samchain/econo-pairs-v1 huggingface dataset:
The GFC has also taught us that even the largest banks in the world are not immune to failure in risk control and management and, when they failed, there would be devastating effects on systemic stability and on the society at large. 4. Fellow INEDs, while you may have come from a rather diverse background, I believe most of you know each other quite well already. This is because all of you have worked for decades in your respective fields, crossing the paths of a wide spectrum of industries, and have achieved proud accomplishments in different shapes and forms. It is your unique experience and expertise, your reputation and your willingness to serve the banking sector that have brought you together as INEDs today at this Conference. 5. As INEDs, you play a crucial and irreplaceable role in the governance of the banks in Hong Kong, serving not only the shareholders but also the public at large, given the special and important role of banks in the society. I think you will agree with me that in the interest of good governance, a board of directors has to provide the needed steer, guidance and checks and balance to the bank. Clearly this can only be achieved if the INEDs can function effectively and efficiently. Without functioning INEDs, the board is just another gathering of the senior bank management. We may as well abolish the board of directors as it would serve no real or useful purposes. 6.

Two weeks ago, the HKMA issued a circular to banks providing guidance on the importance of sound governance and good corporate culture and what they should do to promote them. I won’t go into the details now as the main themes of these new guidance circulars will be covered in the Conference later today. 8. Today is going to be a long day for you because the Conference won’t end until 5:45 pm. However, I sincerely hope that by the end of the Conference there will be some takeaways that you will find helpful in your capacity as INEDs of banks. 9. Fellow INEDs, I have talked long enough and now is the time for me to introduce to you our keynote speaker for this Conference. We are honoured and highly privileged to have Mr Andrew Bailey, Chief Executive Officer of the UK Financial Conduct Authority, to fly all the way from London to join us today. Andrew needs no introduction. Before he joined the FCA last year, he was the Deputy Governor in the Bank of England and Chief Executive Officer of the Prudential Regulation Authority from April 2013 until June last year. So Andrew is truly exceptional in the sense that he has been in charge of both the prudential and conduct sides of banking supervision, and is very well-respected internationally. He is therefore uniquely well placed to share with us his experience and insights. Mr Bailey, please. 2/2  BIS central bankers' speeches
At the same time, the SNB has been active in the foreign exchange market in order to react to increased demand for Swiss francs and prevent a renewed appreciation. This suggests that only a relatively modest portion of the newly acquired currency was invested in Swiss franc  5  Here, we are dealing with the inverse of the effect described in the previous footnote. Seite 5/7  securities. 6 The question therefore arises: in what form were the additional Swiss franc positions built up and held? Swiss franc positions increasingly built up through derivatives Forward foreign exchange contracts have become more and more important in recent years. In principle, investors have two options if they wish to build up Swiss franc positions and thereby reduce their foreign currency risk: either they can sell existing foreign currency assets and acquire assets in Swiss francs instead, or they can continue holding their existing foreign currency assets but hedge the associated currency risk through forward foreign exchange transactions (derivatives). Although both strategies are deployed in practice, the development of customer deposits suggests greater use of hedging transactions. This observation appears to be borne out by the rise in the share of hedged foreign currency assets held by Swiss pension funds. If the SNB increases liquidity in the banking system by purchasing foreign currency against new Swiss francs, this can lead to a rise in customer deposits at commercial banks. From mid2011 to mid-2013, investors increased their Swiss franc positions by forming Swiss franc deposits.

This mix of exaggerated confidence and low real interest rates encouraged investors into riskier assets and banks into riskier lending, epitomised by the US sub-prime housing market. That was compounded by a lack of incentive for care in extending loans, if they were then packaged up and sold on to others. In August 2007, the economic weather turned distinctly autumnal. Falling US house prices and rising sub-prime defaults led to nervousness about the value of assets backed by those mortgages. Moreover, losses associated with sub-prime loans began appearing in places noone had anticipated, revealing how opaque many financial instruments were. The markets for these assets closed and their prices plummeted, putting pressure on the balance sheets of the financial institutions holding them, while wholesale funding dried up. And the wide dispersal of the suspect assets meant these balance sheet pressures were quickly transmitted internationally. In the United Kingdom, banks became increasingly cautious in lending, adding to downward pressure on housing and commercial property prices, and slowing growth. But at that stage, it was still possible to envisage a relatively modest slowdown, with financial intermediaries making the necessary balance sheet adjustments in an orderly fashion. However, the turmoil in credit markets was not the only factor the Bank’s Monetary Policy Committee had to contend with. Oil prices, already high at the start of 2008, hit $ a barrel in July, while a broad range of other commodity prices rose sharply.
Since the typical economist asks whether what they have observed can work in theory, the annex shows how a “labour supply shock” results in a lower path for real wages and productivity, higher employment, and greater downward pressure on wage growth at any particular rate of unemployment. Although the adjustment has been painful, trading off lower productivity and wages for much higher employment, on balance it provides a solid foundation for a durable expansion. That is because keeping people in work through a recession maximises the prospects for individuals and the economy. By staying in work, individuals retain and learn new skills. And they are better placed to participate in the expansion when it gathers force. This can make a material difference to an individual’s lifetime earnings. 17 For the economy, maintaining workforce attachment is the best way to ensure that cyclical downturns in aggregate demand for goods and services do not translate into permanent reductions in our economy’s potential to supply them. As a result, Britain has an opportunity, not often seen after a deep recession, to reach and sustain a higher level of employment than in the past. And workers can maximise their pay prospects. But, you rightly ask, when will this start? When will Britain get a pay rise? The expansion of labour supply does not mean permanently weak growth of real incomes. As employment approaches its new higher level, wage pressures should increase and capital investment should continue to recover.

William C Dudley: The national and regional economy Remarks by Mr William C Dudley, President and Chief Executive Officer of the Federal Reserve Bank of New York, at Queens College, Flushing, New York, 18 November 2013. *  *  *  Good afternoon. It is always a pleasure to speak with the different communities that make up our region, and it is especially gratifying to have the opportunity to speak with you, our future leaders. So thank you for inviting me. I am especially pleased to be here at CUNY (City University of New York) Queens College, given the relationship that we have developed with CUNY through our educational and regional outreach. This academic year we are hosting, at the Bank, a Queens College student participating in the CUNY Service Corps which is a program to provide students with work experiences in regional and economic outreach. We also collaborated with CUNY for this year’s College Fed Challenge, our yearly competition where teams of students from area universities take on the roles of the members of the Federal Open Market Committee (FOMC) and debate the appropriate next step for U.S. monetary policy. A number of CUNY schools competed and professors served as judges, including your own Professor Thom Thurston. My meeting with you today is part of our continuing efforts to understand what is going on at the grassroots level of our economy and to share what we are seeing.
We have only to consider the substantial cost of the recent financial crisis to realise that we can and should do better! In my view, two main prerequisites have to be fulfilled in tandem in order to sustainably achieve a higher level of financial stability. The first is to continuously strive to improve our knowledge about the sources of financial instability. Clearly, the complex, continuously evolving financial system will never allow us to prevent all crises for all times. But, in general, the more information we have on the structure and dynamics of the system, the more accurately we can design its regulation, and the less uncertainty there will be about the “optimal” mix of regulatory instruments. The second prerequisite for improving financial stability is to recognise that financial stability is a question of will, or more precisely, of political will. In other words, even perfect information on the sources of financial instability might prove insufficient if the collective will needed to translate this information into practical measures is not present. Conversely, even with imperfect knowledge, financial stability is attainable if we are willing to take precautionary measures commensurate to the extent of our ignorance. 7  6  For instance, a regularly updated Q&A section covering relevant topics around SNB and Swiss monetary policy. BIS central bankers’ speeches  My optimism that financial stability is achievable rests partly on the fact that, in the case of Switzerland, identifying the main sources of potential financial instabilities is rather straightforward.

The interest rate reflects the price of today’s  1  Negative interest rates have been implemented not just in Switzerland, but also in an increasing number of other advanced economies, such as Denmark and Sweden. BIS central bankers’ speeches  1  consumption in terms of consumption in the future. It is a relative price. There is nothing untenable in tomorrow’s consumption being more valuable than today’s. Of course, while not untenable, negative nominal rates are not representative of a normal state of affairs. Rather, they mirror the current exceptional circumstances of the global economy and of Switzerland. To understand why Switzerland is experiencing a period of negative interest rates, it is necessary to step back and recall three structural features that characterise the highly integrated Swiss economy: its “traditional” current account surplus, its globally traded, freely floating currency, which is commonly perceived as a “safe haven”, and – as a result – its persistently lower interest rates, especially relative to the euro area. 2 In “normal” times, Switzerland’s traditional current account surplus is compatible with a stable currency, as it is compensated by net capital outflows of similar magnitude, with the negative interest rate differential providing the proper incentive for capital exports. This “benign” equilibrium has been severely tested by recent financial market developments. The financial crisis has exacerbated the global appetite for Swiss franc investments because of their safe haven status.
The regulatory approach to governance needs to be sensitive to avoid becoming “shadow management”: firms must be allowed to manage themselves, and indeed to make business judgements that mean taking calculated risk and hence might go wrong. The regulator’s interventions in board affairs need to be particularly measured and proportionate. The PRA recently set out its general expectations in relation to firm governance in a recent consultation paper10. In addition to structural governance issues, the conduct of individuals has also raised considerable concern in the past few years. These matters were the subject of the Parliamentary Commission on Banking Standards (PCBS) which reported in June 201311. The recommendations of that report have been taken forward by the FCA and the PRA and new regimes will come into force in March 2016. For Banks there will be a Senior Managers Regime (SMR) and for insurers a Senior Insurance Managers Regime (SIMR). These new regimes require firms to allocate certain responsibilities explicitly across the senior management and senior non-executives in a firm. They are targeted at the most senior decision makers only and for the SMR only, make it clear that there is an implicit assumption of responsibility for those to whom the firm has allocated it. The intent of the regimes is to make accountability much clearer in advance, so that individuals take more personal responsibility. That in itself should improve the conduct of firms. Where it does not, it should be much easier to hold individuals to account than it has been hitherto.

I should note that insurance represents a very large part of the PRA’s activities – at the end of the financial year 2014/15 the PRA had around 550 front-line supervisors and risk specialists working on various deposit taking firms compared with over 300 on insurance firms. Most of the regulatory reforms that the PRA are implementing have not actually originated in the PRA itself. Rather, they have arisen from a variety of external sources. Some are UK initiatives: for example, the new Senior Managers Regime and Senior Insurance Managers Regime implement the recommendations of the Parliamentary Commission on Banking Standards (PCBS) and the structural reform of the major banks (ring-fencing) emerged from the Independent Commission on Banking (ICB, also known as the “Vickers Commission”). A number of key reforms are European initiatives such as the Solvency II regime for insurers. The banking capital regime, CRDIV, is a European implementation of agreements made in the global Basel Committee on Banking Supervision (BCBS). The development of international insurance standards is being driven by the Financial Stability Board (FSB) via the International Association of Insurance Supervisors (IAIS). The UK authorities, including the Bank of England and PRA, play a full part in negotiating these reforms, so I wouldn’t claim that they are entirely external, even though there are usually aspects of the final agreements which represent the middle ground in negotiations.
The job the FPC has been given in the aftermath is to avoid another avoidable disaster. And real progress has been made. Through new capital requirements the banking system now has the resilience to absorb even a repeat of the 2008 recession, without causing serious economic damage. And with the help of this work, we can stay agile as debt evolves so we can ensure the resilience of the system keeps pace with the underlying vulnerability in the economy. That’s not to say we will be slaves to any particular approach. No single model can capture everything. The point is that we have a benchmark for our assessment, ensuring continuity and discipline in our approach. To that benchmark, we can apply judgements. 12  All speeches are available online at www.bankofengland.co.uk/news/speeches  12  A pocket of risk In that regard, we’re watching closely what’s happening in corporate debt. Although, as we’ve seen, the aggregate picture looks fairly benign, a more concerning development hides underneath. We have just been through a period of rapid growth of one type of corporate lending: leveraged lending.

The effect overall is unlikely to be large – a few tenths of one per cent on the depth of an economic earthquake. But this, for me, particularly when coupled with the clear appetite of lenders and creditors to lend, means the vulnerability level needs to be watched closely. 8  Leveraged loans are typically loans to corporate borrowers that are highly indebted (for example with net debt to EBITDA ratios greater than 4x) or that are owned by a private equity sponsor. However, there is no widely-accepted definition. 13  All speeches are available online at www.bankofengland.co.uk/news/speeches  13  The legacy effect on the balance sheets of lenders and investors could potentially be of more significance. There is a real risk of loss to those exposed to these loans. In the financial crisis, we estimate that 8% of these loans soured, twice the loss rate on loans to businesses overall.9 The shift to riskier lending matters. Since the financial crisis, underwriting standards on leveraged lending have deteriorated. Lenders have real appetite for risk, reducing the price of these loans while also shunning covenants on borrowers. Ten years ago all leveraged loans imposed some restrictions on borrowers. Now only one third have them. And companies are increasingly making use of earnings add-backs, which involves assuming future earnings improvements, to flatter their leverage at issuance. With this deterioration in standards, loss rates are probably now more sensitive to economic conditions than they were a decade ago.
Bwalya K E Ng’andu: Improving the investment climate in Zambia Opening remarks by Dr Bwalya K E Ng’andu, Deputy Governor (Operations) of the Bank of Zambia, at the Foreign Private Investment & Investor Perception Survey 2011 Dissemination Workshop, Lusaka, 22 December 2011. *  *  *  Permanent Secretaries; Chief Executive Officers; Distinguished Participants; Ladies and Gentlemen. I would like to welcome you all, on behalf of the Bank of Zambia, the Zambia Development Agency and the Central Statistical Office, to this Foreign Private Investment and Investor Perceptions 2011 Survey Dissemination Workshop. I want also to take this opportunity to thank the companies that participated in the Survey which was conducted by the three institutions in the third quarter of 2011. The insights and the various valuable revelations on the investment climate in Zambia contained in the survey report were only made possible by their co-operation and support to the process. We want to thank them most sincerely. This dissemination workshop is built around two objectives. The first one is to give representatives of respondent companies the chance to comment on the contents of the report. In this sense, this can be considered as a validation workshop from which inputs into the final version of the report will be received. The second objective is to give the three institutions that commissioned the survey the opportunity to receive feedback on what the community of investors considers to be the main issues in investment.

Norman T L Chan: Black Bear – Blue Ocean – Wanton Noodle Speech by Mr Norman T L Chan, Chief Executive of the Hong Kong Monetary Authority, at the Hong Kong Management Association Fellowship Award Dinner, Hong Kong, 26 November 2013. *  *  *  Dennis (Sun), Alfred (Chan), Victor (Lee), Ladies and Gentlemen, 1. I feel very honoured to have been invited to speak at the HKMA Fellowship Dinner tonight. This is not only because the Hong Kong Management Association has been a forerunner in enhancing the standards of management and governance in Hong Kong, but also because the Hong Kong Management Association and the Hong Kong Monetary Authority share the same initials “HKMA”! Hence, attending the Fellowship Dinner tonight has double meanings for me as the Chief Executive of the HKMA. 2. Management is crucial as it embraces knowledge, skills, culture and leadership that would guide and shape the future of an organisation, whether it is public sector or private sector body or whether it is profit-seeking or non-profit-making entity. There is no doubt that, with increased globalisation and technological innovation, markets in different geographical localities have become more interconnected. One author has described the phenomenon as the “World has Become Flat”. 3. An important outcome of the interconnectedness of markets is that competition has become much more intense and ferocious. Talking about competition, let me share with you this story. 4. One day two men went together hiking in the mountain.
The central bank alone cannot, with the instruments at its disposal, steer the exchange rate. During the years when a fixed or stable exchange rate was the objective of monetary policy, fiscal policy was responsible for smoothing fluctuations in the economy. At the same time, incomes policy’s role was to keep wage growth in line with wage growth abroad. The objective of exchange rate stability therefore provided a framework for economic policy. When foreign interest rates moved up, the interest rate in Norway also had to be raised in order to prevent a weakening of the krone. Conversely, interest rates in Norway were often reduced following a reduction in interest rates abroad. One can imagine how this division of responsibility would have been implemented in the face of the disturbances to the Norwegian economy which occurred in 2001 and 2002. The upward tendency of the krone would have led to reductions in the interest rate down to the international level. As a result, interest rates would also have reached a historical low in Norway. Low interest rates would have fuelled lending growth, pushed up house prices and intensified the shortage of labour. In order to prevent another bubble of this type in the Norwegian economy, substantial fiscal policy tightening would have been required in 2001, 2002 and 2003. The fiscal rule stipulates that the central government budget deficit shall over time be equivalent to the expected real return on the Government Petroleum Fund.

Indeed, the unfolding of our monetary policy measures will ensure that financial conditions will remain very favourable, shielding the economy against the external headwinds and laying out the conditions for the build-up of domestic price pressures. At the same time, we are attentive to the possible side effects of the present monetary policy measures. These need to be carefully and continuously monitored. The ECB strategy review In January, the Governing Council decided to launch a review of the ECB’s monetary policy strategy. After more than 16 years, it was time to conduct a thorough review taking stocks of the profound structural changes that have intervened since the 2003 strategy exercise, and reflecting on what these changes and new trends mean for our framework. This process is expected to last one year and it will be conducted by the Eurosystem and the ECB staff. We will also reach out to academics, Members of Parliament – including the European Parliament – representatives from the civil society and business, and seek the opinion of financial market participants on selected issues. The scope of the strategic review will be comprehensive. That means that we will look at the quantitative formulation of price stability, together with the approaches and instruments by which price stability is achieved. We will also reflect on how other considerations, such as financial stability, employment and environmental sustainability, can be relevant in pursuing the ECB’s mandate.