samchain/econo-pairs-v1 huggingface dataset:
The past five months has been the first stressful period since those changes. Many market contacts have suggested that liquidity during the recent sell-off has been worse than it would have been because the dealers are no longer willing or able to absorb volatility by taking client positions onto their balance sheet. They argue that the dealers’ ability and willingness to make markets has been much reduced. This is a subject of ongoing consideration in the official community. But we have to bear in mind that in a rapidly moving market, regardless of the regulations, no one has ever really wanted to “catch the falling knife”. And investors have always needed to be aware that crowded trades will hit a bottleneck if everyone tries to exit at the same time. On EME assets for example, liquidity during a “risk off” period has always been limited. In my view, we can’t draw any hard conclusions on this topic yet and more evidence is needed. Forward guidance It was in an environment of increased volatility that the MPC decided at its August policy meeting to provide some explicit guidance regarding the future path of our monetary policy instruments. Since our announcement it has been suggested that this policy is overly complicated. I disagree.

Sir Andrew Large: Financial instrument accounting Speech by Sir Andrew Large, Deputy Governor of the Bank of England, to the 13th Central Banking Conference, London, 22 November 2004. *  *  *  Introduction The recent furore over IAS 39 - the international accounting standard for financial instruments - has resulted in a situation which I think all agree is unsatisfactory. We now effectively have two versions of IAS 39, one proposed by the IASB, the other by the European Commission. I probably do not need to emphasise that meaningful accounting standards and their effective implementation are highly relevant to any central bank’s responsibilities for financial stability. They help to ensure the safe and efficient functioning of the financial system. So it is essential that accounting standards have a clear economic rationale, promote comparability and secure adequate disclosure. Only in that way can investors, creditors and others judge the positions and risks being run by financial institutions and hence exert market discipline, and perverse incentives be avoided. Together these can make an important contribution to financial stability. I suggest later that, despite intensive work to improve accounting standards for financial instruments in recent years, fundamental issues with financial stability implications remain to be resolved. One crucial question is: “Who and what are accounts for?” Another more specific issue is the appropriate role of fair value data. So what I want to do this morning is to discuss these issues in turn before commenting on the way forward regarding IAS 39.
This of course can be a bit easier for countries with flexible exchange rates, which can achieve it by nominal depreciation (and thus risk rise in inflation). However, countries with fixed rates are sometimes forced to abandon their exchange rate regime, as they do not have any other way out of real overvaluation of their currencies. Another risk in the short term might be the contagion of financial crises from abroad, which would combine with fragilities and thus prompt financial and economic difficulties in these countries. The long-run challenges for transition countries are related to the simultaneous maintenance of competitiveness and nominal convergence. What is next for the new EU member states is certainly achieving EMU membership and all of them agree that the stability and opportunities of the single currency are their goal. While achieving this seemed easier a few years ago, the prospects are somewhat worsened in the light of the recent developments. The record high oil prices and the high food prices additionally augmented the inflationary pressures in these countries. The high inflation in most of the transition countries makes them breach the first of the four Maastricht criteria. What is even worse, the forecasts for the next several years for most of the countries show they will probably not meet the  10  Source: EBRD Transition report 2007: November update and NBRM calculations. Data for 2007 are estimates. 11  Source: EBRD Transition report 2007: November update. Data for 2007 are estimates. 4  BIS Review 74/2008  inflation criterion.

BIS Review 23/2000  6  In the HKMA, we certainly are putting our money where our mouth is. I have personally attracted some attention in the foreign exchange markets for remarks I have made about the management of Hong Kong’s Exchange Fund, which holds, among other assets, our foreign exchange reserves. Our target exposure to European currencies (which may not necessarily mean the euro alone) is set at 15% of the Fund and we have, over the past few months, moved from an underweight position to the neutral position of 15%. This target exposure may strike you as low. But we do hold some Hong Kong dollar assets in the form of the Hong Kong dollar equities that we have acquired in 1998 and we are obliged to hold US dollars one-for-one as backing for the monetary base under our currency board. If we exclude these, then among the remaining foreign currency assets our targeted exposure to European currencies at present is effectively a little over 20%. Superficially, this may still seem on the low side. But with our peg to the dollar we feel more comfortable having a substantial dollar reserve which covers much more than just the monetary base, even though we do not formally commit ourselves to convertibility at the fixed rate for anything more than the monetary base. In managing our foreign reserves we also tend to be averse to volatility. Thus, given our dollar focus, we have naturally been worried by the volatility of the euro’s exchange rate.
But we also have to avoid the fragmentation of the Internal Market. Not all guarantees are identical. The European Investment Bank (EIB), for example, is offering a very sound shared system of guarantees. We are now seeing national guarantee schemes and we should work towards making these converge to ensure that credit continues to flow, that banks’ balance sheets remain healthy, and that we don’t see fragmentation along national lines. Although different countries will always be given different ratings by the ratings agencies. 1/4  BIS central bankers' speeches  The ECB has been very active since the beginning of this crisis. Do you think that what’s been done so far is enough? The ECB has intervened on three levels. First, we have provided liquidity to the banks, under very good conditions, and we have launched a package of temporary collateral easing measures. In addition, in our role as the single banking supervisor, we have given banks the flexibility to make use of the capital buffers they had built up, so that they can continue financing and providing credit to firms and households. And finally, we have expanded our monetary policy operations. In 2020, asset purchases will reach € trillion (mainly of public debt) to avoid fragmentation of the euro area. Spain will receive between € billion and € billion of this money. In the current crisis, this is the main financial shield for Spain and the other euro area countries.

This is, so to speak, one specificity of our approach in this country. We believe in strong and efficient supervision. We don’t think that bigger cushions are a substitute for competent supervisors. We are strong supporters, in our jargon, of the “Pillar 2” approach, whereby the supervisor is in charge, at any single moment, to check the adequacy of capital buffers with the effective level of risk in the system. Needless to say, we also strongly support the development of macro prudential tools allowing authorities to detect and prevent systemic risks. Given that all economic cycles are not simultaneous, to be fully efficient, those tools should be set and implemented at each jurisdiction’s level and not a regional one, in order to take into account national cycles and the level of risks of individual economies. Overall, I can assure you we are very keen to monitor in real time the economic impact of financial regulation. For the first time, economic and systemic assessments have been made of the new projected Basel 3 framework. We will continue to update them permanently. A good example of our constant vigilance relates to projected liquidity ratios, where the systemic impact and implications for monetary policies are being thoroughly reviewed at this time. *** To conclude, let me emphasize that policy makers are fully aware of possible macro consequences of regulatory reforms and will be eager to limit the economic costs.
Cryptocurrencies like Bitcoin are not backed by any institution or company, pulverising responsibility for those types of currencies. No one is responsible for ensuring stability and confidence. Speculation, manipulation and security breaches have led to substantial swings in value. Cryptocurrencies are therefore unsuitable as monetary units. Time will tell whether the underlying technology proves to be useful. The payment system is one of the most important infrastructures in a modern economy. Stability and security standards must be high. A failure in the payment system would affect important societal functions and large parts of the economy. The changes underway will give us a more efficient payment system in the form of better and less costly payment services. At the same time, rapidly evolving technologies pose new challenges. Regulation and supervision must therefore be adapted to changes in the payment operator landscape and technological developments. Norges Bank has a primary responsibility for Norway’s monetary system. Under the Norges Bank Act, Norges Bank has the sole right to issue cash (Chart 10). The Bank also issues central bank money in the form of funds held by banks in their accounts with Norges Bank. These are the funds banks use for interbank settlements. The core of the payment system is Norges Bank’s settlement system. In 2018, an average of NOK 248 billion passed through this settlement system – every single day. Chart 10 The Norwegian payment system. Central bank money  Desposit money  Cash  Digital central bank currency?

The story is a clear example of how artificial intelligence can produce bad outcomes for all concerned. It also offers a case study for exploring the root causes that lead to bad outcomes - and so in turn offers insights for boards on how to govern the introduction of artificial intelligence. The art of managing technology is an increasingly important strategic issue facing boards, financial services companies included. And since it is a mantra amongst banking regulators that governance failings are the root cause of almost all prudential failures, this is also a topic of increased concern to prudential regulators. In my comments, I will provide a quick overview of the scale of introduction of artificial intelligence in UK financial services; then make three observations about it, and suggest three principles for governance derived from them. Artificial Intelligence Technological innovation is inevitable and welcome. As the Governor noted during this year’s UK Fintech Week,1 we are shifting towards a new economy, which is powered by big data, advanced analytics, smartphone technology and more distributed peer-to-peer connections. This new economy will go hand in hand with fundamental changes to the structure and nature of the financial system supporting it. Indeed some of the largest international investment banks are now declaring that they are technology companies with banking licences. Some of the most important recent developments in technology are associated with the introduction of automation – by which I mean the replacement of humans by machines for conducting repetitive tasks.
PLATFORM FOR DISCUSSION Speaking note  SPEAKER:  Ana Mitreska, Vice Governor  DATE:  20-22 November, 2019  LOCATION:  Prague, Czech Republic  NATIONAL BANK OF THE REPUBLIC OF NORTH MACEDONIA info@nbrm.mk www.nbrm.mk   GLOBAL IMBALANCES, EXTERNAL SECTOR VULNERABILITY AND CAPITAL FLOWS – SELECTED COUNTRIES OVERVIEW This Speaking note was prepared for the 42nd Meeting of the Governor’s Club of Central Asia, Black Sea and Balkan Countries, 2019  Contributors to the Note: Dijana Janevska Stefanova, Vesna Stojchevska and Danica Unevska Andonova1 Department: Monetary Policy and Research  1 Special thanks to Aneta Krstevska, Chief Economist, and Biljana Davidovska Stojanova, Monetary Policy and Research  Department, for the useful comments. 1  Global imbalances, external sector vulnerability and capital flows – selected countries overview  Overview of the global external imbalances The discussion on the issue of global imbalances and the overall profile of the external sector comes at a very proper moment, given the rollback of the globalisation and rising trade tensions. The recent changes might affect the external imbalances globally, if not directly, then indirectly by affecting macroeconomic fundamentals of the economies. Tariffs can define productivity, output, and employment over the longer term, and thus affect the potential to grow. In the last three decades, the decline of tariffs gave ground to global value chains, enhanced competition, and improved productivity across countries.

Before we do a stocktaking of the current external imbalances, it would be useful to provide for a longer-term view of their evolution. The occurrence of the global crisis had a strong impact on narrowing the global current account surpluses and deficits. In the aftermath of the global financial crisis, global current account imbalances (the absolute sum of surpluses and deficits) declined sharply from about 6 percent of global GDP in 2007 to about 3½ percent in 2013. The narrowing of aggregate current account imbalances was led by the United States on the deficit side and by China, Japan, and oil exporters on the surplus side. Meanwhile, the current account balance of the euro area moved from a close balance in 2007 to a surplus of about 2½ percent of GDP in 2013, driven mainly by sharp external adjustments in most euro area debtor economies, while surpluses in Germany and the Netherlands remained large. In key emerging market and developing economies, current account deficits expanded, supported by easy global financing conditions enabled by quantitative easing policies in advanced economies. Yet, after 2013 this process stalled, and we do see immense concentration of imbalances in advanced economies. These economies on aggregate have seen some increase in their current account deficits, led primarily by the United States, and a rise in current account surpluses, mainly in the euro area and Japan.
18 With an appropriate policy response, what should we expect to see in bank balance sheets, in broad money growth, following a credit-supply shock? It might be that the path for broad  15  See Kashyap, A. K., R. Rajan and J. C Stein (2002), “Banks as liquidity providers: an explanation for the coexistence of lending and deposit-taking”, The Journal of Finance, Vol. 57, No. 1, pp 33–73. 16  Acharya, V. V., H. S. Shin and T. Yorulmazer (2007), “Fire sales, foreign entry and bank liquidity”, C.E.P.R Discussion Paper, No. 6309. 17  See Goodhart, C. A. E. (2007), “Whatever Became of the Monetary Aggregates?”, Peston Lecture at Queen Mary College, London; King M. A. (2007), “The MPC ten years on”, lecture to the Society of Business Economists, Bank of England Quarterly Bulletin, Summer 2007, pp 272-85; and Tucker P. M. W. (2007), “Central banking and political economy: the example of the UK’s Monetary Policy Committee” speech at the Inflation Targeting, Central Bank Independence and Transparency Conference, Cambridge, Bank of England Quarterly Bulletin, Autumn 2007, pp445-52. 18  There is an echo here of a channel stressed by Brunner & Melter, but with the impulse coming from the central bank’s short-term interest rate rather than the quantity of reserves, and the transmission into risk premia and so other asset prices coming via the expected path of the policy rate and broad money rather than via narrow money. BIS Review 149/2007  7  money should be unaltered in the medium term.

If reintermediation is significant, banks will be taking back on to their balance sheets conduit and investment vehicle paper or just holding onto loans for longer than usual before they can be sold onto the capital markets. 19  Perhaps nothing illustrates this as cleanly as the advent of credit derivatives. Derivatives of any kind unbundle funding (and so liquidity risk) from the underlying risk to which an agent is seeking exposure via a particular contract. So a credit derivative unbundles credit risk from funding. This further complicates interpretation of the bank lending data (M4L). Imagine that, due to their customer networks and screening capability, banks originate all credit, but that they use credit-default swaps to shed a great portion of the credit risk via CDS to non-bank financial institutions. In the limit, this would be a world in which M4L correctly measured (bank) lending and M4 was one useful measure of “liquidity”. But it would also be a world in which shocks to credit conditions from capital and risk appetite worked largely through non-bank lenders, and in which shocks to liquidity worked largely through depositor confidence in the banking system. In the real world, this story underlines the need to look at total credit, and to analyse the monetary data with finesse. 20  See Bank of England Inflation Report, November 2007, Section 1 on “Money and Asset Prices”, pages 16-17.
It would have sent rather strange signals if the Riksbank had in this situation declared that the repo rate would not be raised, but would remain at 0.25 per cent for several years to come. Apparently, despite the fact that Sweden recovered from the crisis fairly quickly, the repo rate should have been held at a crisis level. But even today, with the increases made since the crisis, there are some signs that households’ repo-rate expectations are below what can be considered a reasonable long-run level for mortgage rates (see Figure 6). The situation had certainly been much worse if the Riksbank had held on to a repo rate of 0.25 per cent for more than four years. I believe that it would have been very difficult to manage the expectations this would have created among households and on the credit and housing markets. In my world, such a policy is simply not realistic and must be disregarded as a meaningful comparison. It is therefore rather unfortunate, and somewhat surprising, that calculations of the number of “lost jobs” based on this assumption have had a relatively large impact on the debate.3 As far as I know, in the countries in similar situation to ours with regard to household debt and the housing market, such as Norway and Canada, there has been no corresponding debate about whether or not the policy rate should have remained at the level to which it was cut during the crisis.

BIS Review 33/2001  3
If Hong Kong is to become a “Brand” for financial services, it must be able to offer “quality” financial products and services. This means that we should have ample supply of financial products and services that: (a)  can effectively meet the needs of customers, be they individuals or corporates;  (b)  are competitively priced; and  (c)  are efficiently distributed through a network of intermediaries that treat customers fairly. 5. So where does Hong Kong stand now in terms of “quality”? If we benchmark Hong Kong against any of our regional peers, I would say Hong Kong stands out as one of the best in this regard. It is hard to pinpoint any key areas in which Hong Kong would have a material gap in offering a suitable and competitive product to meet the financial needs of the customers. 6. That said, it is wrong for us to feel complacent. The fact that we are good and competitive now does not mean we will remain so in the future. It is like “逆水行舟， 不進則退”, “rowing a boat upstream, you either move forward or you drift backward”, but this principle is becoming even more relevant and important lately because of three recent trends: (a)  the world’s financial landscape is changing very fast, especially in the context of the China’s growth story and the internationalisation of RMB and the Belt and Road Strategy. BIS central bankers’ speeches  1  7.

What I would like to say is that, in order to further facilitate Fintech development in Hong Kong, the HKMA has decided to launch two new initiatives today. Fintech Innovation Hub 14. First, I am pleased to announce that the HKMA will collaborate with the Applied Science and Technology Research Institute (ASTRI) to set up the “Fintech Innovation Hub”. It will be equipped with all necessary system and support resources to enable players of the banking and payment industry to conduct proof of concept trials of products and services through the use of new technologies, and do it safely – as this controlled environment is separated from their internal systems. Also, the Fintech Innovation Hub allows regulators to provide early inputs to the trial works before the actual implementation. While some of the largest banks have built their own laboratories, this new Fintech Innovation Hub will cater for the big and small institutions alike such that the industry as a whole would be able to adopt new technologies more speedily and in a more collaborative manner. 15. Among its potential uses, this Fintech Innovation Hub, as a neutral testing ground, will be ideal for two types of activities. First, industry players can test new Fintech solutions which involve the collaboration of multiple parties and are intended to be commonly adopted in the industry. A good example is biometric authentication.