samchain/econo-pairs-v1 huggingface dataset:
As an example of this, the EU itself is looking to amend MiFID2 to iron out areas that need further work. Second, as the world moves on, so the rules need to adapt. If they do not, we will be heading for trouble. The key point here is that good practice means that authorities should be transparent at the time in explaining rule changes, and those changes should be consistent with international standards where appropriate. Let me give three examples of areas of rule changes we in the UK are looking at, two involving banks and one life insurance. First, the Basel regime for banks has, from the outset in the 1980s, applied to so-called “internationally active banks”. The EU has chosen to apply it to all banks and relevant deposit takers. That was a matter of choice. But the Basel regime is heavy duty and complicated when applied to small banks (I know many big banks will say the same, but sorry that’s life). So, we want to see if we can apply a strong but simple framework of rules for small banks that are not internationally active. This is a sensible step in my view and not out of line with the principles and practice of equivalence. Indeed, there are other countries, such as the US and Switzerland that have regimes for small banks and have been determined equivalent to the EU in many areas. Second, the EU changes its rules in December to allow software assets to count as bank capital.

It provides for structural regulatory co-operation on financial services, with the aim of establishing a durable and stable relationship between autonomous jurisdictions based on a shared comment to preserve financial stability, market integrity and the protection of investors and consumers. This co-operation will be supported by a Memorandum of Understanding to be agreed by March, and this will enable discussions on how to move forwards on equivalence determinations “without prejudice to the unilateral and autonomous decision-making process of each side”. To conclude, there is no doubt in my mind that an open world economy supported by an open financial system that respects the public interest objective of financial stability will bring the greatest benefits all round. It needs to be supported by effective institutions and strong international standards. But this must be a global, not a regional, regime to be effective. And that is why we spend so much time and effort on the work of the global standard setting and oversight bodies. What follows from that is much more a matter of implementation and how we each put these standards into practice consistently. We have an opportunity to move forward and rebuild our economies, post Covid, supported by our financial systems. Now is not the time to have a regional argument. Thank you. 4/4  BIS central bankers' speeches
The winning team develops skills – in analysis, presentations and teamwork – that will help them in their future studies and careers in the knowledge economy. BIS Review 18/2010  5  The New York Fed is also supporting the Office of the Commissioner of Financial Institutions in its two-week expo, where last year 20,000 people saw presentations and received financial counseling. We have also had a productive relationship with our good friends at the Puerto Rico Bankers Association. Each year during “Community Reinvestment Act Week,” our staff highlights new ideas and products especially suited to the Puerto Rican market. For example, this November we held a forum for Puerto Rican and U.S. Virgin Islands financial institutions, state and local governments, and nonprofit organizations to introduce “Bank On,” a financial product proven to attract under-banked people into the financial mainstream. Since then, several local banks have formed a group to explore how to best implement it here. Another example of collaboration is our work with the Bankers Association and local universities. During the fall, we held a “Financial Awareness Video Contest” for college students. This pilot project explores building peer-to-peer financial awareness among young adults by having contestants create a 90-second video. We look forward to hosting the first place winners during their trip to New York in the spring.

This serves to provide a safe and efficient clearing and settlement platform that supports trade and investment flows in renminbi. A nationwide awareness program by the banking institutions and the business chambers is also creating greater awareness on renminbi for trade settlement and investment. The Bank has also participated in the Chinese interbank bond market. In 2011 alone, the size of renminbi trade settlement in Malaysia expanded by four times from the level a year ago, reflecting a growing interest in renminbi as a settlement currency. The expansion in renminbi usage has also been underpinned by a diffusion of corporate players, both in size and across the sectors. Not only has the number of corporate players increased, but there has been a shift in relative significance in the use of renminbi as a trade settlement currency from the smaller to the larger corporations. There has also been more widespread corporate participation from a larger cross-segment of economic activities, namely the commodity based industries, manufacturing and services sectors that also includes tourism and education. There has also been an increase in the number of financial institutions participating in renminbi trade settlements. There are now 19 financial institutions that facilitated such trade settlements, double the number in 2009. More recently, there has been an increase in the use of the renminbi as an investment and funding currency. In the first seven months of this year, renminbi deposits in the banking system had tripled.
The incentives to work have rather been reduced in the social insurance system in recent years. There are also discussions now of reducing working hours. The Riksbank has earlier spoken of a potential growth rate in the economy in the interval of 2-2.5 per cent. We have not considered it possible to be more precise than this. Of course, we are constantly examining our view in the light of new data and analyses. When we look ahead two years, there is no reason to change this view now; it is important that no one misunderstands me here. But if the current trends for the labour supply persist, it is likely that we will have to assume in the longer term a potential growth rate closer to 2 per cent than 2.5 per cent. Thank you! Fig. 1. Essential outline, actual and potential GDP GDP  Time  6  BIS Review 16/2003  Fig. 2. Estimated production gap according to three methods Per cent of potential GDP  4  4  3  3  2  2  1  1  0  0  -1  -1  -2  -2  -3  -3  -4  -4  UC PF HP  -5  -5  -6  -6  -7 1995  -7 1996  1997  1998  1999  2000  2001  2002  Sources: Statistics Sweden and the Riksbank  Fig. 3.

As I mentioned earlier, the National Accounts have recently been revised and the new results indicate a strong growth in both GDP and productivity in Sweden during the period 1993-2002. Such revisions show that there is considerable uncertainty in the statistics and that it is important not to overreact to the most recent figures. When we make assessments of inflation in connection with monetary policy decisions we normally look two years ahead. In this context we also calculate potential growth with the aid of more detailed data. This includes labour market data, for instance, to assess labour force developments with reference to developments in the working population, people in regular education and labour market policy training and the number of people on sick leave or early retirement pensions. A digression on demography Allow me, before I finish, to comment further on demographic developments. One factor that we, like many other countries, will need to grapple is the adverse demographic development that will take place in few years' time. This will entail the percentage of elderly people in the population increasing significantly and resulting in a considerable reduction in labour force participation. Large demands will be made on public finances and the labour supply and growth trends will be subdued. My last slide shows the growth in actual hours worked during the period 1981-2001, together with a calculation for growth during the period 2002-2050 (Figure 10).
Monetary policy developments and monetary conditions  The mentioned discrepancy between advanced and emerging economies accelerates capital flows into countries, such as Turkey, with strong economic fundamentals and relatively low risk. Rapid credit expansion and widening current account deficit fueled by short-term capital inflows increase risks to financial stability and carry the potential to hamper price stability  BIS central bankers’ speeches  1  over the medium term. This gives rise to adopting different approaches that incorporate financial stability into the monetary policy framework. As you have been following very closely, we have designed and adopted a new policy strategy as of the end of 2010. While our new policy approach maintains the priority of price stability, we also observe financial stability as a supporting objective. In this context, in addition to policy rates, we jointly use complementary tools such as reserve requirement ratios and the interest rate corridor. The primary objective of this new approach is to contain the negative effects of the ongoing global imbalances on the Turkish economy. Now, I would like to summarize the decisions that we have made within the new policy strategy. The downtrend in inflation during the last quarter of 2010 allowed the CBRT to give relatively more weight to financial stability during this period. In this respect, in order to reduce short-term capital inflows, we lowered policy rates on one hand and raised the volatility in short-term interest rates by widening the interest rate corridor on the other hand.

Thanks to the Chinese leadership, the spirit of connectivity and cooperation is further enhanced through the One Belt One Road initiative. The Asian Infrastructure Investment Bank (AIIB) is an added funding impetus to ensure that there will be physical infrastructure connectivity, laying the strong foundation for shared economic prosperity. China’s growing economic ties with Thailand and ASEAN have become stronger in many aspects. China has been the largest trading partner of Thailand since 2013. Thanks to the China-ASEAN FTA, China has been ASEAN’s largest trading partner since 20092, while ASEAN has been the third-largest trading partner of China since 20113. China has been one of Thailand’s top foreign investors for the past nine years4. And in terms of tourism, almost AFCA follows the philosophy of openness and inclusiveness as well as the mission of “connectivity, cooperation, joint governance, and shared benefits” 2 ASEAN Secretariat: ASEAN Trade Balance (in $ Million) by Country. 3 World Bank: China Trade at a glance. http://wits.worldbank.org/CountrySnapshot/en/CHN 4 Foreign Direct Investment Position Classified by Country $ Combining Hong Kong and China FDI values. BOT. 1  1  nine million Chinese tourists visited Thailand last year, the highest number from any country in the world. It is clear that trade and investment connectivity between China and ASEAN have been well established and have great potential to expand much further. However, financial connectivity in our region has yet to catch up with trade and investment connectivity.
In periods of high or rapidly rising unemployment, the use of petroleum revenue can be increased, and, inversely, fiscal retrenchment is needed during periods of high economic activity and resource scarcity. 2 It now appears that capacity utilisation in the Norwegian economy may return to a normal level in one and a half to two years – and with a somewhat lower unemployment rate than today. A different path can be met with an interest rate response. Our understanding of the fiscal rule is that the government budget for 2012 or at the latest for 2013 should aim at bringing down petroleum revenue spending to 4 per cent of the capital in the Pension Fund. The scale of petroleum revenue spending – growth in public expenditure – is important for developments in competitiveness, also referred to as the real krone exchange rate, in the long term. But, in the short term, the krone exchange rate can vary widely, and it depreciated in autumn 2008 when capital sought safe havens. This helped Norwegian manufacturing in the first phase of the downturn. Since then, the krone has appreciated considerably. In 2009 and 2010, government petroleum revenue spending shows a substantial increase and foreign investment via the Pension Fund a decrease. This leads to higher commercial demand for the Norwegian krone which directly contributes to its appreciation.

Today the benchmark portfolio is more diversified and includes a large number of countries globally. 8  BIS Review 44/2010  In 2008 it was decided to increase the share of emerging market assets in the Fund’s benchmark portfolio. Thus, investments in these markets have grown. The government has stated that the expected annual return on the Fund will be close to 4 per cent over time. Since its establishment, the average return has been 2.7 per cent. It was only a little more than a year ago that we witnessed the steepest fall in global capital markets in our time. By maintaining the Fund’s risk profile it is fairly probable that the average return will gradually approach 4 per cent again. Last year was the best in the Fund’s history. Gains in international equity and fixed income markets led to a record annual return of 25.6 per cent in 2009. 3 However, developments in  3  Government Pension Fund Global – Annual Report 2009. BIS Review 44/2010  9  2009 must to a large extent be viewed in light of the financial crisis and are mainly due to a reversal of the negative results in 2007 and 2008. Multilateral approach to global challenges Finally, let me turn to the international economic order and developments in multilateral institutions over the past few years.
The alternative, as I have discussed before, 11 is to raise a levy from surviving firms after the event. This would have to be linked to a systemic-crisis threshold being passed for the deployment of public funds. And the basis for deciding how much was recovered from individual firms would need to be both clear and principled. In particular, it would be important to try to incorporate features that enabled costs of failures somehow to fall to uninsured, wholesale creditors. Those who finance the system in the good times need to have incentives to price for risk. Summary This has been a fairly high-level survey of the instruments on the crisis management menu. They are, of course, interlinked. They also bear on the wider debates about the structure and regulation of the financial system. Perhaps most obviously, the feasibility of producing recovery and resolution plans will feed into international and domestic decisions on minimum capital requirements for banks in general and on the mooted add-ons for so-called systemically significant firms. The weaker a recovery plan and the greater the obstacles in the way of its effective resolution, the more capital (and liquidity) a bank is going to have to hold. This is why emerging interest in Contingent Capital instruments is so important. If CoCos could form a material part of recovery plans, the landscape might just be transformed. And that in turn goes to the big issue.

Whether our community can find ways of distributing the costs of official sector support operations back to the system and its uninsured creditors rather than to the general taxpayer. If we can achieve that, market discipline would be enhanced. We need to hang on to “market discipline” as a watchword in these debates. The goal of re-regulation – of redrawing the rules of the game for the financial system – should not be to reintroduce the wisdom of the state into micro decisions about how to run businesses. But rather to put market discipline at the heart of a market economy. An effective  10  See the recent statement by Sheila C. Bair, Chairman, Federal Deposit Insurance Corporation, to the Financial Services Committee; US House of Representatives (29 October, 2009). 11  See Tucker P M W (2009b), “The repertoire of official sector interventions in the financial system: last resort lending, market-making, and capital”, Bank of Japan’s 2009 International Conference, Tokyo, May 2009 (pp. 18). BIS Review 144/2009  9  framework for crisis management drawing on the lessons of this crisis can take us in that direction. 10  BIS Review 144/2009
Simon Topping: Basel II - implications for Hong Kong Speech by Mr Simon Topping, Executive Director (Banking Policy) of the Hong Kong Monetary Authority, at the City University of Hong Kong/Oracle Systems Hong Kong Limited “Basel II: Implications for Hong Kong” Seminar, 5 July, Hong Kong. *  *  *  I’d like to start by thanking the City University and Oracle Systems for organising today’s Seminar and for giving me this opportunity to share with you some thoughts on Basel II, and in particular on the implications for Hong Kong. The process of devising a New Capital Accord has now been going on for more than four years and it is still another three and a half years until countries start implementing it. It’s clear from this timescale that what we are talking about here is a very major project indeed, and one which has important implications for the banking industry. It’s very welcome, therefore, to have occasions like this to help spread the word on what it’s all about. But why such a big deal? What’s so wrong with the existing Capital Accord? The answer is simply that, in the 15 years since it was introduced, things have moved on. The nature of banks’ business and the risks they are running have changed dramatically, and the existing Accord no longer comes up to scratch - it no longer functions as a mechanism for ensuring that banks hold an amount of capital that is broadly commensurate with the risks they run.

The real point is whether, given the bank’s particular circumstances, the risk management practices they adopt are adequate. And that, primarily, is a matter for the bank’s management to determine, although we will of course, given our statutory responsibilities, also have an interest in this. I stress these points for three particular reasons. First, because I don’t want anyone to think that we are against banks taking risk. We’re not. That’s the business they’re in. We simply want to make sure they recognise and manage the risk effectively. Second, because I want to make clear that we are not hell bent on driving banks to invest in unnecessarily sophisticated risk management systems. What’s appropriate will clearly vary from bank to bank, depending on the nature and scale of their business and the risks they run. Third, because I want to be perfectly clear that Basel II is not some underhand means of making life difficult for smaller banks by raising the hurdle too high in terms of what they need to spend on risk management and on regulatory compliance. Indeed, on the contrary, the whole thing is carefully designed so as to accommodate banks of all shapes and sizes. So, how will Basel II change banking in Hong Kong? The answer, I would suggest, is that we won’t see any dramatic changes overnight, but we will over time see some re-focusing of how the risks within banks are addressed, both by banks themselves and by the supervisors.
11  Chart 5: Risk weight variability in the trading book(a)(b)(c)(d) 1,000  Max-min range  Chart 6: Risk weight variability in the IRC model(a)  66.2  Median  1,000  5.3  3.9  Max-min  1100 12  30 78  100 88  2.3  Median  21  129  183 127  100  100  10  1  10 VaR  sVaR  IRC  8 12 13 18 19 20 21 22 23 24  All-in  Source: BCBS (a) From the BCBS hypothetical portfolio exercise for the trading book. (b) Sample consists of 15 banks. (c) Values have been normalised by the median. For each model, the ranges represent the simple average of the normalised minima and maxima for all portfolios the model was applied to. For the all-in portfolio, the supervisory multiplier was held constant. (d) Numbers on bars indicate maximum - minimum ratios. Source: BCBS (a) From the BCBS hypothetical portfolio exercise for the trading book. (b) Sample consists of 15 banks. (c) Values have been normalised by the median. (d) Numbers on bars indicate maximum-minimum ratios.

The combination of complexity and manipulation has led to a loss of faith by investors in model outputs, and in particular risk weights, over the past few years. Surveys of investors suggest a fairly deep-seated scepticism about risk weights, with only a small fraction believing them trustworthy (Chart 9). From a low base, investor faith in these risk weights has continued to fall fast (Chart 10). These concerns appear to be reflected in the pricing of bank risk. Bank investors appear to have moved towards using simpler metrics, such as leverage ratios, when assessing capital adequacy. There is a positive correlation between banks’ leverage ratios and their market price-to-book ratios (Hoenig (2013)). No such correlation exists for banks’ regulatory capital ratios. Investors seem to have begun pricing the solvency risk they best understand. The lack of transparency about, and investor trust in, risk weights has important implications. For regulators, a lack of transparency can damage the power of market discipline in constraining risk-taking – so-called Pillar III of Basel. Or, put differently, the complexity of Pillar I of the Basel Tower (regulatory rules) risks emasculating Pillar III (market discipline). Pillar I has become Popeye’s forearm, Pillar III his bicep.3 For investors, uncertainty about banks’ true capital adequacy is priced. Where there is uncertainty, they will factor a premium into banks’ cost of capital. That may be one of the reasons many of the world’s largest banks have continued to trade at a discount to their equity book value.