samchain/econo-pairs-v1 huggingface dataset:
Rather than having to impose hefty fines on a financial institution after a major incident or lapse in controls, we prefer that such incidents not happen in the first place. This means that we will not be apologetic about being intrusive and probing in our supervision work, and ML/FT risks will continue to be a key thematic area of focus. 15 The NRA exercise has noted that the controls adopted by banks are generally strong, but there is scope to strengthen the control processes especially in the areas of trade finance and correspondent banking. For example, during some of our inspections, we found that some banks did not screen all the key items in trade documents, and there were also inadequate controls when processing related party client transactions. We are looking to arrange roundtable sessions to share best practices in these two areas. 16 Apart from strengthening control frameworks and processes, the human factor is just as important. We have noted instances where banks have good systems and processes in place, but line departments did not implement the measures properly. Some of the common reasons include inadequate risk awareness, mis-communication across departments, and lack of management oversight. There is therefore a need to invest in the human capabilities, and not just rely on system capabilities in our AML/CFT efforts. 17 One of the more topical issues relating to supervision is that of tax crimes. Singapore designated serious tax crimes as money laundering predicate offences in the middle of last year.

As a result the build-up in EME foreign assets have been held mainly as central bank reserves especially in Asian countries (Chart 3). In total the foreign assets now held by EME central banks and governments is about $ trillion dollars, which compares with only $ billion gross foreign assets held by the UK government. Many emerging economies concluded after the Asian crisis a decade ago that they needed bigger liquid reserves in traditional government debt to defend themselves against volatility in financial markets even when that carried the likelihood of a negative return (taking account of expected exchange  2  The Kuwait Investment Office is the in-house investment arm of the Kuwait Investment Authority (formerly known as the Kuwait Investment Board) and was established by Sheikh Abdullah Al-Salem Al-Sabah on 23 February 1953. Edmund Hillary and Tenzing Norgay reached the summit on 29 May 1953. 3  These figures include the NICs. Excluding NICs the estimated surplus is $ billion (1.1%). 4  Latest data show that current account deficits were 5% of GDP or above not only in the United States but also in Spain, Greece, Portugal, Australia, New Zealand, UK and Iceland. 2  BIS Review 31/2008  rate movements). But when the reserves outstripped the levels needed for that purpose, it was natural to look to increase the returns on investment by widening the range of investments.
6  Given the size of the benefit, we should all want to handle this part of the regime very carefully. We are applying particular scrutiny to two areas: first, the internal ratings and spreads on direct investments in illiquid assets, particularly the senior tranches of internal securitisations; and second, the use of financial restructuring to bring new assets within the MA. We have accepted internal securitisations as a means to achieve fixed cash flows. But that does not alter the requirement that the underlying assets must match the maturities of the annuity liabilities. We will of course take a careful and prudent approach to all such activity. We have made a series of proposals to give firms greater confidence about which assets can attract MA, and how we will deal with any breaches. But my message to the firms is: if we ended up in a position where the MA’s fundamental credibility was undermined for the sake of a few marginal items, we would all regret it immensely. Collectively, we need to remain on a sensible path. Conclusion  I began by making the claim, which might sound somewhat outlandish to the uninitiated, that insurance regulation is fun. It is! But it is also a deeply serious business, precisely because the insurance industry plays such a vital role in society.

Through our statutory objectives, Parliament has asked us to look out for the policyholder – but in an environment where insurance is provided by private sector firms. This means that other actors – particularly firms’ management, employees, shareholders and creditors – have an important role and a valid claim on our deliberations. As the regulator we need somehow to balance these various interests as best we can, but we do have a particular duty to represent the interests of the policyholder. 2  All speeches are available online at www.bankofengland.co.uk/speeches  2  How should we go about delivering this responsibility? The best way into that question is to ask another one: why do we bother to regulate insurance companies at all? We all in this room probably take for granted that we need prudential regulation of insurers; but every now and then I think it is worth reminding ourselves why this is so. Insurance comes in many different forms and many people rely on insurance for their livelihoods. Some rely on insurance proceeds to ensure they have a comfortable retirement. Some rely on insurance pay-outs following a serious accident, for example from a workplace injury or a car crash. Insurance allows us to go about our daily lives secure in the knowledge that there is a financial safety net should we get into trouble. And this is a huge business – for instance, in the UK there are around 6 million pension annuities in force and around 27 million motor insurance policies.
9  4  Identifying the effect of increased uncertainty is complicated by the fact that it is usually accompanied by a tightening in financial conditions. In this regard, the pickup in uncertainty following the referendum on EU membership in the UK was unusual, as financial conditions eased, helped by a series of monetary and macro-financial policy measures taken by the Bank of England. 5 ‘Uncertainty, the economy and policy’, speech given by Mark Carney, 30 June 2016, available at http://www.bankofengland.co.uk/publications/Documents/speeches/2016/speech915.pdf. 6 For individual firms, the standard variation of annual earnings was around 30 percentage points in the period before the crisis. See ‘Uncertain times’, speech by Ben Broadbent at the Wall Street Journal, 5 October 2016, available at http://www.bankofengland.co.uk/publications/Documents/speeches/2016/speech929.pdf. 7 For example, estimates by the Bank for International Settlements suggest that between 1990 and 2016, the investment rate in fixed assets declined from around 8% to 3½% of total assets, while the investment rate in intangible assets increased from around 7% in 1990 to 10% in 2016. 8 Various papers find evidence that intangibles investment is less responsive to changes in demand than investment in fixed assets. For example, Masayuki (2015) estimates an accelerator-type investment model, where growth of the firm’s sales is included as regressor, together with a measure of cash flow. The estimated “accelerator” coefficient is small and not statistically significant for intangible investment, suggesting this effect might be absent.

This event underlines the importance of stepping up our efforts to achieve a greater degree of financial integration among the remaining EU Member States, particularly those belonging to the Economic and Monetary Union (EMU). We have to finalise the construction of the Banking Union, and complement it with the development of a genuine Capital Markets Union. This objective should be seen as part of a coordinated effort involving several other areas of economic governance. All of these efforts, taken together, should be aimed at reinforcing the euro area and making it more resilient to shocks. European citizens and firms still face several barriers to invest across European markets. On paper, the EU enshrines the right to the free movement of capital. In practice, financial activity remains largely national. These inconsistencies and obstacles take the form of regulatory barriers, national options and discretions, and infrastructural limitations, the persistence of which is mainly due to limited political resolve. As a result, investment is not well diversified and may not be optimally matched with savings, and the financial system is fragmented along national lines, severely limiting the potential benefits of the single market. In principle, the problem is not one of scarce resources. In fact, the euro area runs a significant current account surplus, meaning that there are savings that could be channeled towards worthwhile investment opportunities. But more ambition is required to achieve welldeveloped and integrated capital markets in Europe.
And if we act so as to reach wage agreements and even compile laws that are not backed by real economic resources, and if demand – potential at this moment – becomes real and immediate, we might witness some of the worst effects possible. The wage rise will not bring about a higher living standard – on the contrary, all the accomplishments made in terms of economic stability, investment expansion and growth potential over the past years might dissipate very easily. As I have already stated before the Parliament of Romania, should the improvement of the living standard boil down to a matter of willingness and political decisions, there would no longer be poor countries anywhere in the world. It is true that the economic press tackles this issue in a balanced manner. The economic press evolved significantly over the past decade. Now we have dedicated publications, even dedicated TV channels, a financial analysts’ market, which is ultimately indicative of a mature Romanian society. I would even dare say that economic journalists and analysts are generally more connected to reality than most decision-makers. BIS Review 161/2008  3  I must be very clear about one thing: Romania has no alternative to adjusting domestic demand in order to visibly cut down external deficit. I know how painful this is and I am well aware of the difficulties that every government encounters in putting this measure into practice.

I was head of government during the critical period of 1999-2000 and I know exactly how difficult it is to adjust domestic consumption, even by two percentage points of GDP only. This time, the difficulty posed by the adjustment will be perceived as rather big, because it must be accomplished after several years of significant increases in consumption. The trend seemed to go on forever, which led to the decoupling between aspirations and real possibilities to fulfil them. Therefore, it is adequate to adjust domestic demand sooner rather than later, as long as we still enjoy a marked economic growth, given that at this point adjustment implies only resizing and not amputation. An essential issue that the Romanian society must solve without delay refers to what should be adjusted first: consumption or investment. I realise that we must ponder on this matter. The question is whether we should opt for buying an increasing number of cars or set aside resources in order to build the adequate road infrastructure. In a few years, the former choice could lead us to a total traffic jam, and the only additional consumption left for us could be that of carbon monoxide released by the exhaust pipes. This example is not only metaphorical.
Urban Bäckström: Some reflections on financial and monetary stability  Speech by Mr Urban Bäckström, Governor of the Sveriges Riksbank and Chairman of the Board of Directors and President of the Bank for International Settlements, at a seminar in Bangkok hosted by the Bank of Thailand, on 24 August 2000. *  *  *  Your Excellencies, Ladies and Gentlemen, I would like to thank my dear colleague, Governor Sonakul at the Bank of Thailand, for the invitation to visit Bangkok and for the opportunity to address this distinguished audience this evening. In recent years, significant progress has been made in putting the global economy on a path towards sustainable growth. The world economy entered the year 2000 in considerably better shape than many of us would have expected just a year ago. And after recovering to near its long-term average in 1999, global growth is forecast to go on accelerating in 2000. It is especially noteworthy that performance has improved in almost every region of the world. Southeast Asia, Russia and Brazil have all rebounded from their recent crises more strongly than expected. Many of the world’s poorest countries, including some in Africa, are posting respectable growth rates. The US economy is enjoying its longest recorded expansion ever. Growth in continental Europe is picking up - especially in the larger economies where growth had been relatively weak. And there are signs of an incipient recovery in Japan.

But even if that is achieved, I know from my own experience how difficult the actual implementation sometimes can be, not least for political reasons. The events of the past decade have made it clear that greater efforts are needed to strengthen the functioning of markets. I would like to make the point that today’s favourable trends in the world economy should not lead us to conclude that the danger is over. We have witnessed too many crises in the last decade not to know that market confidence can suddenly shift. Instead, policymakers BIS Review 65/2000  2  throughout the world must continue to work on forestalling new problems both because some evident threats to international financial and economic stability still remain and because there may well be vulnerabilities that are less evident. But the chances of the global economy continuing along the path towards sustainable growth without disruptive financial instability can be enhanced by implementing appropriate reforms. Monetary stability Let me now turn to monetary stability. In the last decade a growing number of countries have chosen to conduct monetary policy with an explicit target for inflation. One reason behind this choice has no doubt been these countries’ poor experience with a fixed, but adjustable, exchange rate regime. The first country to formally adopt a policy of targeting inflation was New Zealand in 1990. Canada did the same in 1991, followed by the United Kingdom, Sweden and Australia. Other countries have also introduced some variant of inflation targeting since then.
Another related concern is the emergence of nonbank Internet financial firms that have balance sheets closely resembling that of banks, but do not have access to the lender-of-last resort. What happens if these institutions have a liquidity crisis? What if that crisis is so large that it threatens to gridlock the entire payments system? What role do the supervisors play? What role should the supervisors play? In addition to these domestic policy concerns, the Administration’s position on electronic payments will be informed by international developments. A number of international organizations in which the Federal Reserve plays a role, such as the Bank for International Settlements and the G-10 central bank governors, have already completed important studies on aspects of electronic banking and payments. For example, a multi-national task force on the Security of Electronic Money was established by the Committee on Payment and Settlement Systems, and the Group of Computer Experts, of the G-10 central bank governors. This task force, which was chaired by Israel Sendrovic of the Federal Reserve Bank of New York, issued a report on its findings entitled “Security of Electronic Money” in August 1996. The Task Force examined primarily consumer-oriented stored-value products by surveying the leading global suppliers of both card-based and software-based stored-value systems. The report concluded that the technology security measures of these systems are being designed to achieve an adequate level of security relative to other forms of common retail payments, assuming that they are implemented appropriately.

The Asian financial crisis in 1997 taught us a number of painful lessons from volatile capital flows associated with such weak institutions. Since then, we have seen a large number of developing countries moving towards flexible exchange rate regime, adopting inflationtargeting framework, and improving the resilience of financial system. Yet, the challenges from volatile capital flows have become more intensified and we still see the implications of volatile capital flows on our economies. We are, therefore, very fortunate to have with us Mr. Rodrigo de Rato, Managing Director of the IMF, and Mr. Hervé Hannoun, Deputy General Manager of the BIS, to share their views and insight on this issue. I believe that we can greatly benefit from the IMF’s new surveillance framework, which put greater emphasis on the volatile financial market, as well as from the BIS expertise on analysis of capital flows during the morning session. I am certain that their perspectives will be useful in setting the tone for our further discussions on how to better prepare ourselves for the more intensified volatility of capital flows, which, I believe, have been rooted to our current economic environment. Ladies and Gentlemen, Following our discussions on the theme, we will have Dr. Perry Warjiyo and Mr. Richard Murray, our Executive Directors from the IMF to lead our discussions this afternoon on recent developments in global and regional economies with a view to identifying challenges ahead of us.
As a central banker, I have nothing to say about the politics of monetary union - that’s for elected politicians. But it is also an economic issue and that is my concern. So what are the economic pros and cons? The potential economic advantages and disadvantages are now reasonably well defined - though different opinions inevitably attach different weights to the respective arguments. On the plus side, the crucial and unique economic advantage of monetary union is nominal exchange rate certainty within the Eurozone - which takes over half UK exports. I’m not talking just about reasonable exchange rate stability - which might result over time from each country pursuing disciplined macroeconomic policies in parallel. I’m talking about nominal exchange rate certainty for the indefinite future. That very real economic advantage is well understood in the UK - especially by businesses that trade with, or compete with, businesses in the Eurozone. And on that ground alone many of them, who have suffered from excessive sterling strength against the euro, would see our joining as an advantage provided of course the exchange rate were initially fixed at an appropriate - and significantly lower level than at present. At the broader macroeconomic level the potential benefit of joining - as a result  BIS Review 33/20009  4  of greater transparency of costs and prices and lower transaction costs - leading to greater competition and more efficient economic resource allocation is well understood.

5  BIS Review 33/2000  Some people in the Eurozone acknowledge these concerns, but they are inclined to argue that if a country participating in the monetary union were to find itself in an unsustainable situation and given that it would have no macroeconomic way out - through exchange rate adjustment, or independent monetary policy action, or fiscal stimulus beyond the limits of the Growth and Stability pact - and given limited labour migration or fiscal redistribution at the pan-European level - then it would have an overwhelming incentive to undertake the supply-side reforms which have proved so difficult to introduce up until now. One of my ECB colleagues in fact once put it to me that - “when we have closed off every other policy option, we will finally be forced to do the things we know that we should have done all along!” I hope that this proves to be right and that it does help ease the tensions. Supply-side flexibility within Europe is crucial in my view not just to the success of the euro, but to the success of the European economy in a much broader sense - to the resolution of Europe’s chronic unemployment problem and to the contribution which a strong European economy can make to the whole of the world economy.
Clearly this put the ball very much in our own court in the sense that we needed to do all that we could to persuade successive Governments, but also financial markets and the public at large, of our integrity and objectivity on the one hand and of our technical and analytical competence on the other. Without that our input to policy would not have been worth very much, and would not have carried conviction. In fact integrity and objectivity together with professional competence are in my view the essential foundations of effective independence whatever the statutory framework. Fundamentally it is up to us! For much of the period after 1946 two contextual factors served in any event to limit the degree of independence we could realistically expect to achieve. The first was the post-war context of direct intervention and controls, including initially the physical allocation of scarce materials and consumer rationing but extended to the financial system for example through credit ceilings and directional guidance as well as exchange controls, which were only finally removed in 1979. Direct resource allocation rather than allocation through market mechanisms involves intrinsically political judgements - choices between the social value of some forms of activity against others - which cannot easily be devolved to appointed officials. It would put the officials dangerously in the political firing line - calling their impartiality and objectivity into question - if they were.

But it was carried much further by Chancellor Gordon Brown, as literally the new Labour Government’s first act of policy - just four days after coming into office in 1997 - when he announced that the Bank would henceforth be independently responsible for the operation of monetary policy. This commitment was subsequently embodied in a new Bank of England Act that came into effect in 1998. The key characteristics of the new legislation were clarity of definition of the Bank’s responsibilities, and transparency and elaborate provision for public accountability for the manner in which those responsibilities are carried out. In relation to monetary policy in particular the new Act defines our responsibility as “to maintain price stability and, subject to that, to support the economic policy of the Government including its objectives for growth and employment”. It is the Chancellor who defines what, more precisely, is to be understood by “price stability” which he has done in the form of a symmetrical 2½% target for a particular statistical measure of retail prices. So we have “instrument” rather than “goal” independence. It is sometimes suggested that this is a second best arrangement. In our national context at least I disagree with that view.