samchain/econo-pairs-v1 huggingface dataset:
No, it would not be wise to always and everywhere trust central bankers with our money, but, yes, there are good reasons to trust central banks, if they are designed as solid and independent institutions with a clearly defined mandate. Institutions limit the faith we need to place into the omniscience and benevolence of individual decision-makers and provide a more lasting and reliable basis for trust and credibility. 4. Reputation and accountability: the role of central banks in society  Properly designed institutions provide the basis for trust and confidence. However, this trust must be earned, maintained and confirmed through action over time. Like individuals, institutions become  BIS Review 96/2000  6  carriers of reputation as a function of their past behaviour. This reputation forms the basis for expectations of future behaviour. In the case of the European Central Bank, the institutional preconditions for credible and successful monetary policy are in place. The European Central Bank is built on trustworthy institutional foundations. As a new institution, however, it started out without a track record and thus cannot rely on an established reputation. The statutes and institutional setup of the ECB have worked very well to date and the Governing Council of the ECB has taken its monetary policy decisions in full independence. However, to firmly establish trust and reputation takes time. Trust is deepened and reputation is built when it is tested in difficult circumstances and when it is maintained over an extended period of time.

[4] See “Response to Feedback on SIBOR Reform and the Future Landscape for SGD Interest Rate  Benchmarks” here . [5] US agencies referred here are: Federal Reserve Board of Governors, the Federal Deposit Insurance  Corporation and the Oﬀice of the Comptroller of the Currency. [6] Bilateral business loans and syndicated loans outstanding as of end September 2020. [7] By end April, all lenders and borrowers to cease issuance of SOR-linked loans and securities that  mature a er end 2021. To support this, all D-SIBs should be ready to oﬀer a full-suite of SORA-based products to their customers by end-February 2021, while all non-D-SIB banks should be ready to oﬀer new SORA-based products by end-April 2021. [8] See “Response to Feedback on SIBOR Reform and the Future Landscape for SGD Interest Rate  Benchmarks” here . © 2021, Government of Singapore. https://www.mas.gov.sg/news/speeches/2021/pushing-ahead-with-sor-sora-transition-in-2021  7/7
After several years spent within the Austrian financial group Erste and its Czech daughter bank, after many visits to Austria on business and on pleasure, and after many working meetings with Austrian partners on various occasions, I have become convinced that Czechs and Austrians have a very similar mentality and share many habits and customs. I would even go so far as to say that hardly any other nation is so similar to the Czechs than Austrians – maybe not even the Slovaks. There are many on either side who will not like this thesis, but I believe there is a lot of truth in it. Not only are Czechs and Austrians typical small savers with a conservative approach to money and debt, and not only do they have similar cultural attitudes to those many petty things important for our lives, from the culture of alcohol drinking to obsession with academic titles, from very similar attitude to clothing to shared mania with sometimes overly bureaucratic procedures here and there. And from comparable attitude to what we deem as the so-called status products in our lives to similar phenomenons and problems also in politics. Moreover however, there is a similar attitude to work. It was Jack Stack, the former head of Erste Group’s Czech subsidiary Česká spořitelna, who made me realise this. He once remarked that it was almost unbelievable how Czechs and Austrians as employees produce very similar outputs and results when given the same tasks to perform.

And that’s probably because the UK economy has weathered the squalls of the past few years rather better than both the US and the euro area. Since 2000, we have grown more strongly than the euro area, and more steadily than the US; indeed we are alone among major industrial countries in not having experienced a single quarter of falling output for more than a decade. As a result the UK emerged from the slowdown in the world economy with less slack than other economies. That is the key reason why we were the first to start raising interest rates last November, when world activity started to pick up and demand at home accelerated. Since then, a number of other countries, including the US, have begun to raise their rates to more normal levels. When I joined the Monetary Policy Committee a year ago, both the Fed and the ECB had just cut their interest rates to exceptionally low levels, reflecting real concerns about the strength of the world recovery. Activity picked up sharply in the US last autumn, but the mood only changed decisively early this year, when a million new jobs were created in just three months. It is now clear that a broad based world recovery is well under way, led by the US and Asia, especially China, but spreading to other regions. The news from Japan is more encouraging than it has been for over a decade.
Without exceeding the terms of this legal mandate, proper compliance requires, as I stated earlier, that banking supervision should be able to adapt to changes in its environment. One group of these changes covers aspects such as financial innovation, concentration and internationalisation, i.e. all developments present in the system and the attendant trends. Banking supervision must know how to capture and interpret the latter, as part of a threefold aim: to encourage their positive aspects; to eliminate, or at least minimise, processes which may prove harmful; and to adapt its own procedures to new circumstances. Only in this way will banking supervision, observing to the full the system's underlying rationale and the initiative of its agents, be able to avoid or correct, at the lowest possible cost, the imperfections of the markets, especially the externalities that may harm third parties. The second no less important group of changes to which banking supervision must adapt is in relation to the demands posed by society. I consider two such demands to be particularly significant. The first is the growing social demand that supervision should promote not only sound, stable and efficient financial systems but systems, moreover, which are governed by increasingly stricter codes of conduct giving rise to practices and conduct subject to ever-higher standards. Among the practical consequences of this demand are, among others, improvements in transparency, in corporate governance and in banks’ knowledge of their clients, as I mentioned earlier.

The conclusion was that our annual stress tests comprised stresses of a scale and nature that encompassed even the worst case disorderly Brexit scenario and that the core banking system would be resilient to such an outcome, were it to occur. We have also assessed other parts of the financial system in the same vein. And of course over recent months, as we approached ‘crunch’ Brexit dates and events, we have developed and have been ready to implement contingency plans to respond to financial sector stress. I would make three observations about this work that has occupied an increasing amount of the Bank’s resources over the last year and a half. First, we have sought to address risks to financial stability. Financial stability is a high hurdle. It does not mean market or economic stability or absence of any disruption or absence of losses. 1  The March FPC statement noted that, while most risks to UK financial stability that could arise from a disruptive Brexit have been mitigated, in the absence of further actions some potential risks to financial stability remain. These risks were: the ability of UK and global banks to provide wholesale banking to EU clients; the operational risks involved with migrating businesses, assets, and contracts in a short period of time; and the ability of UK-EU counterparts to use uncleared derivatives to manage risks.
Different firms can assess risk by different methods and models, using different data sets or applying different judgements: assessments undertaken by the BCBS1 have shown firms can generate quite different RWA calculations for an identical hypothetical portfolio. And firms may choose to optimise both their choice of assets and the weights attached to them to minimise capital requirements. It has been shown that differences in capital ratios calculated on an RWA basis have historically had little or no correlation with whether firms were able to survive a 1  4  Basel Committee on Banking Supervision July, 2013. “RCAP – Analysis of risk-weighted assets for credit risk in the banking book”. BIS central bankers’ speeches  stress2. A leverage ratio offers an alternative approach, which is not risk sensitive but simply calculates total capital in relation to total assets. The degree of leverage has historically been a much better indicator of likely firm failure (although we can’t be sure that correlation will survive if firms start to manage to a constraint!). As alternatives, the RWA and leverage approaches would generate different incentives for firms to be capital efficient. Under RWAs the incentive can be to expand the balance sheet with assets that carry low risk weights. Under a leverage ratio, the incentive can be to limit balance sheet size but choose riskier assets. Ideally, the two measures would work in tandem to ensure sufficient capital to support both balance sheet size and risk taking.

(2009), “Back from the Brink”, http://www.whitehouse.gov/administration/eop/cea/BackFromTheBrink, speech given at the Federal Reserve Bank of Chicago, 24 September 2009. BIS Review 159/2009  5
If this continues it will drag still further on the economy’s already weak productivity trend, over and above the drag from reduced economic openness that I highlighted earlier. I’ve talked so far from a whole UK perspective. And that’s right because the MPC and FPC set policy for the whole country. But regional resilience is also an important aspect of resilience.5  And Scotland, like the UK, has been resilient in a number of ways. The Scottish economy has become increasingly diversified over time. I already mentioned Scotland’s relatively robust performance in the financial crisis. And while the falls in the oil price weighed on growth in 2015-16, more recently GDP growth has broadly kept pace with the UK as a whole – although Brexit uncertainty is having the same negative effects in Scotland as elsewhere. Scottish labour productivity, while slower than pre-crisis as in the rest of the UK, has been better sustained, perhaps because there has been less of an impact from the financial sector. And unemployment is at 3.2%, even lower than the already record-breaking UK rate of 3.8%. In the Highland region it was 3.0% in the most recent data. Andy Haldane’s speech “Is all economics local?”, available online at https://www.bankofengland.co.uk//media/boe/files/speech/2019/is-all-economics-local-speech-by-andy-haldane.pdf, gives a sense of the kind of new ways the Bank is using regional data to get a better understanding of the economy.

What I want to use the rest of this speech to talk about is how I think about stability and resilience in light of those three lessons now that I’m at the Bank of England, and how that has influenced my approach to monetary and financial policy setting in the face of recent and future shocks. 4  All speeches are available online at www.bankofengland.co.uk/news/speeches  4  2 A broader assessment of resilience  My first lesson from the financial crisis was that the past is not necessarily a good guide to the future. For the MPC this is most obviously true when it comes to thinking about supply growth – that is, the economy’s underlying growth potential. The experience of the crisis showed us that it wasn’t enough to think about business cycles relative to a fixed supply trend: that might have worked for the decades before the crisis, when supply growth averaged around 2½ %; these days we have to think about supply as much as we do about demand. That’s because once the economy is on trend the growth of supply sets the “speed limit” for how fast demand can grow without generating above-target inflation. Reflecting that, for instance, the word “productivity” – a concept which is integral to our assessment of the speed limit – now appears almost three times as frequently in our Inflation Report as it did before the financial crisis (Chart 5).
Dr Abbas is also the recipient of several awards from several governments and from the Islamic Development Bank, he received the Annual Prize for Research in Islamic Economics in recognition of his service in advancing the knowledge in Islamic finance. He has published books and research articles on a wide range of areas including microeconomic theory, mathematical economics and Islamic economics. During his tenure at INCEIF, Dr. Abbas will also engage in research and consultancy in on Islamic finance, including guiding academic research and supervising dissertations and theses of INCEIF students. He will also present lectures abroad organised by INCEIF as part of the efforts to strengthen the international alliances that have been established with INCEIF BIS Review 9/2010  1  from other centres of learning in other parts of the world. His appointment as the inaugural holder of INCEIF Chair of Islamic Finance would certainly give INCEIF the opportunity to raise its capacity to become a world class learning institution dedicated to Islamic Finance. Dr Abbas valuable knowledge and insights and his extensive experience in both academia and at the IMF, will benefit and enhance the knowledge and expertise of INCEIF graduates as well as the academia and financial community. Since its establishment in 2006, INCEIF has grown from strength to strength and has been recording a steady increase in the number of students for its three programmes, the Chartered Islamic Finance Professional or the CIFP, Masters in Islamic Finance and PhD in Islamic Finance.

The other step concerns the choice of the central parity rate for entry in ERM II. As explained earlier, this, however, remains a multilateral decision to be taken by consensus and the matter, therefore, is not at our sole discretion. What are your expectations with regard to the central parity rate? As I have just pointed out, exchange rate stability is vital for our open economy and we wish to preserve this important feature of the currency during ERM II. We have reason to believe that this is not an unrealistic expectation. It is based on the outcome of a study the Bank carried out on the equilibrium exchange rate. According to economic theory, the central parity rate in ERM II stands a better chance of being sustainable over the two-year period if it corresponds to the equilibrium exchange rate. Thus, if one could identify the latter rate, one would automatically have an idea of the most appropriate central parity rate for ERM II. The equilibrium rate, however, is not specifically known and cannot be observed. It can only be estimated under a number of assumptions and the estimates are sensitive to the methodology used. Recognising this caveat, the Bank used several methods to estimate the equilibrium exchange rate. Both the methodologies and the results of the Bank's study were shared with local and foreign experts, from the ECB and from fellow national central banks in the EU and in North America.
When I met a group of Japanese industrialists recently, they lamented that the target date of 2020 to achieve the ASEAN Economic Community was too far away. They urged ASEAN to integrate aster into one single market so that it would be an attractive destination for Japanese investments besides China. Terrorism and regional security are major problem areas. The fight against terror will continue for many years. Victory can only be achieved through a sustained and united global effort. The most important dimension of the fight is the ideological one - between mainstream Islam and the extremist elements. If the extremists are not defeated in this intra-Islam ideological fight, there will be a constant supply of terrorists out to create terror and chaos. Tensions have heightened in the Taiwan Straits and the Korean Peninsula. While Taiwan’s economy is becoming increasingly intertwined with China’s, politically, Taiwan appears to be taking steps to move permanently away from China. The risk of a miscalculation leading to military conflict is high in the next few years. The consequences of such a war will make the war in Iraq look like a skirmish. Asia will be in turmoil. Its development will be set back for many years. North Korea is another potential trouble spot. Fortunately, whatever their differences, the key players share a common interest in the peaceful containment of the issue. III. Five-year strategic plan  What does this mean for us in MAS? It means we have to anticipate events and plan for uncertainties.

Banks’ exposure to reputation risk also changes since problems in another, non-banking part of the conglomerate may influence and damage the bank’s reputation. In terms of financial stability, it may nonetheless be an advantage that bank conglomerates spread their revenue base. This is particularly true if earnings from new activities do not fluctuate in step with earnings from traditional banking activities. However, this is not entirely certain since most sources of bank revenues failed during the banking crisis at the beginning of the 1990s. Risk diversification through the securities market Credit that is channelled directly through the securities market diversifies risk and thereby eases the burden on the banking system. Developments in the securities market have made it easier for banks to vary their financing. In addition, the emergence of a number of new credit sources and new instruments has made it possible for banks to engage in risk trading. Therefore, it has also become easier for banks to diversify risk. The structure of the financial system varies considerably across countries. This is illustrated by the different ways enterprises finance their activities. Norwegian enterprises have a fairly low level of borrowing in the bond and short-term paper market, representing as little as 8 per cent of total financing. Different financing structures mean that the risk associated with extending credit and providing other financial services varies across countries. It is an advantage for enterprises and other operators in the financial market to have several financing sources to draw on.
In the context of the economic recovery in 2021, the insurance sector saw a return to growth in all its activities: net inflows increased by 18% compared with the previous year. This allowed insurers to consolidate their solvency, with the average Solvency Capital Requirement (SCR) coverage ratio rising to 253% after the slight decline seen during the Covid crisis. Page 2 of 8  French banks in turn saw a “return to normal” in 2021 in terms of dividend payouts, which was completely justified. Their solvency ratio, which was already solid, increased even further over the year, reaching 16% for the top six French banking groups. Their profitability also improved (their RoE stood at 7.1% at end-2021 compared with 4.6% a year earlier and 6.4% in 2019): it is close to the European average but still structurally too low. Page 3 of 8  Banks continued to play their full role in financing the economy, providing a robust supply of credit: 4% growth in loans to SMEs and even 6% growth in residential housing loans, which is a particularly high rate. Credit in France is continuing to grow faster than the economy, so private debt – that of corporations and households – is still rising. With regard to corporate loans, I said here last year that the gradual winding down of the government aid measures posed a manageable risk to the financial sector. Indeed, the wave of business failures feared by some has not in fact materialised.

Any one who travels outside the United States today returns with an appreciation about how rapidly public infrastructure is improving in many parts of the world, relative to what is evident in many parts of the United States. As global markets become more integrated and companies and capital can move more freely across borders, policymakers will face new challenges in the design of regulations. They will have to look more carefully at the balance of benefits and costs, when companies have more choice about where to invest. They will have to find ways for regulations to evolve more quickly in response to developments in markets. They will have to explore ways to cooperate more closely with other governments, where national approaches alone cannot be effective. We need to get used to a world in which we will see, in many areas, less willingness to adopt a U.S. model or to defer to a U.S. view on the appropriate global standard. You can see some of these dynamics in the financial arena, and concern about the erosion in the relative position of the U.S. financial system. Financial markets outside the United States are now deeper and more liquid than they used to be, making it easier for companies to raise capital domestically at reasonable cost. These financial markets are at an earlier stage in the process of capital market development, and they will therefore experience rapid growth in securitization and the role of derivatives.