samchain/econo-pairs-v1 huggingface dataset:
The type of regulation to which it should be subject is also uncertain. Irrespective of what the future may hold, banks’ classical role remains fundamental today to economic development. In the absence of deep secondary markets at the European level, where it would be possible to convert long-term funding into liquidity through the market, the banking sector is still the main vehicle through which savers’ wish to have their savings available can be reconciled with the need of those demanding funds to have stable funding over time.1 Naturally, this does not mean that credit growth should always be positive, as we were painfully reminded by the crisis. In this respect, the debt ratios of households and firms in Spain reached excessive levels of 85% and 133% of GDP, respectively, before the crisis broke. Fortunately, since their 2008/2009 peak, debt ratios have moved on a markedly downward trend, converging late last year with the average EU levels of 60% for households and 90% for firms. Bank lending has been decreasing throughout this period of household and corporate deleveraging. Nonetheless, this decrease has recently reversed. Specifically, if we look at 12-month cumulative data, the net flow of financing granted to households turned positive in June 2018, posting a year-on-year growth rate of 0.5% in April 2019. Firms’ net global financing flows have also held at positive levels since October, attaining year-on-year growth of 2.6% in April 2019.

The first one, which we may call the pan-European approach, has tended to produce a lot of numbers on aggregates and averages in the financial stability analysis. No country wants to stick out in the assessment; they hide behind these broad numbers. But you cannot identify weaknesses and vulnerabilities through averages. “On average”, banks’ credit portfolios and capital ratios may be robust but an FSAP should look for the outliers – the ones which will break first. Whichever approach you select, you would need to include a detailed analysis of those major financial groups which cross the borders between the European countries and sometimes also operate outside the region. These groups are in many cases so large that they could influence countries both positively and negatively depending on developments. Let me give you a recent example from my own country: Icelandic investors have bought large stakes in Swedish financial firms. The investments are rather small from the Swedish point-of-view but significant for their parents in Iceland. Recently, there has been volatility in the Icelandic financial and currency markets. Luckily, the investments in Sweden are doing very well and have rather contributed to strengthening the Icelandic financial system. But in another situation the reverse could have been true – had the Icelanders made these investments during the Swedish banking crisis in the 1990s the Swedish holdings would have contributed to weakening the Icelandic economy.
And the results and key findings are published on the Bank’s web pages, and factored 7  See for instance Ian Hathaway’s Brookings study of accelerator performance at https://www.brookings.edu/research/acceleratinggrowth-startup-accelerator-programs-in-the-united-states/. 8 Framework adapted from Susan Cohen ‘What Do Accelerators Do? – Insights from Incubators and Angels’ innovations’ (Innovations, volume 8, number 3/4, MIT Press). 5  All speeches are available online at www.bankofengland.co.uk/speeches  5  into the Bank’s future work programme. Firms we have worked with have been invited to join the Bank’s FinTech community, which meets periodically to share insights and assess developments in the sector. The Bank’s FinTech Accelerator: what have we done? The Accelerator has done quite a lot in a short time. In the 16 months since the Accelerator was established, it has completed 9 PoCs with 10 firms across three cohorts (Table 2). And we are announcing a further cohort of 4 PoCs today – the details of which I will come back to shortly. In total, some 200 firms have applied to work with us across a wide range of disciplines. The process is resource intensive for both sides. But our broader interactions with those firms, even those not successful in their application, have been of great value, allowing us to reach a much wider external audience keen to interact, collaborate, teach and learn with us. The PoCs span most aspects of central banking, but can be grouped together into four broad technologies: distributed ledgers; data storage and analysis; machine learning; and cyber security.

10  All speeches are available online at www.bankofengland.co.uk/speeches  10  TABLE 2 BANK OF ENGLAND FINTECH ACCELERATOR PROOFS OF CONCEPT Cohort  Project area Cybersecurity  Cohort 1  Data analysis Distributed ledger technology Machine learning  Cohort 2  Cohort 3  Cybersecurity  PoC  Status  BitSight  We wanted to understand if we could get a view of a firm’s cyber resilience based on publically available data. Completed  Privitar  This PoC explored a tool to desensitise data with the aim of being able to share data more widely within the Bank. Completed  PwC BMLL Anomali ThreatConnect  We built a multi-node scalable distributed ledger environment in-house that enabled the transfer of ownership of a fictitious asset. Experimented with the alpha version of a machine-learning platform that used cloud computing to evaluate patterns in data from a number of trading exchanges. Both firms were asked to create a searchable database where intelligence on cybersecurity threats could be optimised and stored. They helped enable the automation of what was a very labour intensive analysis process. Completed Completed Completed  Data analysis  Enforcd Limited  In this PoC we wanted to understand the benefits in viewing publically available enforcement action from different perspectives and the high level trends. Machine learning  Mindbridge Analytics Inc  The firm was asked to prove the value of their analytical tools for detecting anomalies in anonymised regulatory data collected from a sample of credit unions.
A key challenge for Islamic financial institutions is to attract a knowledge-based workforce with the skills required to enhance the potential for innovation, productivity and performance. The Islamic financial services industry needs to continually promote human capital development and expertise to create a larger pool of experts and high calibre professionals. This involves attracting and retaining the existing talent, and building a robust pipeline of skilled individuals for the future. In addition, specialists in Islamic finance would need to combine knowledge and understanding of the Shariah with the necessary skills in finance. The provision of training and career development will have a key role in the sector. Learning systems therefore need to be strengthened to meet the skills and talent requirements of the next decade. Training is a joint responsibility between the industry, academia and Government. In Malaysia, the Government plans to establish an international financial training institute on Islamic finance. The ground work to establish this institute has already commenced. While this may meet some of the requirements, Islamic banking institutions are also encouraged to explore the feasibility of entering into collaborative arrangements with universities and other institutions locally and abroad, to identify and provide specialized training for the financial services industry. These would include training workshops and courses in new and emerging product lines which require specialised skills and expertise. Education of graduates and other personnel entering the Islamic financial market is also important.

17.06.2019  The Spanish banking system: transformations and challenges Opening of the seminar “Sustainable finances and their importance in the future of the economy”, Universidad Internacional Menéndez Pelayo, organised by the Spanish Association of Economics Journalists Pablo Hernández de Cos Governor  Ladies and gentlemen, good morning: It is an honour and a pleasure to be able to participate in the opening of this seminar, organised by the Spanish Association of Economics Journalists (APIE) as part of the Universidad Internacional Menéndez Pelayo’s summer programme of seminars, being held, once again, on this Santander soil, of which I am so fond. I should like to begin by recalling, here in this historic Magdalena palace, that 2019 is particularly rich in anniversaries relating to the opening up and liberalisation of the Spanish economy. The process began with the Stabilisation Plan 60 years ago, while one of the most important milestones was passed 20 years ago, when Spain adopted the single European currency, the euro. And, exactly 25 years ago, in order to reach that stage, it was necessary for the Spanish parliament to approve the Law of Autonomy of the Banco de España, which confirmed the Spanish central bank’s autonomy and independence. By means of this law, moreover, Spain established an institutional framework in line with the requirements for adopting the single currency, and also put in place a fundamental pillar for a culture of stability in the conduct of economic policy.
The idea was that a fixed exchange rate for the krona would mean that inflation in Sweden was adapted in the long term to inflation in the countries with currencies to which the krona was pegged. Confidence in the fixed exchange rate would mean that the expectations of inflation in Sweden would largely be the same as the expectations in the countries to which we were thus linked. But in Sweden, as in many other countries, it proved impossible to prevent inflation soaring with a fixed exchange rate regime. Other countries which tried to control inflation by means of targets for the money supply also faced problems. The Riksbank announced its inflation target in January 1993, after the krona had been allowed to float earlier in the autumn with a great hullabaloo. The Bank then announced that the target for monetary policy would be to hold the annual change in the consumer price index at 2 per cent. The target would formally apply with effect from 1995. In this way Sweden became one of the first countries to choose to formulate its monetary policy in terms of an explicit inflation target. BIS Review 2/2008  1  Despite being aware that it would be difficult to attain the target exactly, the Riksbank chose to formulate the target with a specific figure for inflation. One of the most important reasons for this was to try to create an anchor around which inflation expectations could be stabilised.

Different countries have chosen different solutions – although most countries define their inflation target in terms of the CPI or a modified version of the CPI. We Executive Board members have said that of course the Riksbank should not exclude the possibility of changing to another measure of inflation than the CPI if there are good reasons for doing so. But when discussing such a change I believe that it is important to remember the most important reason for introducing the inflation target, namely the need for a nominal anchor. This implied at that time, and in my opinion it still indicates, that the inflation target should be defined in terms of a price index that reflects normal purchases and which Swedish households are familiar with. In any case, one important criterion for an alternative measures must be that it can really function as an anchor for inflation expectations. Are we Executive Board members "inflation nutters”? Many proposals for changes in the inflation-targeting policy that have been put forward recently relate to the balance between stabilising inflation and stabilising the real economy. Sometimes they seem to assume that the Riksbank is not allowed to, is unable to, or quite simply does not want to give consideration to production and employment when making decisions on the repo rate. Let me say this as clearly as I can: they are wrong. When we make decisions on changing the repo rate and make forecasts for it we always consider how production and employment will develop.
Yes, we have had one or two very highly publicised revelations on legacy problems – but none of that should take away from the fact that the UK system is stronger today, in my view markedly so. But, I can tell you that achieving such progress on this public good has not been as straightforward or uncontroversial as you might think. And that continues to concern me, because it conveys the message that acceptance of the benefit of the public good is not as entrenched as it needs to be – we have work to do to build the consensus around what constitutes financial stability. I am firmly of the view that last year’s actions on capital were correct, and I have no doubt at all that the recovery in bank lending to support economic activity requires a belief and an expectation that the banking system is and will remain well capitalised, and that if we doubt either of these positions, action will be taken. And that is why we, and other countries, are introducing, or have done introduced, regular stress tests. It is about regulation being forward-looking and using judgement. The second point I would make here is that a stable financial system is a necessary precondition of realising other benefits. Let me give a few pertinent examples. The first one comes from the insurance industry, in which I also have a very strong interest. The Government announced some very major reforms in the Budget to the provision of pensions, notably in the annuities market.

There is another lesson that I draw from this history, namely that there must be some difficult impediments to achieving the goal of institutional stability in financial regulation. To start with, achieving consistency and clarity in identifying the objective of regulation has been a problem in the past. The new approach anchors the PRA’s primary objectives of the safety and soundness of firms and the protection of insurance policyholders in the broader goal of the stability of the financial system. This very clearly ties together micro and macro-prudential regulation, whose objectives are consistent. And, we now have a secondary objective around the competition implications of our actions, which I welcome. Just under two weeks ago we announced changes to the Bank of England’s strategy and structure. In doing so, we adopted a single mission, namely to promote the public good through achieving and maintaining financial and monetary stability. This single mission is much more than just the speak of management, it is a clear change intended to promote the integration of the Bank of England’s objectives of monetary and financial stability. This integration of objectives into a single mission represents a very deliberate decision that the Bank of England should not be organised as a series of silos defined by our different statutory objectives and by the structure of policy making committees given to us in legislation.
However, unlike in Indonesia, the major creditor countries, particularly the United States, got together and agreed on an orderly roll-over of Korean banks’ short-term debt. This stabilised the situation and enabled the Korean economy to resume growth quickly. Hong Kong Hong Kong and Singapore were the two economies with the least structural problems or foreign borrowings, yet neither could escape the contagion. Hong Kong’s economy benefited from its linkages with China which was relatively unaffected by the regional currency turmoil. But the Hong Kong dollar’s $ peg to the $ caused Hong Kong’s real exchange rate to appreciate significantly when all the other regional currencies fell. The full adjustment to the changed external environment had to be borne internally, through nominal prices of assets and wages. The result was a sharp recession from which Hong Kong is just beginning to emerge. At the same time, the high $ led the markets to assess the risks of a devaluation. Interest rates rose, further squeezing the economy. After several speculative attacks on the currency and “double-play” on the currency and share markets, the HKMA intervened directly to buy shares in August 1998. The speculative attacks were successfully beaten off, but the Hong Kong Government remains extremely concerned over the dangers posed by speculators, and particularly hedge funds, to their economic stability. Singapore Singapore was more directly affected by the crisis than Hong Kong because of our close economic linkages to Thailand, Malaysia and Indonesia. Our growth slowed down drastically, turning negative for several quarters.

In the post-crisis era, the conventional wisdom is that emerging markets should choose either a free-floating or fixed exchange rate system. But neither is a panacea. Fixed exchange rates are hard to sustain in a world of global capital mobility. Furthermore, they tend to be viable only when supported by large foreign reserves and strong institutional arrangements. Even then, the exchange rate can still become misaligned and vulnerable, as has happened in Argentina. In Hong Kong, strong foreign reserves and well-developed financial authorities and institutions made its currency board workable and credible. But even the Hong Kong dollar came under fierce attack in this crisis. In other countries a fixed exchange rate may be completely infeasible. Thus Professor Steve Hanke’s proposal to set up a currency board system to stabilise the rupiah was viewed with deep scepticism by policymakers both in Indonesia as well as the IMF and the World Bank. Neither does a free-floating exchange rate always work. Even developed countries do not remain impassive when capital flows overwhelm trade flows and threaten the competitiveness of the country’s exports. A prime example is Japan. And despite a free-float, the exchange rate may spiral downwards if there is a loss of confidence. This happened in Indonesia and Brazil after they abandoned their exchange rate pegs. Singapore operates a managed float. This policy has prevented the currency from getting too far out of line and rendering our exports uncompetitive as a fixed rate might have done.
As you can see for yourself, with goodwill and co-operation, the prosperity of Hong Kong has been ensured, both before and after the resumption of sovereignty to China. You have my assurance, and the assurance of China, that Hong Kong will continue to play its role as an international financial centre. We will work hand in hand with all central bankers around the world to build a safer and more robust international monetary system. Thank you. BIS Review 91/1997

However, recent empirical estimates for the UK suggest the effect is qualitatively present with the increase in banks’ overall funding costs due to higher capital requirements lower than in the absence of the theorem by 45% (Miles et al 2013) and 53% (Brooke et al 2015). 11 For example, the now defunct authority regulating the US Government-sponsored mortgage agencies stress tested them to only an 11% fall in house prices – a more severe shock than any nationwide house price decline to be found from 1945 onward. The peak-totrough fall of 11% was calibrated based on house price data for the West South Central Census Region between 1984 and 1993. Frame et al (2015) show that an alternative scenario based on realised post-2006 data would have revealed that Fannie and Freddie’s capitalisation was much weaker than what the original stress tests suggested. It wasn’t only regulators who made the mistake of relying on the recent past only. During a week when Goldman Sach’s Global Equity Opportunities fund lost 30%, Goldman’s chief financial officer famously stated: “We were seeing things that were 25-standard deviation moves, several days in a row.” His focus was too narrow. While the moves in 2007 were substantial, they were not unprecedented. Even within the last thirty years, equity prices had experienced larger single day falls than they did during 2007. 12 Danielsson et al (2016) show that systemic risk indicators constructed with market data were low and falling before the stress events in 1997 and 2008, and shot up during the events.
They range from the loss of demand in connection with the adjustment to the bursting of the bubble from the late-1980s, to more underlying structural factors. To some extent the explanations overlap and each of them certainly played a part in the dramatic course of events in the early 1990s. In order to understand what happened I believe that we have to go back to the beginning of the 1970s and the collapse of the Bretton Woods system. For it was then that the stability oriented regime - a regime that had worked well in the post-war era - broke down in our country. In the absence of a global currency system, it proved difficult to establish a regime in Sweden that would be equally stable. During the 1970s and 1980s Sweden had to manage without a distinct anchor for either monetary and exchange rate policy, wage formation or economic policy in general. We moved through a series of devaluation cycles, fiscal discipline was undermined, structural problems accumulated and wage formation ceased to function properly. When the financial sector was deregulated in the mid-1980s, the problems with stabilisation became even more difficult to manage. Meanwhile, the structural weaknesses were being concealed by an overheated economy. Activity looked strong but the potential growth rate in the Swedish economy had weakened some time before. As the 1980s drew to a close, however, there was a growing awareness that something would have to be done.

There is also the question of what is the end-result of the merger in terms of market share. It may be necessary for more than two banks to get together in order to achieve a significant increase in scale. But the more banks that are involved in a merger, the greater the complexity of achieving strategic fit and cultural harmony. The attitude of the HKMA This reinforces the general point made earlier that successful execution of M&A is not an easy task. However, despite the potential pitfalls, the HKMA continues to believe that consolidation of the local banking sector is desirable and probably inevitable. This is for the reasons I have already mentioned. In general, it is difficult to see how a banking system like Hong Kong's, which is open to the forces of global competition, can resist the pressures that are leading to consolidation in other banking systems. In terms of Hong Kong's particular situation, while it is always dangerous to extrapolate current market conditions into the future, it does appear that organic growth is going to be more difficult to achieve than it was in the years before the Asian crisis. This lays greater stress on the need for smaller banks to find a strategy that will differentiate themselves from their competitors and enable them to earn an adequate return on capital. This will not be straightforward, particularly since a number of the potential business options such as wealth management involve heavy set-up costs that need scale to justify them.