samchain/econo-pairs-v1 huggingface dataset:
And so I see a number of challenges which underline the need for further work: To the extent that climate change makes the distribution of future shocks nastier, that could imply higher capital requirements, all else equal. So a key judgement will be: are current capital levels sufficiently high to guard against unexpected shocks during the transition? Even if capital levels are appropriate in aggregate, that does not mean that the capital is held in the right places. As we have seen, some of these risks are highly concentrated in particular  Page 8  sectors. A second key judgement will therefore be: does the framework of capital requirements capture climate risk at a sufficiently granular level? We also need to ensure firms have the right incentives to continue to improve their capabilities, and meet our expectations. The CBES results show that while progress has been made, there is still much to do. From the point of view of capital, this suggests a third key judgement: are we satisfied that firms are building the capabilities they need – and if not, do we need to introduce more incentives? Most fundamentally, the CBES results are a snapshot – based on current data and modelling capabilities, and focused on a specific set of scenarios and risks. I have highlighted the significant uncertainty as well as the gaps that underlie these results.

Under both the LA and EA scenarios, climate change has broadly been brought under control by the end of the 30 year period. By contrast, with no additional action the impacts will persist well beyond the 30 years of our scenario – incurring substantial economic costs not captured in these estimates. [11] Even sticking within the 30 year bounds of the scenario – and focusing on financial sector impacts – the NAA scenario is pretty grim. Projected impairment rates for banks are up 50% compared with normal levels. And whereas the ‘transition’ scenarios offer clear opportunities for banks to increase their profits by investing the transition, the ‘no action’ scenario offered no such opportunities. Instead the world gets poorer and more uncertain for all sectors, particularly those directly exposed to physical risks. The ‘no action’ scenario is particularly unpleasant for life and general insurers – even sticking to the 30 year window, their losses in this scenario were worse than in the transition. For instance UK and international general insurers, respectively, projected a rise in average annualised losses of around 50% and 70% by the end of the NAA scenario. It’s worth emphasising that these costs would be mostly passed on to consumers through higher premiums. Ultimately, in a ‘no action’ scenario, we would see a reduction in access to lending and insurance for so-called ‘climate vulnerable’ sectors and households. To give an example of what this means, homes at risk of flooding would likely become prohibitively expensive to insure or borrow against.
Better, sometimes, to try to address a bubble at its source. This could be unpopular, but such is the job of taking away the punchbowl. We will explain our decisions. I cannot emphasise enough that the FPC will not indulge in attempts to micromanage the banking system or the allocation of credit. Nor will we be excessively activist, trying to fine-tune credit policy. This is about stability, which is an absolute precondition for steady improvements in economic activity and employment. The goal is to make the financial system resilient, to contain destructive “busts”, and to do so without impairing the contribution that the financial sector makes to the economy’s medium-term growth. Can the FPC help right now? The benefits of the new regime for stability will take time to come through. That might leave you asking what the FPC could do to help right now. Indeed, with credit conditions so tight, it has been asked whether the FPC should be easing regulatory constraints on banks. The aim would be to encourage them to loosen lending conditions, helping recovery. And, it is suggested, that would be consistent with the FPC’s remit because it could reduce threats to stability from the risk of borrowers defaulting. At its September 2011 meeting, the FPC concluded that such a step would in fact be counterproductive – endangering stability and jeopardising recovery. Given the precarious starting position of UK banks when the crisis broke, their capital adequacy is still being rebuilt. And banks are still operating in an extraordinarily risky international environment.

As I have said before, easily the Committee’s biggest judgment in recent years has been that inflation will gradually fall back to the 2% target – initially as the effects of higher VAT, energy  4  BIS central bankers’ speeches  and import prices diminish; and then as slack in the economy bears down on wages and prices. Though it has fallen significantly over the past six months, from over 5% to 3.5% on yesterday’s reading, it remains uncomfortably above target. The MPC will guide inflation back to target in the medium term, but in the near term there is considerable uncertainty about the path that it will follow. In its February forecasts on the outlook for growth and inflation, the MPC saw a gradual pickup in activity as the headwinds from weakness in the world economy and tight credit conditions receded and as the squeeze on household incomes is ameliorated through lower inflation. Big picture, that view on the growth outlook still looks broadly on track, but it is not always going to seem like that over the next few weeks and months as the ONS data for the first half of the year are published. Two temporary factors look likely to muddy the waters, leaving the headline ONS figures for GDP growth well short of what has been suggested by surveys. First, data for construction output over the turn of the year were extremely weak.
Among state banks in the US during the 19th and early 20th centuries, double liability is believed to have helped constrain risk-taking. 17 This practice was ended at the time of the Great Depression in the US. Given the likely need to rebuild bank equity in the future, now may not be the time to return to unlimited liability. Fortunately, there are two alternative approaches to adapting capital structure which alter the balance of risk-taking incentives, without jeopardising the flow of risk capital. Both involve operating not on equity, but on debt. And both involve making debt, like equity, a more loss-absorbing instrument in stress events. First, contingent capital is a means of automatically converting debt instruments into equity in the event of a capital top-up being needed. The capital structure of banks  16  Caprio and Honohan (2008). 17  Grossman (2001). 8  BIS Review 139/2009  thereby becomes more malleable. There has been recent interest in contingent capital instruments as a means of providing banks with an extra degree of freedom in stress situations. 18 The benefits in principle seem clear. The difficulties in practice include whether there is likely to be sufficient investor demand for such hybrid instruments. Second, wholesale debt instruments at present rank equally with retail deposits in the UK in the event of a wind-up. In the US, depositor preference has operated nationally since 1993, with retail deposits ranking ahead of wholesale debt.

Chart 10: Bank and hedge fund concentration  35  T op 5 as % of sample assets  T op 5 assets % of top 1000  30  18 16  Global banks (RHS)  14 25 12 20  10 8  15 Hedge funds (LHS)  6  10 4 5  2 2009  2008  2007  2006  2005  2004  2003  2002  2001  2000  1999  0 1998  0  Source: TASS and The Banker  18  BIS Review 139/2009  Figure 1: Payoff profile for bank equity  β=1  Return on Bank Equity  Return on Market Portfolio  Socialised losses  Figure 2: Payoff profiles for bank equity  β=2 Return on Bank Equity β=1  Return on Market Portfolio  Leverage-induced social losses  BIS Review 139/2009  19  Figure 3: Payoff profile for bank equity  Return on Bank Equity  β=1  Return on Market Portfolio  Risky-bet induced social losses  20  BIS Review 139/2009
Our expectation is that after this forum, we shall see the emergence of an interactive and symbiotic alliance between International and Zambia financial institutions whose goal will be to provide financial services that will uplift the well-being of the Zambian populace at large. This sounds like a difficult task to achieve but it is my conviction that it is better to begin a step towards this direction rather than waiting for it happen in future. On a lighter note, Ladies and Gentlemen, let me remind you that the Soccer World Cup to be hosted by South Africa in 2010, has attracted increased demand in the construction and tourism sectors in the whole Southern African Region. Zambia needs to take advantage of this and invest heavily in the tourism industry to benefit from the event; particularly that it has a vast number of national parks and the Victoria Falls, one of the seven natural wonders of the world. Obviously this can only be done if there is long term partnerships between local financial institutions and International financial institutions like the ones invited here today. Mr. Chairman, Ladies and Gentlemen, I thank you for your attention. BIS Review 150/2007  3

Such a process is undeniably messier, less predictable and possibly harder to explain in a consistent way. But it is also precisely these very characteristics that make it much more relevant in the world that we live in today. 3/5  BIS central bankers' speeches  At the Bank, our work on proportionate regulation and risk culture aims to support this evolution. For example, the innovation sandbox allows financial institutions greater regulatory room to test innovations within a controlled environment and learn from emerging experience. We are also examining options to better tailor the regulatory framework to the size and complexity of financial institutions. And we are directing greater supervisory focus on an institution’s prevailing risk culture to determine the degree of supervisory intensity that we apply to individual institutions. We expect these developments to pave the way for more constructive dialogue with institutions to achieve regulatory frameworks that will deliver a sensible balance and greater synergies between risk and innovation. Building resilience The third important shift that I want to mention concerns a stronger focus of innovative risk management approaches on building resilience, in addition to simply averting or reducing risks. In the area of network security, organisations are increasingly adopting an “assume breach” paradigm where they operate on the assumption that a risk event has already occurred. In the financial world, reverse stress testing is being incorporated into risk management approaches to identify the scenarios that would break an institution.
When you look at the level of savings as a proportion of household revenue in the various countries, you see to what extent some of them are already largely taking into account the expectation that tomorrow you’ll have to face up to additional taxation and additional financing needs for public funds. FT: In the US, what is really striking about Europeans is that some of them understand that this crisis is so exceptional that in a way you may have to put aside the rules. These are exceptional circumstances. But on the other hand there are other Europeans who just feel that we’ve used so much effort and political will to put together and agree on those rules that whatever we do, we mustn’t abandon them. Now, where do you come down on these two sides of the equation? Trichet: Incidentally, we had an exceptional relationship with the other side of the Atlantic in a large number of areas, including the supply of dollar liquidity. We have had a lot of “premiers” in terms of our own decisions, and “premiers” in terms of the close cooperation and very confident cooperation with other central banks. This is something which is important. But I’m cautious. I take the Stability and Growth Pact as it is, with its provision for exceptional circumstances. But it would be a mistake not to take into account fully the situation of the various economies.

A critical front in this battle is the leveraging of technology and data. Banks need to use available data to improve their predictive analysis, not just for operational efficiency and planning, but also for insights into customer behavior and preferences. What is particularly surprising to me is that banks, though custodians of vast quantities of customer and transactions data, are not utilizing it effectively. Banks will need to change the way they segment customers, not by their income levels or types of accounts, but potentially by their life cycle, growth potential, and behavior patterns. Data analysis can provide a bank with actionable insights into multiple factors that impact its business, allowing it to improve its strategic and operational decision-making. Moreover, banks will need to overhaul their operations, accelerate end-to-end digitization, modernize their technology infrastructure, and transition towards digital channels. McKinsey estimates that banks worldwide could save more than $ billion a year in direct costs by shifting traditional customers to digital platforms, reducing the service cost by 80 to 90%. By winning the battle for efficiency, banks will not only be able to better engage with customers and achieve higher satisfaction rates, but also curtail operational cost. Central Bank of Kuwait - Public ‫ عام‬- ‫بنك الكويت المركزي‬  - 12 -  iv. Battle for Resilience Winning the battles for customer loyalty, value and efficiency will help banks to grow and remain relevant. But that growth should not compromise banks’ soundness or sustainability. This bring us to the fourth battle: the battle for resilience.
This implies an expanded programme generally for young families, young specialists, as well as rural mortgage — these are the preferential programmes that may be implemented on an ongoing basis. Of course, we will be discussing all these issues with the Government and the banking community and we also encourage you to express your opinion. For many banks, mortgage lending is a key component of their business models. Now, I would like to speak on regulation. While the focus is mostly put on the regulatory easing, 3/7  BIS central bankers' speeches  including temporary relaxations to be curtailed, the decisions we made in 2020 also covered systemic regulatory changes. These systemic regulatory changes have also largely helped banks to release capital. First and foremost, I am talking of the new approaches implemented that have enabled us to reduce the load on capital for low-risk loans, that is, for investment-grade borrowers when new standardised approaches are in place, mortgage loans with sufficiently large down payments, consumer loans to borrowers with low payment-to-income ratios, as well as in high-priority areas, such as lending to small and medium-sized businesses and project finance. According to our estimate, the overall capital released owing to these decisions last year amounted to one trillion rubles, which is actually equivalent to a potential lending expansion by ten trillion rubles. These systemic measures will not be terminated and will remain effective in the future as well.

Singapore’s strong ecosystem of buy-side and sell-side institutions, alongside professional services providers, makes us an excellent gateway to channel international capital to Asian borrowers. Today’s conference gives you a firsthand experience of being part of this ecosystem. 16. MAS is strengthening Singapore’s value proposition as Asia’s fixed income hub for bond issuers, and we would be glad for the opportunity to explore how we can serve your needs. 17. On this note, I wish you an enjoyable discussion ahead and many fruitful interactions. Thank you. 1 Standard & Poor’s 2 IMF WEO, April 2017, estimates for Emerging and Developing Asia (excluding Japan). 3 Advanced Economies are expected to grow at an average of 1.8% over 2017–2022. 4 The ASEAN-5 economies in the IMF’s forecast refers to Indonesian, Malaysia, Thailand, Vietnam and the  Philippines. 5 HSBC Research, 2016. 6 SEB Research, 2017. 4/4  BIS central bankers' speeches
Depending on its design, such a rule book would either be permanently outdated and incomplete, because legislators cannot keep up with the rapid pace of innovation within the financial sector with meticulous regulation, or would have to regulate so rigidly that it would impose excessive restrictions on the functioning of the financial system. As is often the case, the most sensible option is in the middle. We need regulation based on principles which adapts to changes in banking and we need a supervisory authority that is capable taking action. Allow me to elaborate. •  Good regulations must be adaptable. They must be just as applicable to different business models as they are to different sizes of institution – they must fit large and small institutions alike. Good regulations must adapt to changing circumstances without legislators having continually to improve on them. Accordingly, the rules must provide room for discretion in individual cases. •  Good regulations must, however, also ensure a minimum level of planning and legal certainty for banks; that is the only way in which banks operate properly and provide their financial services over the long term. This holds particularly true of Europe, where banks play a greater role in financing the real economy than the capital markets.

Without losing sight of the interest this seminar has in the challenge the new technologies pose, I would like to focus today on another major challenge that is not exclusive to the banking industry but applicable to everybody: financial education. Allow me first to set out, non-exhaustively, some of the results drawn from the Survey of Financial Competences presented by the Banco de España and the CNMV last month. I shall then refer to how important it is to continue dedicating efforts to financial education, especially in the current context of financial innovation. The Survey of Financial Competences The Survey of Financial Competences, which is included in the National Statistics Plan, adapts for Spain a questionnaire devised by the International Network for Financial Education, coordinated by the OECD. The aim is to measure, in an internationally comparable way, the financial competences of the population aged 18 to 79. The Survey measures these competences from different perspectives, and obtains information on: (i) financial literacy; and (ii) knowledge, holding, acquisition and use of financial products. To measure financial literacy, the Survey poses questions on three basic financial concepts: i) inflation; ii) compound interest rates; and iii) risk diversification.
It will always be difficult to know when and to what extent monetary policy should respond to a sharp rise in asset prices and a strong increase in credit growth. Our knowledge of the driving forces is incomplete. Our history is short and our experience with deregulated loan and housing markets is limited. It is difficult to determine to what extent the rise in house prices and growth in household debt can be accounted for by structural and long-lasting adaptation, by “normal” cyclical effects and by a short-term trend extension and speculative behaviour that may amplify the cyclical fluctuations when the bubbles burst. We have leaned towards the notion that debt and asset price developments may be a potential source of subsequent instability, but it is neither our ambition nor our conviction that monetary policy can control developments in these variables. Combined with the favourable supply-side developments in the economy, this has prompted us to extend the horizon for reaching the inflation target. In our communications, we have also clearly articulated that the interest rate has been unusually low and  BIS Review 49/2006  3  must gradually be increased to a more normal level. Since last autumn, this has been expressed in Norges Bank’s interest rate projections for the period ahead. From using technical assumptions or others’ assessments, we have now taken ownership of the interest rate path in our projections. This is also a means of seeking to influence household and business expectations.

Underlying inflation, like the output gap and the neutral interest rate, is an unobservable variable. An ideal indicator of underlying inflation should show the same average rise as the rise in the CPI over time. It should be less volatile than the CPI and should be indicative of future developments in inflation. BIS Review 49/2006  5  The consumer price index adjusted for taxes and excluding energy products, the CPI-ATE, has been widely used as an indicator of underlying inflation. However, the CPI-ATE not only excludes temporary effects of tax changes and fluctuations in energy prices, but also trend changes in these variables. This indicator is therefore not a perfect measure of underlying inflation. In the last 10 years, the CPIATE has underestimated underlying inflation because energy prices have increased more than other consumer prices and the level of excise duties has increased somewhat. In the past ten years, the difference has been roughly 0.3-0.4 percentage point on average per year. Traditionally, Norway has been a net exporter of energy, but at the end of the 1990s the situation reversed. The price of energy is largely determined by supply and demand in the Nordic energy market and to some degree by the energy balance in non-Nordic countries. Energy trading is important for Norway. It reduces the vulnerability to precipitation levels and inflows. However, the majority of Norway’s energy trading partners use coal, oil, gas and nuclear energy. Production costs for thermal power are higher than for hydropower, which is produced in Norway.