samchain/econo-pairs-v1 huggingface dataset:
Clearly in this case the bank staff had little, if any, regard for the financial circumstances and the lack of investment experience of the customer; nor did the bank staff adequately explain the risks and penalty of early termination. This is a blatant breach of the customer’s trust. The HKMA cannot condone this kind of practice and will take necessary supervisory and disciplinary actions to protect the interests of bank customers. In this particular case, the bank agreed to cancel the policy and refunded the full amount of the first year premium to the customer and the bank staff concerned has been suspended by the HKMA from selling investment products for a period of three years. What do we expect bank consumers to do to protect their own interests? Justice upheld, sounds a happy ending. But there is always the other side of the equation. There is a commonly held view that the responsibility for consumer protection rests with banks, the regulators and the Government. I don’t think this is a helpful view if we want to promote consumer protection. True that banks owe their customers the duty to look after their interests and to treat them fairly. True that the Government should provide the legal framework and set the policies for protecting consumers. Equally true that regulators will use their powers to enforce the consumer/investor protection requirements. But an important piece is missing from the jigsaw.

Another way of thinking about it is that, at an aggregate level, our purchases reduce the scale of assets that the private sector needs to finance by borrowing from the banks. This is not just a UK thing. That being so, we should not be too surprised that there has been a sharp fall in the utilisation of central banks’ liquidity facilities during 2009. The size of central bank balance sheets (Chart 12) remains much the same as about a year ago, just as QE was getting underway; but the composition of our asset portfolios has changed. The bottom line is that we are still providing an enormous amount of liquidity to the banking system as a whole, but with revived wholesale money markets distributing that assistance to where it is needed. So our monetary instruments and financial stability instruments shade into one another – unsurprisingly. And that means that when planning our so-called exit strategies from monetary easing, central bankers will need to weigh the effects on bank funding conditions, which in turn affect credit conditions and demand in the economy. Five issues for the policy framework for maintaining macro economic stability I want to look beyond the immediate conjuncture. I don’t plan to say anything today about financial sector reform, but will concentrate on the overall framework for preserving macroeconomic stability. That there are lessons from the crisis is obvious. Don’t be seduced by the appearance of stability The so-called Great Stability was, with hindsight, in some respects a surface phenomenon.
Finally, I will briefly touch upon a number of recent policy proposals. On the basis of these ideas, and drawing on the history of central banking, I will then offer some personal reflections on what a simple but effective policy response might look like. In closing, I will briefly comment on the Government of Singapore Investment Corporation (GIC), one of the most prominent SWFs in the world. As you know, UBS last week turned to the GIC for a substantial capital injection in connection with losses in the sub-prime credit markets. BIS Review 150/2007  1  2. The rise in sovereign wealth funds  I noted at the outset that the rapid growth in SWFs is largely a by-product of global macroeconomic imbalances. Slide 3 shows that the current account deficit of the US has increased every year since 1992. The deficit surpassed USD 800 billion, or 6 percent of GDP, in 2006. Such a large current account deficit is unprecedented in US history. 1 This rise in the US current account deficit has been mirrored almost one to one in the combined rise of surpluses in South East Asian countries and oil exporting countries. I will refer to these two country groupings as the surplus regions. By definition, the surplus regions are investing less than they are saving, and hence, both regions are accumulating net financial claims on foreigners. But the underlying reasons for the current account surpluses in the two regions are distinct.

Nonetheless, it is difficult to argue with the basic direction of these forecasts. The fundamental dynamic behind the recent rise of SWFs will not disappear over night. As I mentioned, estimated excess reserves are very large. 12 In all likelihood, at least some of these excess reserves will be transferred to SWFs in coming years. Moreover, even if global imbalances were to unwind quickly, for instance in association with a sharp and protracted recession in the United States, the power of compound return will continue to be a substantial source of growth for SWFs that already exist. Fourth, SWFs have so far been initiated predominantly in the Middle East and in Asia. Slide 8 shows that these two regions account for 77 percent of the assets of the largest SWFs. Nonetheless, we should not lose sight of the fact that 16 percent of the assets of the 14 largest SWFs are held in developed countries. 13 Fifth, SWFs will increasingly attempt to diversify their holdings. They will do so gradually, given the prevailing size and liquidity constraints. Like central banks, SWFs have traditionally been investors in highly rated fixed income assets. Going forward, SWFs will increasingly look for investments in equity markets, both public and private ones. Several of these investments have recently produced headlines in the global financial press. Slide 9 depicts some of them. 3.
The monetary policy we have needed to conduct to attain the inflation target and to provide sufficient support for the recovery has entailed historically-low interest rates and support to lending through fixed-rate loans to the banks. In Sweden house prices have risen substantially over several years. During the crisis, for instance, while house prices fell during a period of time, data from Statistics Sweden indicate that they have been rising again since the end of 2009 (Figure 3). Figure 3 House prices Annual percentage change  Source: Statistics Sweden  4  BIS Review 25/2010  There are many indications that the rise in house prices in Sweden as a whole is due to fundamental factors, such as the fact that demand has increased more than the number of new housing. But there may be risks. The Riksbank, like many other central banks, must achieve the balance I just described – evaluate possible risks of an imbalance in the housing market in relation to what we believe will happen in the economy as a whole. We have done this when making decisions on interest rates right now and in our forecast of future monetary policy. In a way, this is nothing new. We always follow developments in the housing market very closely. At the same time, we see a need to develop the analysis of house prices and credit growth – not least with regard to the question of how the links between the housing market and the Riksbank’s tasks and objectives look.

We will probably have to live with some of the repercussions of the crisis for some time to come, but we expect the financial markets to normalise. But it is necessary to achieve a balanced economic growth even beyond the monetary policy forecasting horizon. If we are to do so we must attend to any deficiencies regarding, for instance, regulation, supervision and the allocation of responsibility, deficiencies which have come to light rather clearly in recent years. It is important to establish a system that covers all aspects; a system that prevents unnecessary risks and imbalances from building up. Experiences of the financial crisis in the 1990s have in many ways contributed to changes that have given our economy better resilience during periods such as the past few years. Merely the fact that we entered this crisis with sound public finances, a surplus on our current account and a lower, more stable inflation rate has given us room to manoeuvre that we previously lacked and which many other countries lack now. Some changes have also been made with regard to financial supervision and analysis of the bank sector. The banks themselves have also learnt from the previous crisis and have acted, at least in Sweden, in a much more responsible manner with regard to credit granting, for instance. But to some extent I think our memories were too short in the 1990s, when the acute crisis was behind us and crisis management was no longer such a pressing issue.
This way of organizing regulation will be an even bigger challenge when new regulation designed to hinder the build-up of systemic risk is introduced, since a host country and the home countries of banks operating in the host country may be in different stages of the business cycle. Output gap in the Nordic countries  This is illustrated in this chart showing output gaps in the Nordic countries. Today most economies are closely integrated with other economies, both through trade and through  8  BIS Review 113/2010  financial markets. Still there may be significant differences both in the timing (and amplitude) of peaks and troughs in the business cycle and in the functioning of financial markets. Asymmetries between countries mean that the appropriate regulatory parameters to dampen systemic risk will not necessarily be the same for all countries at the same time. To be effective, regulatory parameters, for instance those calibrated to ensure the buildup of countercyclical buffers, need to encompass all banks operating in the same jurisdiction, as put forward in the July 2010 BIS proposal. Finally, I will say a few words on crisis resolution. Resolution actions taken in one country in response to a crisis can have effects on banks in other countries that do not choose to introduce the same resolution actions. For instance, issuance of government guarantees in one country can weaken banks in neighboring countries without such guarantees (since government guarantees provide an incentive to move deposits to banks in these countries).

The upsurge of current and capital expenses over this period, financed by the expansion of the state deficit and the growth of public borrowing, affected considerably the economic activity, however in a short-term. Through the twice cuts of the key interest rate and the ongoing injection of liquidity, the monetary policy of the Bank of Albania manifested also a simulating character over 2009 and during the early months of 2010. The monetary conditions at home, under the presence of the exchange rate depreciation during this period, have progressively provided ground to the aggregate demand. However, monetary conditions have been and continue to remain in line with the medium term and long term stability of prices at home, serving also to the well functioning of financial markets and to the maintenance of financial systems stability. BIS Review 50/2010  1  In terms of the respond to the easing monetary policy and to the decrease of risk primes in economy, monetary indicators show improvement signs during the two first months of 2010. A decreasing trend of currency outside banks is materialized and a correspondent growth of deposits in the system. The resulted improvement of liquidity indicators of banking system and the reduction of the demand for funds of public sector are followed by the decrease of Government securities yields. The exchange rate also appears relatively stabilized, reflecting a slight correction of foreign trade indicators and of the country current deficit during the last two quarters.
At over 400 USD/ounce, the gold price was at a seven-year high at the beginning of December. Because of the weak dollar, the gold price increase in francs was more modest. However, its peak of approximately 17,000 CHF/kg was still the highest for several years. The main reason for this rise was persistently modest hedging activity by gold producers. 2  BIS Review 58/2003  Equity markets International equity markets exhibited a positive course overall, steadily making up lost ground after their mid-March low (see graph 3). As the equity environment began to present a perceptibly brighter picture, turnover also picked up. This, together with the more confident investor sentiment, reduced volatility. The ambitious profit expectations now reflected in share prices suggest that market players are optimistic about the economic situation and the corporate environment. To sum up, the financial markets are currently influenced by a complex interplay of factors: a globally synchronised economic recovery is taking place against a backdrop of external imbalances. An autonomous economic recovery outside of the US - underpinned, not least of all, by supply-side reforms - would help substantially to redress these imbalances. Key features of the SNB’s future investment and risk control process The SNB’s investment activity is subordinated to monetary policy and is determined by the criteria of liquidity, risk and returns. The new National Bank Law will extend the SNB’s investment opportunities. The current National Bank Law (NBL) limits eligible investments to gold and fixed-interest securities, and eligible borrowers to states, international organisations and banks.

Let me briefly outline our concept regarding the new investment process:  BIS Review 58/2003  3  •  The Bank Council approves the principles laid down for risk policy and the investment process. •  The Governing Board decides each year on the investment strategy based on the aforementioned criteria of liquidity, risk and returns. •  The organisational unit Asset Management, which is part of Department III, is responsible for the market-oriented implementation of this investment strategy. An investment committee chaired by the head of Asset Management makes the strategic investment decisions and sets the targets for each portfolio manager. •  A well-tested risk control process ensures that risk taking at the different levels is duly supervised. Responsibilities and competencies are clearly assigned at all levels of the investment process. Performance at the different levels is assessed through the consistent use of benchmarks and the corresponding measurement techniques. The process described above is applied to the management not only of the international reserves but also of the proceeds from the sale of gold no longer needed for monetary policy purposes. How the gold reserves deemed “free” at the time are finally used will be a political decision. Managing these assets is not part of the SNB’s statutory mandate. Thanks to the new NBL and the SNB’s internal know-how, however, the Bank is well qualified to perform this task. 4  BIS Review 58/2003
The feeling one gets is that the starting point for the analysis is often: “Assume that the world had looked different than it does now – that is, the inflation targets had been higher”. Then, one observes, developments would probably have been more favourable than they actually were. But in this case the challenge mainly concerns how the transition from one world to the other will be attained. Setting an inflation target for the first time is one thing, but changing a target that has become established is quite different. If one is to change the level of an inflation target, I believe the easiest and most efficient way would be to do so in a relatively normal situation – when inflation is not too far from the original target and the economy is not in a crisis or otherwise in a difficult situation. If, for example, one raises the inflation target in a situation where inflation is much higher than the target, there is a risk that this will be perceived as giving in and taking the easy way out and that one will be expected to continue doing this the next time there is a problem. There is a corresponding risk if one lowers the target when inflation is undershooting the target by a long way, even if there are of course limits as to how low one can set the target. Sooner or later expectations would probably adjust to the new target, but the adjustment period could prove costly.

Should, for instance, financial stability be included as a new objective for monetary policy, together with price stability and macroeconomic stability? 5 Or can the objectives, as before, apply to price stability and macroeconomic stability but with consideration to financial stability included in the prospects for these two quantities in the slightly longer run? 6 Theoretically, there may thus be some differences between different ways of including consideration of financial stability in inflation-targeting. In practice, I do not think the differences are so large – regardless of the underlying reason, the results are in practice that monetary policy is slightly adjusted to counteract potential imbalances on the financial side of the economy. 7 It may be worth pointing this out: a monetary policy that “leans against the wind” in this way does not actually scrap the inflation target and swap it for a target for asset prices or indebtedness. The inflation target is still the foundation. What this means is that in some situations monetary policy can be adapted so that it takes slightly longer for inflation to get back to the target that it would have done otherwise if one had not taken financial stability into account. A necessary condition for being able to give such consideration is that confidence in the inflation target is firmly rooted and does not risk deteriorating because it takes somewhat longer for inflation to attain the target. A monetary policy that leans against the wind thus assumes that inflation expectations are firmly anchored around the target.
1  2  See “Background note on public financial assistance in the restructuring of the Spanish banking system (2009–2013)” published on 12 June 2014 and available at www.bde.es  BIS central bankers’ speeches  Essentially, three different types of public financial assistance have been made available. The first and most significant type have been the contributions of funds in the form of subscription of capital instruments, whether ordinary shares or contingently convertible bonds. These amounted to a total of € million, of which € million have already been recouped, and encompassed actions both by the FROB and the Deposit Guarantee Fund (DGF) which, despite being financed by contributions from the banking industry, is included for National Accounts purposes under the public sector. We might also add here the acquisition by the DGF of shares valued at € million of Nova Caixa Galicia Banco Catalunya Banc held by minority investors in these banks following the burden-sharing exercises undertaken, and the subscription by the FROB of capital and subordinated debt instruments of Sareb for a total of € million. The second type of public financial aid refers to the so-called Asset Protection Schemes (APSs) or other guarantees offered by the DGF or the FROB under resolution or restructuring processes. APSs consist of the assumption by the guarantor of a majority portion of the risk associated with specific portfolios of the beneficiary bank.

But the severity of the crisis increased dramatically following the failure of Lehman Brothers in the autumn of 2008. Confidence in the very essence of banking – as well as in individual financial institutions – was shaken to its core and the most severe banking crisis for almost a century was triggered. As we now know, this led to a deep and highly synchronised global recession. Output in virtually every corner of the world fell sharply. Global trade flows contracted by a staggering 15% in the two quarters following the failure of Lehmans. Over the same period, output at home is estimated to have fallen by 4 1/4% – the largest fall in UK GDP over a two-quarter period since quarterly records began. The speed and severity of the downturn cannot be explained solely by the tightening in credit conditions. The impact of the banking crisis was greatly amplified by the accompanying collapse in business and household confidence. Firms’ concerns about their ability to access the working capital needed to run their businesses was compounded by the bleak and uncertain prospects for demand. In response, production was slashed and business spending was severely curtailed. Stock levels were run down at an unprecedented pace, as companies met demand from existing inventories and economised on working capital. Faced with growing spare capacity there was little incentive for businesses to invest in new plant and machinery, and capital expenditure contracted by almost 20% in the first six months of 2009 alone.
William C Dudley: Benefits and challenges from globalization Remarks by Mr William C Dudley, President and Chief Executive Officer of the Federal Reserve Bank of New York, at the Bombay Stock Exchange, Mumbai, India, 11 May 2017. * * * Thanks, Ashish, and thanks to the U.S.-India Business Council, the Confederation of Indian Industry, and the Bombay Stock Exchange for organizing this event. As always, what I have to say reflects my views and not necessarily those of the Federal Open Market Committee or the Federal Reserve System.1 It is a pleasure to have the opportunity today to talk about the issue of globalization. Although the debate about the benefits and challenges of globalization is not new, it has recently come into sharper focus. This debate is important to all of us, and I think it is particularly relevant to India given its growing role in the global economy. Globalization means different things to different people. In my remarks today, I will focus on the role of globalization as a force for international economic integration and economic development. I will highlight three themes: First, the important role that trade plays in promoting higher standards of living globally. Second, how changes in trade can create challenges for industries that become less competitive. We have not adequately considered and remedied the very large costs this can impose on certain communities and households. Third, the answer to those challenges is not greater protectionism.

The SNB therefore welcomes the revision of the ‘too big to fail’ regulations as a crucial step in the overall process of resolving the ‘too big to fail’ issue in Switzerland. It is very important for our country that a lasting solution be found. The SNB will continue to play an active role in this endeavour and in the implementation of the approved measures. In the process of designing and calibrating the revised capital requirements, care was taken to retain the complementarity and interplay between risk-weighted requirements and leverage ratio requirements. Risk-weighted requirements should guide economic decision-making, while the leverage ratio should serve as a backstop. The leverage ratio requirement thereby takes into account the fact that the models used for risk-weighting are not perfect and do not always capture all risks accurately. To ensure this complementarity is also retained in the future, the Federal Council has already factored in the expected reforms by the Basel Committee on Banking Supervision with regard to risk-weighted capital requirements. Overall, these reforms are likely to result in an increase in risk-weighted assets and, hence, to a balance between the leverage ratio and risk-weighted requirements in Switzerland. The SNB will actively support the finalisation of the Basel Committee’s reforms as planned and the publication of these reforms by the end of 2016. In addition to these measures on capital requirements, the SNB still considers it necessary for the big banks to increase their transparency with regard to their risk-weighted assets.