samchain/econo-pairs-v1 huggingface dataset:
My congratulations go to the four winners, as well as to the other participants for some brilliant ideas in response to the four problem statements. I am truly impressed by all the solutions, and I hope to see our banking community benefit from similar solutions in the near future. Maybe the HKMA should also explore the use of some of those solutions as well. 15. Apart from the Global Regtech Challenge, the HKMA has launched multiple initiatives to grow Regtech in Hong Kong. Some of those include the Fintech Supervisory Sandbox, the Fintech Career Accelerator Scheme, and a Regtech skills framework that we will be releasing in the coming months. 16. Industry associations also play a key role in promoting Regtech adoption in Hong Kong, because they help foster greater industry collaboration and communication. It was good to hear in our ‘Path Forward’ panel that following the publication of our Regtech white paper in November last year, there has been a higher level of engagement with Regtech-related associations in Hong Kong. We will continue to maintain close dialogue with the industry associations. Working together to achieve our Regtech 2025 vision 17. Looking ahead, we expect the demand for Regtech solutions to continue to grow. The HKMA will provide more guidance to the industry by issuing the Regtech Adoption Practice Guides, developing a Regtech skills framework, and building a Regtech knowledge hub. 18. But we will only achieve our Regtech 2025 vision if the Regtech ecosystem works together towards the same goal.

Here is a rather pungent quote from a note he sent out on Jan. 2: “…QE [quantitative easing] puts beer goggles on investors by creating a line of sight where everything looks good…” For those of you unfamiliar with the term “beer goggles”, the Urban Dictionary defines it as “the effect that alcohol … has in rendering a person who one would ordinarily regard as unattractive as … alluring”. This audience might substitute “wine” or “martini” or “margarita” for “beer” to make it more age-appropriate, but the effect is the same: Things often look better when one is under the influence of free-flowing liquidity. This is one reason why William McChesney Martin, the longest-serving Fed chairman in our institution’s 100-year history, famously said that the Fed’s job is to take away the punchbowl just as the party gets going.2 … and the eye of the needle The other eye catcher for me was a cartoon in the Jan. 6 issue of The New Yorker. Sitting in a room are two businessmen who are apparently conversant with the New Testament’s book of Matthew. One says to the other, “We need either bigger needles or smaller camels”. Today, I want to muse aloud about whether QE has indeed put beer goggles on investors and whether we, the Fed, can pass the camel of massive quantitative easing through the eye of the needle of normalizing monetary policy without creating havoc. Free and abundant money changes perspective Boockvar is right.
To get an idea how long ago that was, 1984 was the year I finished college. The labor market has also improved dramatically and is now very strong. Over the past 12 months through January, the economy added over 6-1/2 million jobs. The unemployment rate has fallen from the pandemic peak of 14.7 percent to just 4 percent today. In fact, there are many more job openings now than there are people looking for work. Another clear sign of the hot labor market is that wages rose sharply last year, especially for lower-paid jobs. Inflation I mentioned earlier that the Federal Reserve has two goals: maximum employment and price stability. The very strong labor market is great news in terms of achieving maximum employment. However, we have seen inflation rise to a level that’s far too high. Ten years ago, the FOMC set a longer-run goal of 2 percent inflation—that is, prices rising 2 percent per year on average.1 From 2012 through 2020, inflation averaged below this 2 percent goal. But the inflation rate started rising sharply in 2021. The Fed’s preferred price measure, the personal consumption expenditures (PCE) price index, rose 5-3/4 percent last year, its highest reading since the early 1980s. This sudden, sharp rise in prices reflects a unique set of circumstances that has driven supply and demand out of balance. For those of you who have studied economics, you will not be surprised that I ascribe this rise in inflation to demand outpacing supply.

We will also be examining, if not now then at some time in the future, whether it is possible to introduce a risk-based element into the setting of the premium so that well-managed banks pay less. It will also be necessary to keep the administrative structure of a DIS as lean as possible to minimise operating expenses. If the go-ahead is given, these and other details will take some time to work out and to enshrine in legislation. It is unlikely therefore that a DIS could be introduced before next year. One advantage of this is that it will give us time to evaluate the impact of interest rate deregulation before the DIS is introduced. Conclusion I hope that I have been able to give you a picture in this speech of some of the trends in the Hong Kong banking sector and how our reform measures fit into these. In the time available I have not been able to discuss all the issues that the HKMA is currently addressing, including the proposal to set up a commercial credit reference agency in Hong Kong. However, the issues that I have talked about – deregulation and deposit insurance – are probably enough for you to think about for the time being. Assuming that they go ahead as planned, they will play a major role in helping to shape the future development of banking in Hong Kong. 4  BIS Review 29/2001
Diversity may be the true mother of all invention – and the father of all risk management. That being the case, what should be the next steps in harvesting these benefits? We have all got a lot on our plates: from the uncertainties of Brexit to the complexities of geo-politics; from wrenching technological change to rising inequality; from simmering mistrust of big business, big banks and big government. We would be forgiven for putting diversity issues on the back-burner while these more pressing matters resolved themselves, would we not? While this sounds reasonable, I think it would be exactly the wrong response. This environment is precisely one in which we should be pressing the accelerator, rather than the brake, on diversity policies and practices. Why? Because an environment of acute uncertainty and ambiguity is one in which the organisational returns to diversity are likely to be greatest. What is the best safeguard against the ambiguities of geo-politics? A workforce with diversity of thought and experience who can juggle competing world views. How are the opportunities of technology best to be harnessed? With a creatively diverse workforce, masquerading as five year olds. How is trust to be rebuilt among diverse and disenchanted customers and stakeholders? By having a workforce which is their mirror-image, who can understand their needs and perspectives. And how are entrenched inequalities in income and wealth to be redressed? By first tackling inbuilt inequalities in educational attainment and social mobility. These are fine as aspirations, but how are they to be realised?

What is the next frontier for diversity and how is it to be reached? From a potentially long list, let me make four points on possible next steps. First, we have barely scratched the surface when it comes to harvesting the fruits of existing diversity initiatives, focussed on the protected characteristics of gender, ethnicity and disability. On gender, where progress has perhaps been fastest and furthest, there are still gaps to fill all the way up the executive chain, especially in financial services, with a persistent pay gap of 20-30% and low levels of representation at executive level. On ethnicity, as John Parker’s report last week made clear, we are scarcely out of the  7  For further details please see Haldane (2014) ‘Central bank psychology’. 4  All speeches are available online at www.bankofengland.co.uk/publications/Pages/speeches/default.aspx  4  starting blocks. And on disability, physical and mental, much the same could be said. Whatever else we do, we must not let up in continuing to make progress along these dimensions of diversity. Second, notwithstanding that, I do think we need to do a much better job of understanding and measuring the more subtle, cognitive and socio-economic dimensions of diversity. They are harder to identify and measure, as the information exists between our ears rather than on our faces. But that is precisely why unconscious biases may be largest and most in need of redress.
Although, it is worth acknowledging in this context that Congress did approve legislation setting up a special contingent resolution process for the government-sponsored enterprises (GSEs) in the summer of 2008. A final lesson from this phase of the crisis was the critical need for policymakers to question the validity of the assumptions that are often taken for granted in assessing the risks to financial stability. For example, most macroeconomic models do not have an explicit banking sector. Thus, in simulations of the effects of house price declines, the main channel of propagation is an indirect one through a wealth effect on consumption. As house prices continued to decline at unprecedented rates, many analysts started to reconsider the adequacy of what had previously been considered ample capital in the U.S. banking system, and thus the extent to which this capital would be a firebreak against a significantly sharper contraction. If this firebreak was insufficient or perceived to be insufficient, then these analysts correctly anticipated that a vicious adverse feedback loop might take hold: declines in economic activity would make financial institutions reluctant to lend in order to conserve capital for possible credit losses, the decline in lending would further reduce economic activity and so on. This type of nonlinearity had not been part of pre-crisis evaluation of the risks of large house price declines, but by the spring of 2008, it was becoming a central concern.

In this context, it is worth noting that the United States had led the world with its Federal Deposit Insurance Corporation (FDIC) Improvement Act in 1991 in establishing a state-ofthe-art resolution regime for depository institutions to avoid the panics and runs associated with the risk of insolvency of a financial institution, while at the same time protecting the taxpayers. However, this regime did not address how to efficiently resolve holding companies  4  In the 1930s, Congress had passed legislation giving the Federal Reserve additional flexibility in its lender-oflast-resort powers but these were removed with the passage of the small business investment act in 1958. 5  Most of this information can be found at the Board of Governors of the Federal Reserve System’s Credit and Liquidity Programs and the Balance Sheet. 4  BIS Review 81/2010  that included a depository institution, investment banks or other financial institutions that were tightly and very intricately woven into the global financial system. Perhaps because many thought that March 2008 was the height of the crisis, the overwhelming importance of this lesson coming out of the Bear Stearns episode did not translate into this gap in our regulatory framework being addressed with sufficient urgency. As I will discuss momentarily, the gap re-emerged as a main accelerant of the crisis with the collapse of Lehman Brothers in September of that same year.
Material for our assessments and forecasts comes from many sources On the whole, we use official statistics and the results of surveys from authorities such as Statistics Sweden and the National Institute of Economic Research and their counterparts in other countries. We also closely follow the assessments made by other forecasters in Sweden and abroad and regularly evaluate our own forecasting performance. We also bring back new impressions from the many international meetings we regularly attend. In addition, the Riksbank has begun to carry out its own company surveys. This involves our employees visiting companies around the country and hearing their views on the economic situation. This is a means of obtaining explanations of what we can see in the official statistics and of capturing tendencies before they appear in the statistics. The process begins with a discussion of the risks Before I go in greater detail into how we make forecasts, I would like to make some general observations. Firstly, making forecasts is a continuous process. Many of us at the Riksbank, both Executive Board members and employees in the different departments, closely monitor economic activity. The increased use of models makes it easier to some extent to update the forecasts when new information is received. But we only make a new, thorough and coherent assessment of what all the new information means for future monetary policy in connection with our monetary policy meetings, which are held six times a year.

Banking sector Under the consolidation programme, the bigger banks in the sector are permitted to benefit largely from organic growth while the mid-tier banks are expected to strengthen their financial viability and grow through consolidation. As larger banks grow, it will be difficult for smaller banks to remain competitive, and therefore, small banks are encouraged to merge with strong partners. The outcome of the consolidation in the banking sector is expected to result in a sector where at least 5 Sri Lankan banks will have assets of over Rs. 1 trillion with a stronger regional presence by 2016, while domestic banks, which hold assets less than Rs.100 billion now will have to increase their asset base above Rs.100 billion through consolidation by 2016. Further, as the Sri Lankan economy’s investment ratio is expected to be maintained at over 30 per cent of GDP, there will be an increasing demand for investments within the country. However, the 2 banks with development banking focus in Sri Lanka, namely, the National Development Bank PLC and DFCC Bank with DFCC Vardana Bank Ltd., are still not as big as the economy requires them to be to cater to the current and future needs of the economy. Therefore, these 3 banks will be merged so that the resulting entity would be large enough to comfortably raise long-term capital from domestic as well as international markets and cater to the growing demand for investments by both the private and public sectors.
The first generates an elevated perception of risk, the second an asymmetric balance of risk. Both are relevant to explaining the path of interest rates, the likely fortunes of the economy and the optimal setting of monetary policy. Dread risk In their classic account, Friedman and Schwartz (1963) believed pessimism among households and businesses played a key role in explaining the severity and persistence of the Great Depression: “The contraction instilled an exaggerated fear of continued economic instability, of the danger of stagnation, of the possibility of recurrent unemployment.” In other words, economic depression contributed to psychological depression, and vice-versa, in a feedback loop. Subsequent research has lent support to Friedman and Schwartz’s hypothesis. Psychological studies show that catastrophic events generate an exaggerated sense of fear and insecurity. This causes people to over-estimate systematically the probability of these dread events re-occurring, relative to their true probability. 3 Perceptions of risk, in other words, are exaggerated. Psychologists call this “dread risk” (Slovic (1987)). 3  2  As a corollary, people also tend systematically to under-estimate the probability of risks with a higher probability but which affect a smaller number of people, such as car crashes (Gigerenzer (2004)). BIS central bankers’ speeches  Dread risk has been shown to be associated with events which, although low probability, are high impact. Specifically, they are associated with large losses among a large number of people occurring at the same time.

4/7  In any event, the improvement in the Spanish banking system has allowed it to support the economic recovery and job creation seen in recent years through a more efficient allocation of credit to businesses and industries. The paradigm shift in bank resolution This transformation of the Spanish financial sector has occurred in parallel with a farreaching review at international level of the regulatory and supervisory frameworks for financial institutions. The aim has been to increase the resilience of the banking system and to reduce the impact of financial crises on the economy, with a wave of reforms, the last phase of which was completed in December 2017 by the Basel Committee on Banking Supervision and will be implemented progressively over the coming years. In Europe, these reforms have been accompanied by very significant institutional changes, in particular, creation of the banking union. And one of the pillars of the banking union is the Single Resolution Mechanism. As regards bank resolution, these reforms have in fact generated a paradigm shift, as a result of the high cost of the global financial crisis for the public sector in numerous advanced countries. The paradigm shift consists in moving from a bail-out to a bail-in system of bank resolution, that is to say, from rescue or recapitalisation using public funds to rescue using private funds, belonging to the bank itself, through the use of capital, hybrid instruments and, where applicable, the most subordinated debt.
It was also thought to be counterproductive, because of crowding out concerns in the presence of tight liquidity conditions in domestic financial markets and because of negative feed-back loops through higher risk premia. As a result, our fiscal policy is now locked on a consolidation path, aiming to bring the public debt below 60% of GDP within the end of this decade. This means the monetary policy remains the only countercyclical tool to stimulate economic activity. Taking everything into account, I believe fiscal consolidation, coupled to an expansionary monetary policy, delivers the correct policy mix in the country. However, given our experience so far, I would like to conclude my speech on three observations: –  First, monetary policy remains effective even in the presence of fiscal consolidation. In Albania, we have been able to steer interest rates into a downward trajectory and to stimulate credit growth in the domestic currency. However, the effectiveness of monetary policy is hampered by fiscal contraction. While the two policies moving in opposite directions would not be ideal in the best of times, it is doubly so in the presence of balance sheet adjustment in the private sector and heightened risk premia and deleveraging in the financial sector. –  Second, monetary policy can still achieve its goal of price stability in the presence of fiscal consolidation. However, this statement needs to be qualified further. On a longer term perspective, inflation remains a monetary phenomenon.

We do this by continually assessing threats to the system as a whole – “oversight of the systemic conjuncture” if you like. 2  BIS Review 36/2005  So we look beyond the risks in relation to individual institutions, to the aggregate problems that can arise: through networks and single points of failure; through dependencies and interdependencies of firms and markets. In other words to areas where, if market forces and market participants are left to their own devices, problems could threaten the stability of the system. This means that we need to have our finger on the pulse and to maintain regular contact with key firms and infrastructure providers. Market intelligence is vital in this area: it is not enough to read about issues, we need to be learning about them first hand from key players and analysing our findings from a financial stability perspective. The FSA also shares responsibilities in this area. They too will be asked for advice by HMT. Their starting point is the assessment of the strengths and weaknesses in the individual institutions and markets they supervise, and the potential consequences of problems or failures at individual institutions. An important factor for the Bank relates to London’s position as a major financial centre. Although our specific focus and interest is the systemic conjuncture as it affects the UK, possibilities of contagion in an increasingly global market mean that we have to be alert equally to developments in global capital and financial markets.
Thompson (2016), Enough Said: What’s gone wrong with the language of politics?, Bodley Head. US Congress (2015), ‘Fed Oversight Reform and Modernization Act of 2015’, H.R. 3189, 114 Cong. (2015). van der Cruijsen, C, Jansen, D-J and de Haan, J (2015) ‘How much does the public know about the ECB’s monetary policy? Evidence from a survey of Dutch households’, International Journal of Central Banking, Vol. 11, No. 5, p. 169-218. Warsh, K (2014), ‘Transparency and the Bank of England’s Monetary Policy Committee’, available at www.bankofengland.co.uk/publications/Documents/news/2014/warsh.pdf Williams, J (2014), ‘Policy rules in practice’, Journal of Economic Dynamics and Control, vol. 49(C), p. 151153. Williams, J (2015), ‘Monetary policy and the independence dilemma’, FRBSF Economic Letter, Federal Reserve Bank of San Francisco. Williams (2016a), ‘The Heath of Nations’, presentation to the National Interagency Community Reinvestment Conference 42  All speeches are available online at www.bankofengland.co.uk/speeches  42  Williams, J (2016b), ‘Rules of engagement’, FRBSF Economic Letter, Federal Reserve Bank of San Francisco. World Bank (2003, 2007, 2011), Bank Regulation and Supervision Survey. Yellen, J (2017), ‘The Economic Outlook and the Conduct of Monetary Policy’, speech available at https://www.federalreserve.gov/newsevents/speech/yellen20170119a.htm  43  All speeches are available online at www.bankofengland.co.uk/speeches  43

The establishment of the International Centre for Education in Islamic Finance thus comes from the recognition of this need to invest in human capital to advance the industry forward to greater heights. Bank Negara Malaysia has allocated an endowment fund of RM500 million for this purpose. The income from the endowment fund will be utilised to finance the operations of INCEIF. The objective of INCEIF is to produce high-calibre practitioners and professionals in Islamic finance as well as specialists and researchers in the disciplines of Islamic finance. INCEIF will leverage on the wealth of experience of the Islamic finance industry, both in Malaysia and abroad, to provide its graduates with value added insights and perspectives, in particular for their research programmes. Malaysia's experience in Islamic finance for over more than two decades will also provide a training environment, including for internships for developing Islamic finance professionals. The required skill set in Islamic finance is unique. It needs to have the right blend of knowledge of finance with the understanding of the Shariah as being central. The Shariah principles must be embedded in every operational aspect of the Islamic financial institution, including in the design of financial products and financing structures, financial contracts and their execution, liquidity and balance sheet management, risk management as well as asset and wealth management. The upholding of the Shariah principles must permeate from the highest level, including at the broad and senior management levels.