samchain/econo-pairs-v1 huggingface dataset:
Capital meeting the broader definitions was largely ignored by investors during the intense phases of the crisis, leading to significant financial runs and liquidity problems at institutions whose capital, using the broader definitions, actually satisfied existing regulatory standards. As conditions deteriorated, market focus  1  These remarks were prepared for delivery at a gathering focused on “The New Framework to Strengthen Financial Stability and Regulatory Priorities”, jointly organized by the Financial Stability Institute and the banking supervisors from Central and Eastern Europe, and hosted by the Central Bank of the Russian Federation. 2  Beyond concern over immediate losses, investors may also focus on the possibility of future losses and the capital readily available to offset them. BIS central bankers’ speeches  1  shifted from the relative strength implied by regulatory capital ratios to the vulnerabilities associated with deteriorating measures of “pure” capital. This led to greater uncertainty and ultimately to liquidity stresses. The experience in the United States during the crisis is instructive as we think about where we should focus our attention in terms of bank capital, as well as in terms of supervision. On the latter, I would note that stress testing has proved to be an important supervisory tool in the United States for judging the quality and quantity of capital.

While individual business-line stress tests had been done by bank supervisors, a comprehensive stress test of all the largest banks at the same time using the same scenarios was new. While conducting the tests simultaneously for all 19 banks was challenging and resource intensive, the exercise provided supervisors the ability to make comparisons across institutions using the same underlying assumptions, and allowed the same core supervisory staff to be involved in assessments across institutions. Where banks were outliers relative to peers, supervisors could ask for more detailed information to determine if these differences were justified, based on analysis of comparable data. In addition, the stress tests were forward looking, so that the evolution of performance and results over the next two years  4  BIS central bankers’ speeches  could be compared across institutions. This provided a rigorous, data-driven assessment. It also highlighted where institutions needed to do additional work relative to peers to improve their risk management practices. The banks were evaluated on whether, over the two-year period under stress assumptions, they were likely to be able to maintain a Tier 1 capital ratio of 6 percent and a Tier 1 common capital ratio of 4 percent. It is worth noting that for most banks it was the Tier 1 common capital ratio that was most binding, and was the capital definition that best reflected the ability to absorb losses.
This is not only the case for economies like ours here in Hong Kong where financial services constitute a substantial proportion of GDP, but equally for economies that rely on other sectors, be they manufacturing, mining, or agriculture, for the bulk of economic activity. There are many reasons for this. First, a well-functioning financial system helps allocate capital to the most productive individuals, firms, and sectors through the process of intermediation between households that engage in savings and entrepreneurs who require funds to carry out investment projects. Second, broad financial markets permit risk sharing and diversification, thereby reducing the exposure of investors to idiosyncratic risks. Third, structured financial products allow the transfer of risk to entities that are most capable of bearing it. This makes it possible for economic agents to offload risks that they are not well equipped to deal with and specialize in activities which constitute their comparative advantage. Last but not least, a financial system makes it possible to shift purchasing power across time as individuals build up financial assets while they are working to sustain a comfortable living standard in retirement. Considerable progress has been made by many regional economies in revamping and strengthening the financial markets since the Asian financial crisis. However, there is still a general lack of diversity in the channels of financial intermediation, with a significant over-reliance on the banking system.

But I am also convinced that expanding the effective size of Asian financial markets through greater integration across jurisdictions, can make our economies better able to absorb the volatility of international capital as effectively as the US and European markets. It is therefore heartening to observe that several initiatives for promoting the development of the financial markets in the region are bearing fruit. A notable example is the Asian Bond Fund (ABF) initiative championed by EMEAP central banks. The ABF has been created specifically to encourage the development of bond markets in Asian economies, with the ultimate goal to create an integrated regional market. In developing the ABF, we have achieved a few firsts, including the introduction of the first exchange-traded bond index fund in Asia, arranging for two Asian markets to allow exchange-traded funds for the first time, and opening up the renminbi inter-bank bond market for the first time to foreign investors. The process leading up to the launch of Asian bond funds has shown that cooperation between central banks in the region can successfully deal with a number of technical and conceptual issues, which bodes well for the further development of this initiative as well as potential initiatives in other areas of financial market development. The successful experience of ABF has laid a strong foundation for enhanced regional cooperation by central banks to promote financial integration in Asia. There seem to be at least three aspects in which further development of central bank cooperation may be useful.
The reason may be that market participants have a different perception of the interest rate path that is necessary to stabilise inflation at target and to achieve stable developments in output and employment. Alternatively, the market may have the same short-term interest rate expectations as Norges Bank, but because of extraordinary conditions long-term bond prices are being pushed up and, consequently, long-term bond yields are being pushed down. 1  Forward interest rates - often referred to as implied interest rates - are calculated so that a short-term bond, when rolled over and reinvested at the implied interest rates, generates the same yield as a long-term bond. For example, if we observe today’s one- and two-year interest rates (‘short-term’ and ‘long-term’ interest rate respectively), the implied forward interest rate one year ahead will be expressed by the equation , where is the two-year interest rate, is the one-year interest rate and is the implied one-year rate one year ahead. The expectations hypothesis holds that the implied interest rate is equal to the market’s interest rate expectations and the expected return from rolling over short-term bonds is equal to the return on a long-term bond. However, if term premia exist, the expected return from rolling over shortterm bonds is different from the return on a long-term bond. If the term premium is positive, forward interest rates will overestimate expected future short-term interest rates, while they will be underestimated if the term premia are negative.

Policy implications What does all of this mean for policy? While the water has not become as warm as two years ago I thought it would, I do not yet see enough evidence that we have missed some shift to a permanently colder environment. My central expectation remains that as the effects of the crisis continue to heal and as the deflationary effects of past sterling strength and oil price falls wane, domestic cost pressures will gradually push inflation back to target. I will be looking to see that consumer confidence remains robust and business intentions remain strong. I will be watching to see if pay growth picks up as disinflationary pressures fade and if productivity growth accelerates as a result of the pick-up in investment and of the tightness of the labour market. And I will be looking very carefully at the risks of another unfortunate event for the UK economy from a hard landing elsewhere in the world. If economic growth falters and pay and productivity remain stuck at current levels then the healing story will become increasingly less convincing. There are of course other possible stories one can tell about the economy and other risks. I want to mention three. The first is the possibility, much in the news two years ago, that monetary policy will not react in time to the build-up of inflationary pressure. Monetary policy typically has its peak impact on inflation somewhere between 18 and 24 months ahead.
The engine of societal progress would no longer be human ingenuity, imagination and intelligence. Instead it would be artificial ingenuity, imagination and intelligence. Scared yet? Co-Evolution Don’t be. I want to argue that loss of human jobs and control of their destinies is far from being the only possible, or even the most likely, ending to this story. Humans can remain in work and masters of their own destiny. As in the past, there are good grounds for optimism. This will, however, require some fundamental changes to human skills and human work and in the social institutions supporting them. 26  Manyika et al (2017). Lawrence (2017), and House of Parliament, Parliamentary Office of Science & Technology (2016). 28 Baweja (2016), Lawrence (2017), and Berriman (2018). 29 Kurzweil (2005). 30 Tegmark (2017). 27  13  All speeches are available online at www.bankofengland.co.uk/speeches  13  One reason for optimism is that, for the foreseeable future, humans are likely to retain their upper hand across a number of tasks. One such set of tasks are those requiring large doses of creativity involving leaps of imagination or bespoke design. Super-computers have designed and created international supply chains for nuts. But they are no more likely than squirrels to replace Roald Dahl or Tim Burton any time soon. A second set of tasks not easily machine-reproducible involve interpersonal or social skills. There are robots for childcare and social care. But I doubt they will become the norm. People are social animals and value social interaction above all else.

Finally, some efforts should be made  Page 3 sur 5 to harmonise the main features of national insolvency proceedings, such as creditors’ hierarchy, rather than creating parallel crisis management paths which would simply duplicate the existing resolution tools while triggering significant level playing field issues. Once these steps are taken, the probability of recourse to the Single Resolution Fund (SRF) could increase. However, while the initial objective was to reach 1% of the covered deposits, such a goal being evaluated at an amount of EUR 55 billion, this amount has been constantly revised, and the SRF represents today EUR 66 billion and will reach around EUR 80 billion next year. This sharp increase can be mechanically explained by the surge in deposits in the wake of the Covid crisis and “forced” savings. The fact remains that this very high amount has never been used so far: we cannot completely ignore this question. It can be discussed whether this amount is disproportionate compared with European banks’ level of risk. If the answer is yes, then we should contemplate introducing a ceiling in absolute terms – the level of which would have to be determined. We should also use the flexibility offered by the current regulation to alleviate the burden of the contributions for banks, so that irrevocable payments commitments can represent up to 30%. All these questions need to be examined. II.
In addition and as a crucial complement to its operational responsibilities, the Markets Group has responsibility for monitoring and analyzing financial markets. These activities serve to support existing operations and provide vital knowledge as new types of operations are contemplated. They also supply an important source of unique market intelligence for policymakers on developments in an array of financial markets that could affect the economy or have policy implications. These efforts tend to focus on understanding broad financial market conditions, expectations for monetary policy and the real economy, and financial stability risks. My use of the phrase “market monitoring” is intended to capture much more than following prices and trading activity in asset markets and conversing with market participants globally about the causes behind market developments, as important as that is. It includes broader responsibility for analyzing both immediate and longer-term trends in global financial markets and linkages among financial institutions, and it rests upon a deep understanding of the microstructure of financial instruments and markets and of the motivations of market participants.2 By maintaining deep expertise in particular asset classes and detailed knowledge of market behavior and infrastructure, the Desk is able to structure and execute operations to achieve the objectives of policymakers. This deep expertise also enhances the quality of the information and staff assessments about current market developments that is communicated to policymakers throughout the Federal Reserve System through a variety of briefings, conversations and written products.

On the face of it, these add up to a substantial change to the Bank’s responsibilities; and to our operations and staffing needs. But in fact our underlying objectives as a central bank - what we term our three core purposes - have remained remarkably unchanged. These are, first, maintaining the integrity and value of the currency; secondly, maintaining the stability of the financial system; and, thirdly, seeking to ensure the effectiveness of the UK’s financial services. I would like to say something about each of the three core purposes in turn. Core purpose: monetary policy As regards monetary stability, as you all know, the Bank was given monetary independence in May 1997 when the Monetary Policy Committee was established to set interest rates. The structure of the Committee was later set out in the Bank of England Act 1998 and the Bank’s independence in pursuit of monetary policy is enshrined there. To quote directly, our objective is “to maintain price stability and, subject to that, to support the economic policy of HM Government including its objectives for growth and employment”. The balance implied in this objective is important. First,although the Bank has operational independence, the inflation target - RPIX (that is, retail prices excluding mortgage interest payments) of 2.5% - is set by the Government and confirmed in the Budget each year. And this target is symmetrical. We on the MPC are as concerned about inflation being below 2.5% as we are about it being above 2.5%.
Luis M Linde: Reflections on the road and challenges ahead – regulatory changes affecting banking activity Closing address by Mr Luis M Linde, Governor of the Bank of Spain, at the IX IESE (Instituto de Estudios Superiores de la Empresa/Business School of the University of Navarra) Banking Sector Meeting “Banks – beyond the crisis”, Madrid, 12 December 2013. *  *  *  Firstly, let me thank Professor Juan José Toribio, the president of the Centro Internacional de Finanzas, for inviting me to participate in this IESE Banking Sector Meeting. And allow me to congratulate the IESE on this ninth edition of a forum that has become a classic and has consistently been of the greatest interest and highest calibre. I am not going to address certain matters that are very important and topical, such as the signs of recovery in the Spanish economy, the initial steps of the launch of the Single Supervisory Mechanism, or the asset quality review or stress tests for those banks that are to be supervised by the Single Mechanism. I would hardly have anything novel to say there. Rather, I wish to review some aspects of the regulatory changes which, once the crisis has been overcome, are going to significantly affect banking activity.

Let me conclude by mentioning how much we have achieved in Europe over the last fifty years. The EU has reached a diversified but, broadly speaking, very ambitious level of integration: it is complex because the degree of integration is largely dependent on which areas are at stake, it is ambitious since, in some areas precisely, the system is completely integrated and relies on one single policy. The euro, in that regard, is both the symbol of our achievements and our best hope for the future of European integration. Thank you. 2  BIS Review 51/2007
Unit costs 2001 NOK 15 14 13 12 11  1988 1994 2001  10 9 8 7 6 5 4 3 2 1 0  Unit costs excluding Unit costs including cash withdrawals at cash withdrawals at the counter the counter  As you probably know, we also investigated the costs related to payment transactions in the largest banks and Norway Post in 1988 and 1994. At constant 2001 NOK, the cost per transaction fell from NOK 14.10 in 1988 to NOK 10.70 in 1994. In 2001, the average cost per transaction was NOK 5.30. Since 1988, the cost of an average transaction, at constant prices, has fallen by a good 60 per cent. Banks have steadily increased the scope of direct pricing so that the degree of cost coverage by means of direct pricing has nearly doubled both from 1988 to 1994 and from 1994 to 2001. In 2001, 70 per cent of costs were covered by means of direct pricing. 4  BIS Review 66/2002  6.

The Ministry of Finance will provide additional clarification and detailed explanation of the income tax treatment on more prescribed Islamic financing arrangements including financing through a partnership arrangement, project finance as well as interbank placement of funds6. This is in  6  The tax circular will cover Islamic financing arrangements based on Diminishing Musharaka (financing through a partnership arrangement) and Istisna (project financing) and interbank placement based on Wakala (agency contract) and Murabaha (sale at cost-plus) concepts. BIS central bankers’ speeches  3  keeping with our long-standing principle that Shariah-compliant products should not be disadvantaged in terms of regulatory and tax treatment where the economic substance and risks are similar to conventional products. We hope that this will expedite the development of more such financial products in Singapore. Conclusion 18. To sum up, the Middle East and Asia continue to present attractive opportunities. Both regions need to work closer together to achieve greater synergy and accelerate the global growth of Islamic finance. Singapore will play its part in this international effort together with our regional and industry partners. 19. I am glad to see more players from Middle East and Asia participating in this year’s Summit. I hope that you will take up the challenge to work together to spur the development of Islamic finance as a bridge between Asia and the Middle East. Thank you. 4  BIS central bankers’ speeches
(2021). Several of the world’s large economies are now in a period of slower labour force growth, making it less profitable for companies to undertake major investments. Even if savings are falling, companies’ incentives to invest are declining even further. The prediction is therefore that the global real interest rate will fall for a long time to come. 6 When the inflation target was introduced at the beginning of the 1990s, the Riksbank had support from the then prevailing economic crisis, in the sense that inflation was pushed down to a level close to the target, making the task then ‘only’ to try to keep inflation at this level. 4 [15]  way that companies set their prices and the wage demands that households put forward. The inflation that results from the inflationary price-setting and wage formation confirms expectations and in turn affects the new expectations of future inflation. This gives a new round of effects on price-setting and wage formation, and the high inflation thus becomes a self-generating process. One reason why the high inflation was built into expectations among households and companies was that it was not sufficiently counteracted by the overall economic policy. Instead, this policy became systematically too expansionary. At that time, Sweden had a fixed exchange rate. The idea was that this would have a disciplinary effect on price-setting and wage formation: If Swedish prices and wages increased faster than prices and wages abroad, our competitiveness would weaken, exports would decline and unemployment would increase.

Preparations for EU membership and the adoption of the euro have spurred a broad-based reform process. The adoption of the euro should not mark the end of this structural reform process. In order to reap the full benefits of euro adoption and to ensure sustainable convergence, this process should continue. As you know, economic and monetary integration between countries with somewhat different characteristics and levels of development requires careful preparation. However, you have already reached this stage and your planning for the introduction of the euro is almost complete. Looking ahead the adoption of the euro will enhance your integration with all EU partners. Today practical preparations towards the public are remarkably advanced and the euro campaign has been outstanding in Malta. Indeed, the Central Bank, and also the National Euro Changeover Committee can be praised for their excellent work paving the way for a smooth changeover. The ECB has contributed to this euro campaign by making the public acquainted with the visual appearance of the euro banknotes and coins and the security features. The framework used by the ECB and the CBM constitutes an optimal communication mix to ensure a good reach of the public. This means research, advertising, direct marketing, public relations (like this event today) or addressing the vulnerable population. Overall, around 500, 000 copies of publications will be distributed by the CBM or via multipliers – so more than the actual population.