Asian economies themselves - with forecast growth in the newly industrialised Asian economies falling by 2½%, whereas growth in the G7 countries was expected to be only about ¼% lower at 2¼%, with a substantially larger impact on Japan. My impression is that, notwithstanding these revisions, most analysts would still see the risks as being quite heavily on the downside. There have been suggestions that the dampening of activity, particularly in this country and in the US, as a result of these developments is welcome insofar as it will help to prevent the re-emergence of inflationary pressures. And that is true - up to a point, my Lord Copper. It is clearly not desirable that the necessary moderation of demand should be narrowly concentrated on those sectors that are exposed to international competition. And while some of the industrial countries can certainly tolerate significant external deficits for a time, persistent, large deficits would not be sustainable indefinitely.

Much attention will also be required, in the fullness of time, to make sure that the financial systems through which financial intermediation takes place are robust so that the benefits of financial liberalization could be maximized and the associated risks could be minimized and prudently managed. 3. As a financial services centre which operates with a highly liberal regime, Hong Kong has important roles to play in all this. There is not enough time to go into details here on this occasion, so I shall just identify three general areas for your consideration. 4. The first area concerns financial intermediation within individual economies, in other words, the channelling of domestic savings into domestic investments. Here Hong Kong, at this stage at least, largely only plays an advisory role. The less liberalized financial systems in this region are very much dominated by domestic financial institutions, particularly in the banking market. Further, domestic politics and a desire to protect domestic financial institutions from undue competition are such that liberalization to admit foreign financial institutions to take part in domestic financial intermediation would only proceed at a pace dictated by these considerations. For example, it will, I think, take some time and patience for Hong Kong-based banks to gain a physical presence in the mainland of China, be allowed access to renminbi banking business and command a significant share of that business. 5.
The Rt Hon Sir Edward George GBE: Recent UK economic developments against the background of world economic activity Speech by The Rt Hon Sir Edward George GBE, Governor of the Bank of England, at the Chartered Institute of Bankers in Scotland Biennial Dinner at the Exchange, held on 15 January 2001. *  *  *  Mr President, Lord Provost, my Lords, Ladies and Gentlemen, This is the fourth occasion on which I have been honoured to be invited to speak at this great biennial dinner of the oldest Institute of Bankers in the World; and it gives me particular pleasure this evening to join you in celebrating your 125th anniversary. On the three previous occasions I have been able to report to you steady progress of the overall UK economy, but then, as a central banker brought up to look for the dark side of the moon, I’ve gone on to discuss the prevailing risks and uncertainties and to pose the question: can that steady progress be maintained? I will adopt the same format this evening. Since your last dinner in 1999, we have in fact, come through the short, sharp, shock to the world economy, associated with the emerging markets financial crisis, relatively unscathed. Our own economy has now grown continuously quarter by quarter for over 8½ years at an average annual rate of 3%, which is well above most estimates – at least until recently – of a longer term trend rate of 2¼2½%.

In its conduct of monetary policy, Norges Bank focuses on the fundamental preconditions for achieving exchange rate stability against the euro. First, price and cost inflation must be brought down towards the corresponding aim for inflation for the European Central Bank (ECB). At the same time, monetary policy must not in itself contribute to deflationary recessions as this could undermine confidence in the krone. There are few significant differences between Norway's actual response pattern and that of countries with explicit inflation targets. Price and cost inflation must be steered towards that aimed at by the ECB. However, in Norway fiscal policy has traditionally had an important role in stabilisation policy. This has reduced the burden on monetary policy. In addition, the Norwegian wage determination system has probably contributed in periods to dampening the impact of shocks hitting the economy. Monetary policy influences price and cost inflation with a time lag of perhaps one to three years. In consequence, projections for price and cost inflation with a horizon of a couple of years play an important part in the setting of interest rates. From the time interest rate decisions are taken until the interest rate has an impact on prices and costs, various types of disturbance occur which influence price and cost inflation. Thus it is not possible to maintain full control over developments in prices and costs. Actual price and cost developments normally deviate somewhat from earlier projections.
So the IMF has simply observed that France can’t afford to stand still when Germany began to reform some years ago, and given that the southern European countries are also moving to address the problems of cost competitiveness and rigidities. This is clearly why the  2  BIS central bankers’ speeches  economic reforms announced in France are so important. I’m delighted that the government has made this such a high priority. EUROWEEK: Let’s move on to France’s relationship with the financial markets and with the developments in its banking system. Are you concerned about what the ratings agencies have been saying about France? Or are ratings agencies irrelevant these days? They don’t seem to have had much of an impact on France’s borrowing costs. Noyer: No. I don’t worry about ratings agencies. The crisis led to a weakening in public finances in most countries, so in relative terms there have been few changes in their ratings. No agency is denying that France still has one of the strongest risk profiles in Europe. The second reason why I don’t worry is that worldwide authorities such as the G20 and the FASB have said very clearly that they want market players to rely less on credit ratings agencies and to make their own judgments. This can be done by banks’ internal models or other types of analysis by investment managers which are more sophisticated than they used to be a few years ago.

The remainder has been in areas such as project and trade finance. The French banks haven’t exited from these businesses altogether, because they have very strong franchises in these areas which are a good source of revenue. But they have managed to liquidate a number of operations that were weighing down their balance sheets. That has helped them to reduce their financing needs. They did not reduce their leverage through imposing some kind of credit crunch – absolutely not. Actually, the change in the volume of bank lending in France has been less rapid than in almost all other eurozone countries – or almost all other European countries, including the UK. I don’t believe there has been any constraint on the supply of credit to the economy. If there has been a decline in lending volumes this has been a reflection of reduced demand, rather than any decline in supply. Possibly in the future there may be a relative decline in the importance of bank lending, because we have worked a lot on developing simple and transparent alternative financing instruments such as securitisation. These may attract more attention from institutional investors and would therefore be a way of providing more credit to the economy without putting as much pressure as there may have been in the past on the balance sheets of the banks.
Such assessments are further complicated by the fact that there have been a number of important structural changes in the mortgage markets. Without going into detail, weighing the available evidence together, we do not think that residential property in Sweden is significantly overpriced in general. Nor do we believe that households in general are overly indebted. However, this does not preclude the possibility that there are other countries where house prices and household indebtedness have risen to levels beyond what can be fundamentally motivated. Yet, even if we don’t believe that house prices and household indebtedness have been disconnected from their fundamental drivers, there are still reasons for us to be concerned by the rise in property prices and household indebtedness. In the last years, in Sweden as elsewhere, household debt has grown much faster than disposable income. Obviously, this is not sustainable in the long run, as households then ultimately would be unable to service their debts. In the long run it is likely that indebtedness and house prices will increase roughly at the same rate as the nominal growth of the economy. This type of adjustment, to more restrained growth rates, will normally occur smoothly, as households begin to feel that their finances cannot tolerate a higher level of indebtedness. However, if there is an overly sharp correction or “hard landing” if you like, it could lead to weak growth in the economy for a long period of time. In this case, it would also have effects on inflation.

Nevertheless, it is uncertain today how an enlargement will change the EU’s face in the future. How will these countries be integrated? How will the decision-making process inside the EU be affected? And finally, how will the EU enlargement be financed? All these open questions constitute a potential risk factor for the euro. 4. Conclusions  Looking back at the first 14 months of the euro from a Swiss perspective, the most striking observation is the extraordinary stability of the Swiss franc/euro exchange rate. A detailed analysis shows that this stability was due to a high degree of convergence in economic fundamentals and in the monetary reaction of the two central banks. Thus, solid economic reasons have been behind this stability and not some artificial strategy of currency pegging implemented in secret by the SNB. In the future, the exchange rate should evolve depending on the development of the fundamentals - in Switzerland and in the euro-zone - and on the answers to some important political questions. Exchange rate stability, on the scale that has been experienced so far, is not guaranteed to last forever. However, the risk of erratic movements seems limited because the presence of large currency blocks has lowered the attractiveness of the Swiss franc as reserve currency. Nevertheless, I would hesitate today to qualify the euro and the Swiss franc as “sister currencies”. If you have a sister, she remains your sister for life and not just in case of common interests.
BIS central bankers’ speeches  7  Figure 3 Real exchange rate (*) (index, 1986=100) 120 110 100 90 80 70 88  90  92  94  96  98  1991-2010 average  00  02  04  06  08  1996-2010 average  10 RER  (*) Preliminary for August 2011. Source: Central Bank of Chile. Figure 4  Change in Central Bank of Chile's international reserves (percentage of GDP) 8  8  6  6  4  4  2  2  0  0  -2  -2  -4  -4 91  93  95  97  99  01  03  05  07  09  11 (*)  (*) The reserves include the purchase of $ billion announced in January 2011. To forecast GDP, growth and inflation projections in the September Report are used. Source: Central Bank of Chile. 8  BIS central bankers’ speeches  Figure 5 Central Bank of Chile balance sheet (billions of pesos, percent) 3.000  30  2.000  20  1.000  10  0  0  -1.000  -10  -2.000  -20  -3.000  -30 97 98 99 00 01 02 03 04 05 06 07 08 09 10 Net result  NER variation (*)  (*) Corresponds to y-o-y exchange rate variation at December of each year. Source: Central Bank of Chile.

However, as proven by the evidence, and as our communication highlighted, taking this kind of measures grants no permanent solution. The solution must necessarily come from improvements in competitiveness and productivity. The second purpose of the program is to strengthen our international liquidity position. This means having the tools to deal with external turbulences. All the available evidence shows that a strong international reserves position helps to protect the economy of financial shocks coming from abroad, which in turn reduces the risk premiums of the economy. In our present  2  BIS central bankers’ speeches  conjuncture, the level of reserves we are pursuing with the program sets us on a very good foot in case of a major global disruption. Holding reserves is tantamount to having an insurance policy. During the good times, it bears a cost associated with the differential between the yield of foreign liquid and safe assets, and the cost of the domestic liabilities that finance them. However, during episodes of global recession and financial stress, the available reserves permit to cushion the impact of the shock on the cost of the country’s external financing and provide increased flexibility to economic policies to mitigate the effects on the domestic economy. Fluctuations in the international value of the peso cause significant volatility of our accounting results, as we have seen in recent years. In good times, the peso tends to appreciate, which generates accounting losses as the net worth is measured in pesos due to the effect of reserves revaluation.
Jean-Pierre Danthine: Swiss banks from a financial stability perspective Introductory remarks by Mr Jean-Pierre Danthine, Vice Chairman of the Governing Board of the Swiss National Bank, at the Media News Conference of the Swiss National Bank, Berne, 1 December 2014. *  *  *  In my remarks, I would like to look at the situation of the Swiss banks from a financial stability perspective, taking the big banks first and then moving on to a discussion of domestically focused banks. Strengthening the resilience of the big banks Since the last media news conference, the Swiss big banks have improved their capital situation once again. The Swiss National Bank recognises the considerable progress made in this area as regards both risk-weighted capital ratios and leverage ratios. It is also of the opinion that the strengthening of the big banks’ resilience must continue, for the following reasons. First, risks in the economic and financial environment remain high. In several of the adverse scenarios considered by the SNB, the estimated loss potential for the big banks continues to be substantial relative to their capitalisation. This is also the case when viewed in a historical perspective, as evidenced during the recent financial crisis. Second, while the big banks’ risk-weighted capital ratios are above the average for large globally active banks, the same still cannot be said for their leverage ratios.

Unilateral deregulation would be nothing less than a lose-lose scenario with serious consequences for the stability of the global financial system – we would be paving the way for the next financial crisis – as well as the competitive landscape for US and European banks. International cooperation on financial reforms is a common good that has been extremely precious during these past eight years and is crucial to our future. 5) The fifth challenge is to complete the European framework and ensure greater consistency between regulation, supervision and resolution. Since 2014, the euro area has taken decisive steps with its Banking Union, which now ensures the uniform supervision of the banks of 19 countries. But in order to complete it, further progress is needed on three levels. First, with regard to concrete mechanisms, the second pillar of the Banking Union, which deals with “resolution” in the event of difficulty, must be finalised and simplified. Second, laws and requirements, which all too often accumulate diverse additional regulations and amendments, should be coordinated in a consistent manner. Moreover, cross-border banking mergers in Europe are still too difficult. Lastly, as regards the interaction between institutions, we should develop a better interaction between the various European authorities, and even envisage, going 5/7  BIS central bankers' speeches  forward, a single authority that would strive to enhance the soundness of the European banking sector. And in addition to the regulatory aspect, we must endeavour to implement what I call the Financing Union for Investment and Innovation.
We also need to consider the cumulative impact of lost jobs, lost customers, and lost tax revenue on households,28 businesses,29 and governments.30 Will they run out of money? If so, when? And what happens then? What will be the scale of defaults and bankruptcies? A group of academics recently alerted Congress to capacity limitations in our bankruptcy courts.31 Delays created by capacity limitations could lead to more liquidations of companies that might otherwise restructure and survive. It is important that all potential participants in bankruptcy proceedings anticipate challenges of overextended courts. Longer term—say, in the next two to five years—one of my concerns is the role of non-bank financial institutions in the economy. In April, the International Monetary Fund warned about the exposure of non-bank financial institutions to credit risk as a result of the pandemic.32 I worry about how that exposure will affect regulated banks and the real economy—and whether we have sufficient information to assess that impact. Going forward, we may want to consider whether the regulatory perimeter should be expanded to provide greater transparency into non-bank financial companies. In addition, I wonder how changes to the workplace and the workforce will affect culture within financial services firms. John Williams, the New York Fed's President and CEO, has observed that it is easy to talk about values and integrity when revenues are flush. Living up to those standards becomes more difficult—and more important—when making a profit is harder.33 Remote workspaces add to this challenge.

To do that, we will continue to take a technology-neutral and risk-based regulatory approach, offering a level playing field for incumbent banks and new market entrants alike. 39. So I call on all of you to put your most innovative ideas, your best technology, and your brightest people to work on fintech solutions for our city. 40. I think you will find plenty of opportunities. And I believe that, together, we will take banking in Hong Kong to new heights. 41. So join us and be part of this exciting fintech journey. Thank you very much. 4/4  BIS central bankers' speeches