samchain/econo-pairs-v1 huggingface dataset:
That is why a healthy banking sector remains a prerequisite for SMEs to be able to access loans. Over the medium to long term, however, the desire is not to have to rely on this sector alone, but to foster alternative methods of financing, for example by appropriately regulating the securitisation market. Second, spreading risk means that financial markets within a monetary union should actually function independently of national borders. Economic shocks can then be better absorbed because countries receive a certain amount of protection from the private sector. If, for example, part of a country’s assets are held by foreign investors, these investors will also bear a share of the consequences of an economic shock. Such shocks thus have a reduced impact on the domestic economy. A country can also reduce its vulnerability to shocks by holding a geographically diversified portfolio itself. Ultimately, integrated financial markets help to cushion national shocks because companies and consumers can also fall back on foreign capital markets and banks in times of crisis. Such risk-sharing with the private sector works very well In the United States. According to scientific estimates, around two-thirds of an economic shock are smoothed by capital and credit markets. 3 The European financial markets are much less effective at absorbing such shocks and their ability to do so deteriorated even further during the course of the crisis. 4  3  Sørensen, B. E. and Yosha, O.,”Channels of interstate risk sharing: United States 1963–1990”, Quarterly Journal of Economics, 111(4), 1996.

Summing up In conclusion, as we reflect on potential changes to the U.S. regulatory regime, we should not lose sight of the horrific damage caused by the financial crisis, including the worst recession of our lifetimes and millions of people losing their jobs and homes. We had a woefully inadequate regulatory regime in place, and while it is much better now, there is still work to do. We should finish the job as quickly as possible, and we should do no harm as we adjust our regulatory regime to make it more efficient. Thank you for your kind attention. I would be happy to take a few questions. 1 Figures are based on the CoreLogic home price index (including distressed sales) and the PCE price index as 6/7  BIS central bankers' speeches  the deflator. 2 For more background, see Fleming and Sarkar, The Failure Resolution of Lehman Brothers, December 2014. 3 For more background, see Chen, Cipriani, La Spada, Mulder and Shah, Money Market Funds and the New SEC  Regulation, March 20, 2017, and Cipriani, La Spada and Mulder, Investors’ Appetite for Money-Like Assets: The Money Market Fund Industry after the 2014 Regulatory Reform, June 2017. 4 For more detail, see Tri-party Repo Infrastructure Reform. 5 For more background, see Over-the-Counter Derivatives. 6 To paraphrase Andrew Carnegie and Mark Twain. 7 For related remarks, see William C. Dudley, Principles for Financial Regulatory Reform, April 7, 2017. 7/7  BIS central bankers' speeches
A second generation of crypto tokens is emerging, to address some of the current challenges related to network congestion, transaction time, energy costs, money laundering risks, and importantly, price stability. Some of the best minds in the field are applying their creative energies to make crypto tokens mainstream. Not all developers and programmers in the crypto world are anti-establishment anarchists. Many may have been 10 years ago, but a growing number are married and have kids now! They know the value of stability. The litmus test will be public trust and acceptance. Basically, the history of privately issued money has not been an inspiring one. Will people put their faith in Money that is not backed by a trusted public institution like a central bank dedicated to protecting its value? Perhaps – if an algorithm can mimic the reaction function of a central bank and preserve the value of the crypto token better than central banks can do with respect to fiat currencies. We have to wait and see. The good, bad, and ugly of crypto tokens Whether crypto tokens become Money or not, they are here and they pose a variety of issues – the good, the bad, and the ugly. Let me start with the good. As many have pointed out, far more significant than the crypto token is the underlying blockchain technology that these tokens help to power. The blockchain has two distinct characteristics that hold promise. First, it is a distributed ledger.

As Hong Kong has to import almost all the raw materials and equipment, devaluation of the currency does not mean that the export prices would necessarily be lowered by the same extent of the devaluation. As you know better than I do, although price is always important, competitiveness does not depend on price alone, whether or not you are talking about manufactured goods or services. Competitiveness depends on a host of factors, including better cost control, innovation, entrepreneurship, marketing and constant striving to achieve productivity gains. In this context, I cannot help tell an old, but true, story involving a conversation with an American friend 6 or 7 years ago, when the $ was depreciating and the DM and the Yen surging to new highs. He was complaining that many countries, including the Southeast Asian economies, were manipulating their exchange rates to gain trade competitiveness. As a result, American goods were having a hard time selling overseas because they were too expensive. I told him that, while it may or may not be true that some countries were deliberately keeping their exchange rates low, the apparent difficulty experienced by US manufacturers to penetrate the Asian markets was not caused by pricing alone. For example, how could the Americans expect to sell their refrigerators to Hong Kong households if most of the refrigerators they tried to sell were almost as big as the kitchen of an average flat here in Hong Kong?
Instruments that bail in creditors before that point is reached, such as contingent convertible bonds, therefore hold some attraction. That is particularly important for institutions deemed too large or too systemically important to fail. In addition, structural reforms can improve the robustness of the financial system. These issues are currently the object of discussion within the Financial Stability Board and the Basel Committee and firm proposals, together with a transition timetable, are due shortly. While this territory is beyond the scope of this paper, it is worth noting that effective measures to improve the robustness of the financial system, by reducing the likelihood and severity of future crises, also reduce the need for monetary policy to LATW. On the other hand, there is also a potential role for macro-prudential policy to cool credit/asset-price booms that appear to be getting out of hand. Most discussion of such instruments has so far revolved around the introduction of a pro-cyclical capital buffer. Banks would be required to build up extra capital/reserves during a credit/asset-price boom, which 18  BIS Review 111/2010  can then be run down in the event of a bust. This should reduce the incentive for banks to leverage up in a boom, as well as making the financial system more robust in a bust. Other instruments could, however, be deployed to this end. For instance, credit/asset-price booms are usually characterised by an excessive shift into riskier forms of lending.

Finally, and crucially, in the aftermath of the financial crisis, we are working with our colleagues in Washington, D.C., and at other agencies to help put the nation’s financial system on a firmer footing. Yet, much remains to be done and we are determined to keep at it. I recognize fully that there can be no return to pre-crisis business as usual – whether on the part of the financial sector or on the part of regulators like ourselves. All in all, there is a lot to keep my colleagues busy. 2  BIS central bankers’ speeches  National economic conditions Now, let me update you on national economic conditions. We stand here today several years after the worst financial crisis in modern times. The origins of the crisis are complex, but it had its roots in the bursting of a credit bubble that had grown to great size during the middle part of the last decade. Prior to the onset of the crisis, a combination of rapid financial innovation and imbalanced global economic integration resulted in a mispricing of risk worldwide. This was particularly extreme in certain markets such as U.S. housing and housing finance. This mispricing of risk led to a misallocation of resources and an excessive build-up of debt in many parts of the global economy. Many – though not all – U.S. households responded to the easy availability of credit and rising home prices by taking on more debt.
There’s uncertainty about future average tax rates on investment income, for example, or the future pace of average labor productivity gains. This is aggregate uncertainty. There is also uncertainty that widens the distribution of asset returns across firms or the distribution of income prospects across households, while leaving aggregate average asset returns and aggregate average productivity prospects unchanged. This is cross-sectional uncertainty. Finally, there’s the uncertainty that you feel when you think that you understand how the world works and then discover that you don’t because something happens that you thought unlikely to happen.3 In the extreme, these are “black swan” events: the “oh spit” moments we experience when we realize that we have fundamentally and disastrously miscalculated. Black swans induce paradigm shifts: The world – or, at least, our thinking about the world – is never the same again. The Great Depression was one such event. The housing-market collapse that began in 2006 and then spilled over to financial markets is another. If the U.S. government defaults on its debt later this month, we’ll have a third example. The unthinkable will have become real, and the “full faith and credit” of the United States will be a mirage rather than accepted fact. There are myriad other events that, on a much smaller scale, lead people to question their understanding of the rules.

Simultaneously, the Fed tried – and I emphasize tried because the message seems to have been garbled in the minds of some intended recipients – to influence expectations of its own behavior once asset purchases have run their course. These “asset-purchase” and “forward-guidance” policies are relatively unfamiliar, and their impact is uncertain. 6  See “Assessing the Costs and Consequences of the 2007–09 Financial Crisis and Its Aftermath,” by David Luttrell, Tyler Atkinson and Harvey Rosenblum, Federal Reserve Bank of Dallas Economic Letter, vol. 8, no. 7, 2013, www.dallasfed.org/research/eclett/2013/el1307.cfm. 4  BIS central bankers’ speeches  One implication is that aggregate fiscal shocks – and, hence, also aggregate fiscal uncertainties – are likely to have outsize effects in current circumstances. Contractionary fiscal policy that would ordinarily drive down interest rates, providing offsetting stimulus to private expenditure, will have a larger-than-typical economic impact because this “crowding in” is absent once interest rates are confined to the zero lower bound. Expansionary fiscal policy, similarly, will fail to “crowd out” private expenditure if interest rates hold steady. Second, because the zero bound complicates the conduct of monetary policy and shortcircuits fiscal crowding out, it introduces a “kink,” or discontinuity, in the economy’s behavior. The existence of a kink means that uncertainty matters even if ordinarily it would not: “Certainty equivalence” no longer applies. When real growth and/or inflation prospects are weak – so that the economy is operating near the zero bound – downside risks to growth and inflation loom larger than they ordinarily would.
For one thing, credit creation by the banks is continuing to be slow-moving. For another, the growth of the money stocks is considerably influenced by portfolio shifts, which are likely to be reversed once economic activity accelerates and interest rates begin to rise. We shall, however, continue to keep a careful eye on this development. As already stated, there are still certain risks that the economic development will not be sustained. The upswing in Switzerland should not be jeopardised by a premature changeover to a more restrictive monetary policy. We shall therefore continue our expansionary monetary policy and in this way further bolster the economic recovery. We are convinced that we shall have sufficient time to keep inflation within the bounds of price stability by tightening monetary policy at a later point in time. Should a possible marked appreciation of the Swiss franc vis-à-vis the euro threaten to cause an undesirable tightening of monetary conditions, we would again take decisive action. 2  BIS Review 58/2003  Inflation Forecast December 2003 with Libor at 0.25%  2003  2004  2005  2006  Annual average inflation in %  0.6  0.4  1.0  2.3  Inflation forecast of December 2003  New National Bank Law in the making On 3 October, the two Federal Chambers passed the new National Bank Law. We are very happy with the course of the parliamentary debate: only minor amendments were made to the draft of the Federal Council. The deadline for a referendum is 22 January 2004.

At this stage, the relevant question for the new EU member states (NMS) is thus not whether but when to join the euro area. Entry is subordinated to the so called Maastricht criteria whose economic rationale is very strong. These criteria encompass: limited inflation differential vis-à-vis the best performing EU member; stability of the nominal exchange rate with the euro; sound fiscal accounts; and low long term interest rate spread vis-à-vis the best performing EU member states in terms of price stability. They must be satisfied simultaneously for the country to be able to join the EMU. The economic rationale is clear: membership of a monetary union entails the absence of monetary policy as a domestic adjustment tool. Diverging inflation rates become quickly unsustainable both because they create strong real exchange rates movements and within the area and different real interest rates at the national level. In this context more inflation-prone countries would have too low real interest rates leading eventually to credit booms, domestic demand overheating, and loss in competitiveness and current account deficits. Furthermore, in the absence of an independent monetary policy at the national level, fiscal policy becomes the main adjustment tool. In this context, fiscal criteria were designed in order to assess the ability of the government to conduct sound fiscal policies. Is the euro a model of monetary cooperation for other regions in the world? What is happening in Europe is triggering a lot of interest in other parts of the world.
This would indicate that at 4/18  least some of the correction of the external adjustment is of a structural nature, and associated with the aforementioned cumulative gains in competitiveness and with the increased geographical diversification of exports and of the number of firms selling their products regularly to the rest of the world. Also worthy of mention is the notable deleveraging by the non-financial private sector, at a very advanced stage in the case both of non-financial corporations and of households. In the case of non-financial corporations, for example, the debt-to-GDP ratio, after falling more than 40 percentage points (pp) from its peak, stands below the average for euro area firms. Significantly, too, there has been intense recapitalisation and restructuring in the banking sector. Yet as I shall explain, the sector continues to face a very complex environment demanding high adaptability. Under the projected baseline scenario for growth of the Spanish economy, however, the Banco de España expects a gradual slowdown in the rate of change of GDP to figures more closely in line with its potential growth. On our estimates, that would be around 1.5%. This gradual easing in growth reflects the progressive exhaustion of some of the abovementioned factors, such as the expansionary demand policies and, in particular, monetary policy. This scenario of gradual deceleration is, moreover, part of a complex and uncertain global context. Here there are doubts about the intensity and the pace of growth in the global economy, in particular the euro area, which is Spain’s main export market.

Abdul Rasheed Ghaffour: Islamic finance and the Fiqh of crisis management Keynote address by Mr Abdul Rasheed Ghaffour, Deputy Governor of the Central Bank of Malaysia (Bank Negara Malaysia), at the 16th International Shariah Scholars Forum (ISSF) "Islamic Finance and the Fiqh of Crisis Management", 6 October 2021. * * * Assalamualaikum w.b.t and a very good afternoon to all distinguished guests and fellow participants. It is a pleasure and honour for me, to be part of what I believe will be another stimulating and thought-provoking dialogue. I would like to record the Bank’s appreciation to ISRA for hosting this annual platform, and also more broadly, for its continued dedication in advancing the frontiers of applied Shariah knowledge in Islamic finance towards greater heights and prominence. The chosen theme “Islamic finance and the fiqh of crisis management” is very apt and timely. With the persisting rage of the Covid-19 pandemic, our economic and financial backdrop is gripped with unprecedented challenges that emerged within a very short period of time – priced with great health, economic and social costs. The forecasted statistics are rather staggering, sparing no countries from economic fallout and social regress. With as many as 150 million people globally estimated to be pushed into extreme poverty by 20211, exacerbated with the fact that global unemployment is expected to hit more than 200 million people by 20222, the impact from the crisis has disproportionately affected the most vulnerable.
Proceedings of the National Academy of Sciences, 109(45), 18338-18343. Arjani, N., & Paulin, G. (2013). Lessons from the financial crisis: bank performance and regulatory reform. Bank of Canada Discussion Paper, No. 2013-4. Avery, C., & Zemsky, P. (1998). Multidimensional uncertainty and herd behavior in financial markets. American Economic Review, 724748. Bahaj, S., Bridges, J., Malherbe, F., & O'Neill, C. (2016). What determines how banks respond to changes in capital requirements? Bank of England Staff Working Paper, No. 593. Bailey, M., Cao, R., Kuchler, T. and Stroebel, J., (forthcoming). Social networks and housing markets. Journal of Political Economy. Banerjee, R. N., & Mio, H. (2017). The impact of liquidity regulation on banks. Journal of Financial Intermediation. Bank of England (2009). The role of macroprudential policy. A Discussion Paper. November 2009. Bank of England (2011). Instruments of macroprudential policy. A Discussion Paper. December 2011. Bank of England (2013). Monetary policy trade-offs and forward guidance. August 2013. Bank of England (2014). Stress testing the UK banking system: 2014 results. December 2014. Bank of England (2015a). The Financial Policy Committee’s powers over leverage ratio tools. Policy Statement. July 2015. 54  All speeches are available online at www.bankofengland.co.uk/speeches  54  Bank of England (2015b). One Bank Research Agenda. Discussion Paper. Bank of England (2015c). Supplement to the December 2015 Financial Stability Report: The framework of capital requirements for UK banks. Bank of England (2016a). The Financial Policy Committee’s approach to setting the countercyclical capital buffer: A policy statement. April. Bank of England (2016b). Financial Stability Report.

In the world of finance, some of the questions being asked today are: What makes a bank a bank? Will digital currency ever replace central-bank issued money? Or more likely, will central banks issue their own versions of digital currency and in the process, disintermediate banks? Are banks selling financial products, or are they offering a lifestyle, opportunity and the freedom to pursue a new and different path in life? What business are banks really in? When everyone stopped using film in cameras, one wonders if Kodak realised that it was actually in the business of capturing memories. Or when smartphones burst into the mobile handset market, did Nokia realise that their business was not selling mobile handsets, but connecting people with the world around them? Three years ago, McKinsey predicted that technological advancements will redefine the landscape of finance, and then went on to argue that incumbents had – at most – a brief window of five years to adapt or risk becoming obsolete. You may or may not agree with this, but I think it would be hard to deny that a shake-up of the industry is already present. To some extent, the finance industry has been responding. Total IT spending is estimated at over $ billion every year across the regions of North America, Europe, Asia Pacific and Latin America. In 2016, a single global bank spent $ billion, or 16% of its expenses on technology.
This authority can be triggered only in special circumstances, and requires the action of a number of regulatory and fiscal authorities. There is an understandable reluctance for the government to be directly involved in resolving a large firm. It creates the perception that the largest firms get special advantages. This is why many would prefer to eliminate Title II and rely exclusively on a bankruptcy process.3 But, if we were to rely on ordinary bankruptcy rather than Title II for the resolution of a systemically important financial firm, we would need to ensure that the bankruptcy regime would work in a way that does not destabilize the financial system. First, such a regime would need to enable a systemically important firm to initiate a resolution strategy over a weekend while markets are closed so that the firm’s subsidiaries could continue to operate. Otherwise, the remaining franchise value of the troubled firm would quickly evaporate and we would experience significant contagion across the financial system. Second, there would need to be a credible liquidity backstop for the restructured firm in place by Sunday evening when Asian markets open. Many of the troubled firm’s counterparties would undoubtedly initially run because the cost of doing so would be very small. They would be especially likely to do so if there were no credible liquidity backstop.

Whether such innovations have led to more efficient markets for end-users to invest and to manage their risks are still subject to some debate. Regulators worldwide also have been keeping abreast with innovative developments to understand newer forms of risks and market linkages, as well as to embrace the opportunities that these may bring. I will highlight a few examples that will be relevant to the world of exchanges. 43. I think we can expect innovations in distributed ledger technology that will be applied to the “plumbing” of financial markets, areas which we hitherto tend to take for granted. A distributed system should in theory improve resilience as it theoretically removes the risk of a single point of failure. If the clearing and settlement of equity trades can be reduced from the existing standard of 2–3 days to as little as 10 minutes, this will further reduce settlement risk. Some have said that the near instant settlement of transactions can transform the financial system and free up billions of dollars’ worth of collateral that is locked up during the trade settlement period. 44. Technology can also lead to “commoditisation” of certain financial intermediation functions. Just 15 years ago, the cost of brokerage for retail investors was as much as 1%. But now our retail investors are able to access global markets at significantly lower brokerage costs. There will be no let up on cost pressure.