samchain/econo-pairs-v1 huggingface dataset:
The deposit market, that is to say, the market for loans without collateral, and the derivative markets were in principle fully integrated  2  BIS Review 26/2001  at the beginning of 1999. The Eurosystem's refinancing transactions have strengthened the development of cross-border transactions on the money market, while the TARGET system has enabled a balancing of liquidity within the euro zone and contributed to eliminating price differences within various segments of the money market. The stiffer competition, the increased number of counterparties for individual banks and the improved liquidity are other important structural changes that have taken place parallel to the increasing cross-border activities. On the other hand, the integration process has been much slower on the repo market and the treasury bills market. On the bond market the euro has led to an acceleration of growth. The number of outstanding bonds in private, non-financial companies have increased considerably, albeit from a low level. This increase mainly applies to the large bond loans, that were issued to finance the extensive merger and acquisition activities. However, Europe lags behind the USA, where the market for private bonds is three times as large. On this side of the Atlantic bank loans still dominate, which makes corporate borrowing more costly. Europe also lies one step behind the USA on the stock markets. However, a clear trend towards increased saving in shares can now be discerned in Europe, too. The change in the national pension systems contributes to this development.

Thirdly, most countries have implemented extensive fiscal policy stimulus measures. The OECD estimates that these measures have accounted for just over half of the reduction in general government net lending in the OECD area. In the United States, where stimulus packages have been introduced on an unprecedented scale, the OECD estimates that these active stimulus measures have accounted for as much as three-quarters of the deterioration in public-sector finances. In the euro area it is instead the automatic effects on tax revenues and cyclical expenditures that have predominated. Consequences of the deterioration Extensive historical studies of financial crises show that they are often followed by a severe weakening of public finances and prolonged periods of subdued GDP growth. 2 The deterioration in public finances that we have seen during this crisis will keep GDP growth and inflation down in many regions for some time to come, as the weak finances will enforce fiscal policy contraction and/or may lead to higher interest rates. A tighter fiscal policy is inevitable to make public finances stable in the long term. Restoring the deficit to the level that prevailed prior to the crisis, and one might ask whether this will be sufficient, is not simply a case of replacing the fiscal policy stimulus measures implemented during the crisis with corresponding tightening measures after the crisis. In addition, expenditures have to be replaced as potential GDP and thus potential tax revenue have fallen due to the crisis.
But one has to remember that there was no obvious alternative. Inflation targeting was new and untried and not many people were even aware of its existence. Moreover, it was far from obvious that it would succeed where the fixed exchange-rate policy had failed – in establishing an anchor for price setting and wage formation. We now know that it did succeed and moreover that it did so fairly quickly. If I were to choose what I think is the most important contribution of inflation targeting, and indeed its overall main merit, it would be this – that is provides a nominal anchor for the economy.2 It is quite  2  The same conclusion is drawn by Ben S. Bernanke, Thomas Laubach, Frederic S. Mishkin and Adam S. Posen (1999), Inflation Targeting – Lessons from the International Experience, Princeton University Press. 2  BIS central bankers’ speeches  clear from a Swedish point of view that inflation targeting has helped “to put the house in order” by providing such an anchor, and it is probably an important explanation as to why the Swedish economy has developed so well since the crisis in the 1990s. Has the Riksbank systematically set the repo rate too high? But, as I noted, inflation targeting has nevertheless been criticised, particularly in recent years, so let me now move on to this criticism. One criticism is that the Riksbank has an inbuilt tendency to set the repo rate too high.

2  BIS central bankers’ speeches  While foreign direct investment continues to gravitate to emerging economies, in particular to Asia, the scale of such investment activity has also moderated. Finally, the international regulatory reforms and the unilateral initiatives in a number of the major advanced economies have also had their intended and unintended consequences. The reforms, which have focused on building a stronger global regulatory framework and raising the resilience of the banking system, are still in their early stages of implementation. While it is too early to verify the concerns raised on the new prudential standards, the call has, however, been for the need to ensure that the benefits of greater systemic resilience will exceed any costs to the efficient functioning of the financial intermediation process and to the real economy. For Asia, the new standards contribute positively for regional financial integration, as they promote a more consistent regional approach to regulation. They also work to strengthen regional financial stability arrangements, through more robust frameworks for the oversight of systemically important financial institutions at the regional level. These reforms have, therefore, encouraged increased communication and closer coordination on financial stability developments between regulators in the Asian region. These financial reforms are, however, not without challenges for emerging economies. In particular, the standardised regulatory prescription goes against the grain of regulation that is proportionate to risk.
The purpose of bank supervision is to ensure that supervised firms are resilient to all of these risks.1 Banks are becoming increasingly attuned to the heightened financial risks from a changing climate. These risks can manifest in a number of ways: the impairment of collateral due to severe weather events; mark-to-market losses from the devaluation of companies with stranded assets; stress to contractual cash flows as regional shocks are realized; or the reduced provision of financial services as business strategies adapt. All of these are salient concerns for financial firms and their supervisors. Financial firms are now incorporating these risks into existing risks management frameworks. Many firms view climate change as a cross-cutting risk driver that spans familiar risk categories, broadly affecting risk management approaches. Moreover, some firms are considering governance issues, the use of scenarios analysis, disclosure options, and thinking about the strategic implications of a transition to a more sustainable economy. Understanding the impact of climate change, however, comes with significant challenges including the long time horizon, data gaps, the need for new model development, inherent complexity and fundamental uncertainty. All of this suggests that there is much work ahead of us. Taskforce on Climate-Related Financial Risks Just as banks are building awareness of climate-related risks, the supervisory community is similarly developing capacity in this area. I will now turn my attention to the specific work of the 2 The Committee Basel Committee’s Task Force on Climate-Related Financial Risks (TFCR).

In particular, I think it will require ongoing collaboration between the private and public sectors to push the industry toward greater resilience to the financial risks of climate change. Discussions like this one are a critical step in that direction. Thank you for your attention. 1 Federal Reserve Board of Governors, Supervision and Regulation Report, November 2020. 2 Stiroh, Kevin J., The Basel Committee’s Initiatives on Climate-Related Financial Risks, October 14, 2020. 3 Basel Committee, Climate-Related Financial Risks: A Survey of Current Initiatives, April 30, 2020. 4 David J. Snowden and Mary E. Boone, “A Leader’s Framework for Decision Making," Harvard Business Review,  November 2007. 2/2  BIS central bankers' speeches
The increased globalisation of Islamic finance and its greater integration with the international financial system increases the exposure of the system to contagion effect from such developments. In the dynamics of a financial crisis in the conventional financial system, this would be referred to as the second round effects. The first round effects is when developments within the financial system triggers the financial crisis which in turn impacts the real economy. The second round effects is when the resulting slower growth causes further strain to the financial sector. The experience has shown that when such crisis is not contained, the consequent deterioration in economic conditions results in a worsening of the financial crisis. For this reason, resolution has to take place quickly. For Malaysia, in the 1997-98 crisis, every effort was taken to give attention to financial sector resolution so as to prevent the spiral that could have set in as economic activity became affected by the financial crisis. In this indirect manner, Islamic finance would be affected by such financial turmoil. Slower economic growth and the reduction in the global liquidity would affect those institutions that are heavily reliant on a business model that focuses on real estate and asset finance. Islamic financial institutions would also be exposed to increased inventory risk due to the increased volatility and the reduction in asset prices.

VI.1. Unrealistic solutions  We deem the following solutions as unrealistic given their cost-benefit ratio:  8  BIS central bankers’ speeches  A.  NBR intervention to bring the CHF/RON at the level of 14 January 2015, which would involve an appreciation of the EUR/RON from around 4.4 (where it currently stands) to 3.7; such an operation would keep the desired level in place only in the short run, because the level would be unsustainable and would entail arbitrage. The associated costs would translate into substantial FX reserve losses, seriously detrimental impact on exports and larger disequilibrium on the FX market  B. Conversion of CHF-denominated loans into lei at exchange rates other than the market exchange rate applicable on the conversion date. •  Assuming credit conversion at the historical rate in the month of extending the credit, banks would incur losses (calculated as the difference between the exchange rate on 23 January 2015, i.e. 4.58, and the historical CHF/RON rate) estimated at lei 5.66 billion (around 0.85% of GDP). Four credit institutions would see their solvency ratio fall below the minimum regulated threshold. The solvency ratio across the banking sector would diminish from 17.1% to 14%. •  Credit conversion at the historical rate + 20% would generate losses worth around lei 4.5 billion for the entire banking sector, while three credit institutions would see their solvency ratio fall below the minimum regulated threshold. The solvency ratio across the banking sector would diminish from 17.1% to 14.6%.
As the title of my speech suggests, today I am going to lay out the reasons why I, along with my colleagues Jennifer Roush and Michelle Steinberg Ezer, believe that the benefits of the TIPS program exceed the costs of the program. Before saying anything more, let me emphasize that the views I express today are my own and those of my co-authors and, therefore, may not represent the views of my colleagues on the Federal Open Market Committee. Also, let me note that Jennifer and Michelle are the main authors of this paper. I have ridden along on their coattails. My main contribution was to slow down completion as I had to fit in my very modest contributions around the unfolding financial crisis! Finally, you may be wondering why this is my first speech since I have become president – an odd subject to choose, perhaps, given the ongoing financial crisis? The answer is a simple one, our paper and this conference have been in train for a long time. It is just a coincidence that the conference and my becoming president of the New York Fed have happened to arrive at about the same time. The logic of issuing inflation-protected securities is straightforward. Wouldn’t some investors pay a premium – that is, accept a lower expected return – in exchange for guaranteed, full compensation for inflation? Because the United States and a number of other countries decided that the answer was likely to be “yes,” they developed an inflation-indexed government debt market.

And I am convinced that today’s conference will play an important role in sharing developments in the frontier economies – the next wave of emerging economies which will contribute to the regional and global growth and prosperity. 17. Last but not least, I would like to express my sincere gratitude to our cohosts, the International Monetary Fund (IMF) and the Japan International Cooperation Agency (JICA), who make the conference possible. I wish you all a successful conference and look forward to your discussions. 18. Thank you. BIS central bankers’ speeches  3
The use of  BIS central bankers’ speeches  3  variable remuneration also allows for deferral and the recouping of rewards in ways which better align remuneration with the longer term interests of a bank”. The second area where incentives are important is governance of firms. For banks, Parliament has legislated to introduce the Senior Managers regime which implements an important recommendation of the Parliamentary Commission on Banking Standards, and the PRA and FCA are consulting on our proposals for implementation. For insurers, we will consult on implementing the fit and proper requirements of Solvency II, and as the Governor has made clear it is our view that we should align the regimes where that is possible. I have read with considerable interest some of the press reporting of the new regime, which has been at times at odds with the facts. The regime has been portrayed as all about proving criminality under a reverse burden of proof. That is the wrong interpretation. The key principle is a simple one: there should be a presumption of senior management responsibility. To support that principle, we will set out the meaning of the statutory requirement that senior managers will need to show that they have taken the steps that a person in their position could reasonably be expected to take to prevent breaches of our requirements. We are very clear on the presumption of responsibility, as Mark Carney has said, but I would assert that the test is no different from other areas of corporate responsibility.

In this context senior management means only the very senior executives, and in the PRA’s proposals, only non-executives that are either: the chair; chair of a major board committees; or the senior independent director. There are differences between prudential and conduct in this respect, and our consultation poses the question of how substantial those differences should be. But, is it really unreasonable to expect the most senior figures to assume responsibility? Not in my view, and in my experience not in the view of those who take on these roles. Boards should challenge and this is the role of the NEDS. The executive should view this as a positive help to improving judgements the board is called upon to make and so should provide NEDs with the material to do that, and to do so as concisely as possible. The old saying for students that it is harder to write a good short essay than a long one is relevant here. And, as supervisors we too should follow that principle. In conclusion, whilst more capital and liquidity was a necessary condition for fixing the financial system, it wasn’t sufficient. Getting the incentives and governance right matters a lot. As supervisors our job requires good judgement – not easy but it has to be done – and it also requires a keen eye for structuring incentives to deliver our objectives. Rules alone will not get us there.
The Long-term Planning Commission has made calculations that indicate that the economic driving forces for returning to work are generally low with regard to unemployment and usually even lower with regard to sick leave. These calculations show that almost four out of ten wage-earners retain 90 per cent or more of their income when they go on sick leave. Approximately one out of ten retains less than 70 per cent. The survey also shows that the driving forces for working slightly more have increased since the 1990s, but also that they are relatively low among the lower income groups.5 While a high level of compensation means increased security for the individual in the case of loss of income, if the negative effects on labour supply are large, they will also entail substantial costs to society as a whole. It is important to remember that what I have taken up here is the effects on the labour market’s supply side. But the total effect on the labour market is determined by the interaction between the supply side and the demand side. If one wishes to affect the functioning of the labour market more radically, it is probably necessary to implement structural policy measures that will influence both sides. Economic driving forces are certainly not the only method of influencing the labour supply. Nor is it useful to focus solely on the size of the compensation levels.

The number of hours worked in the economy is determined partly by how many people actually work and partly by how many hours each person works. The number of people in work is determined first and foremost by how large a percentage of the population are of working age, defined here as 20-64 years of age. For various reasons, not all of these people are available for work, so the labour supply is also affected by the percentage of people of working age that are included in the labour force. Of the people in the labour force, some are unemployed and some are employed. Finally, owing to various types of absence from work, only a certain percentage of the employed actually contribute hours worked in production. If one totals the changes in all of these components and also takes into account how much each works in a given year, one obtains the change in the number of hours worked that year. By studying the relative development of the components over time, it is possible to see how the significance of different factors has varied, and also to speculate about the long-term trend in the future labour supply. In this context there are many interesting relationships to observe. Let me point out some aspects that illustrate some of the problems the Swedish economy is currently facing and will be struggling with in future. Figure 4 shows the population growth and the change in the number of people of working age.
Positive transformations taking place around us will continue to pave the way for new growth opportunities for the industry. Collectively, we need to understand these developments and leverage on them to advance economic and social goals, and manage the attendant risks. Today, I would like to touch on three key issues, the rise of fintech and its impact on Islamic finance, the growing importance of responsible, inclusive and sustainable finance and the preconditions necessary to sustain a value-based financial system. One of the most significant transformational developments of our era is the technological revolution. More specifically, the fintech revolution was made possible by maturing social, mobile and cloud technologies. The digital revolution and widespread penetration of technology-driven applications in nearly every segment of the financial sector is already upon us. Fintech innovations are fundamentally altering the way we experience and deliver financial products and services. According to a recent McKinsey report, the number of fintech start-ups globally has now exceeded 2,000, more than twice the number less than a year ago. Such growth is expected to continue as innovators tap into the preferences of millions of technology savvy millennials who are more receptive to new ways of consuming financial services. Fintech is challenging the status quo of the financial industry. New business models will emerge. Delivery channels will challenge existing norms. Transaction costs will be reduced. Rather than looking at the fintech revolution as unwelcoming, financial institutions ought to embrace it as an opportunity.

And why, for countries where there have been larger and faster increases in household debt levels, recessions have tended to be deeper still. The Financial Policy Committee has already acted in response to the growing momentum in the housing market. As well as the general strengthening of bank capital, the FPC, in conjunction with other regulators and the Treasury, withdrew both the cheap funding and favourable capital treatment of mortgage lending introduced after the crisis to help support the housing market. And, we have asked the FCA that when lenders test whether prospective borrowers can afford, through time, the mortgages they seek they should bear in mind future Financial Policy Committee recommendation on the appropriate interest rate stress test to use in assessments of affordability. Whether and how to act further if, following the pause of the last couple of months, momentum continues to build will be the most challenging judgment the FPC will have to take in the coming months. The FPC’s response will depend on the nature of the risks to stability identified. The FPC’s powers of direction in relation to the capital banks and building societies bear most directly on mortgage lenders’ ability to weather a downturn and housing bust once it has emerged. Others, like the FPC’s powers to make comply or explain recommendations to the PRA and FCA could bear more directly on the crucial underwriting standards and affordability constraints like debt service to income, loan to income and loan to value.