samchain/econo-pairs-v1 huggingface dataset:
In this way they try to immunise the market risk by allowing assets and liabilities to have the same sensitivity to interest rates. This means that a change in interest rates that leads to the debts increasing in value will be neutralised by a corresponding increase in the value of the assets. An investor that lacks this type of natural investment horizon must seek alternative points of departure when choosing duration. The relationship between risk and earnings then becomes a reasonable point of departure. This applies to the Riksbank, as we do not have any fixed-income liabilities. My colleagues and I must therefore consider how to achieve a balance between risk and earnings. If the purpose is to avoid negative effects on the results in all situations, it would be logical to base the duration on the accounting period, which in our case is one year. Then the actual result would be close to the forecast result. However, this type of short-term investment strategy is at the cost of both increased reinvestment risk 16 and lower expected earnings. As a public authority under parliament, we have instead assumed that the general government prefers long-term good earnings at the cost of larger, short-term fluctuations in the annual result. This type of long-term perspective in our assets enables us to avoid paying the extra liquidity premiums that market agent appear willing to pay for fixed-income securities with a shorter duration.

Given this, the Executive Board has decided that the total fixed-income investment should have a modified duration of 4.00. This choice is based on a consideration where the price risk 17 is not assessed to offer a threat to the capital. 12  The Riksbank invests in the following institutions: Tennessee Valley Authority and the mortgage institutions Federal Home Loan Bank, Fannie Mae and Freddie Mac. 13  Changes in the slope mean that the yield curve becomes steeper or flatter when the long or short end of the curve moves. Changes in curvature involve the long and short ends moving in the same direction, while the middle segment of the curve moves in the opposite direction or remains unchanged. For a detailed description of the yield curve, see for instance Golub & Tilman (2000). 14  Modified duration is a linear description of the relationship between a bond portfolio's market value and interest rates. 15  Although the yield curve normally slopes upwards, it would be risky to take this for granted. During different period of time, parts of the yield curve have been both horizontal and downward sloping. 16  Reinvestment risk arises when capital is to be invested over several periods, as the reinvestment interest rate during the later periods is not known now. By investing assets with the same duration as the accounting period, one is only exposed to reinvestment risk and the annual result will be known at the beginning of the year (this applies to assets without credit risk).
Economic theory says that such goods will not be offered to a sufficient extent or sufficiently efficiently by the private market. Tobin (1987) 15 argued that this aspect of the monetary system means that central government should have a central role on the payment market and I am inclined to agree with him. The implementation of payments involves the exchange of a large amount of information, demanding large IT systems which are expensive to obtain but with 13 The banks’ possibilities for creating new loans are also limited, to a certain extent, by the requirement that they have a certain amount of equity in relation to the size of their balance sheets. There are also regulations for the composition of the balance sheet that are aimed at reducing the risks in the financial system. 14 Up to SEK 950,000 per person and institution is protected according to the deposit guarantee. See www.riksgalden.se/sv/Insattningsgarantin/Om_Insattningsgarantin/. 15 See Tobin, J. (1987) “A Case for Preserving Regulatory Distinctions.” Challenge 30 (5). 5 [15]  which the marginal cost for executing a further payment is small. In other words, there are economies of scale, which, in theory, leads to natural monopolies. This means that, if the market is left unregulated, the dominant company will have an incentive to supply too little of the product for too high a price. Monopolies can also create worsened conditions for innovation as these are often driven by competition. In addition, the system can be vulnerable when one company, and thus one technical platform, dominates.

This limit ensures that banks still have to borrow from the Eurosystem at the monetary policy rate set by the Governing Council. Here is where the ANFA comes in. Its purpose is to limit the size of the NCBs’ non-monetary policy portfolios, net of the related liabilities, and thus to ensure that the Eurosystem can effectively implement the single monetary policy. Of course, when performing national tasks, the NCBs must comply with the Treaty including the prohibition of monetary financing. Moreover, if these tasks were to interfere with monetary policy in any other way, they can be prohibited, limited or have conditions placed on them by the Governing Council. The publication of the previously confidential ANFA text was a unanimous decision of the ECB and the NCBs in the Eurosystem to live up to our commitment to be transparent. This publication should resolve misunderstandings about ANFA. In particular, it clarifies that the sole purpose of ANFA is to set limits for non-monetary policy operations related to national tasks of the NCBs, which they are allowed to conduct according to the Treaty. Nothing more and nothing less. These limits ensure that the NCBs’ operations do not interfere with the objectives and tasks of the Eurosystem and, in particular, with the single monetary policy. BIS central bankers’ speeches  3  Finally, complementing the information on ANFA, the ECB also published data on the Eurosystem’s aggregate net financial assets. The NCBs will follow suit and disclose their respective net financial assets when publishing their annual financial accounts.
Monetary policy easing and substantial liquidity provision to the banking sector have so far not been sufficient. Moreover, the impetus from emerging economies has waned. Sluggish investment is the main drag on growth in Europe. Elevated uncertainty surrounding economic developments, high corporate debt and tight bank credit standards are holding back the willingness and ability to invest. The result is a self-reinforcing mechanism that is difficult to unravel. BIS central bankers’ speeches  5  With policy rates near zero, the central banks of major advanced countries have employed unconventional measures to stimulate activity and combat the risk of deflation. Large-scale securities purchases, including government bonds, have been made. The bonds are recorded in central banks’ balance sheets. The US and the UK were among the first countries to launch asset purchasing programmes in the wake of the financial crisis. Until recently, the European Central Bank (ECB) had largely used a different channel, namely supplying large loans to the banking system on favourable terms. Three weeks ago, the ECB decided to take it a step further and will soon start purchasing government bonds on a large scale. Government bond buying drives up prices and pushes down yields. The purchases may also push up equity prices and prices of riskier assets. The aim of these central bank operations is to stimulate lending and investment via lower long-term interest rates. There is evidence to suggest that the measures have contributed to softening the downturn and boosting production in the UK and the US.

These rules establish that it will be the shareholders and investors who will bear, in the first instance, the losses of a bank. In 2016 additional rules will come into force, protecting member states and taxpayers from having to pay for systemically relevant banks by establishing a resolution fund paid for by banks. It will take eight years for the fund to reach its target level of 55 billion euro. Is this not too little, too late? It will be a quite significant amount, taking into account several other safety buffers. First, banks have considerably increased their own funds in recent years. Second, the resolution fund will only be used after contributions have been made from shareholders and creditors. These could reach up to 8% of liabilities, which is already a significant amount. Thus the overall loss-absorbing capacity of banks has increased considerably. The resolution fund comes on top of this. The third pillar of banking union, the creation of a European fund to guarantee savings deposits, has come to a standstill. Should we be worried? Not unduly, because deposits are already guaranteed up to 100,000 euro at the national level. But more importantly: if the first two pillars of the banking union work properly and secure the stability of individual banks and the banking system, the need for a joint fund significantly diminishes. The stress tests revealed worrying weaknesses in Italian banks. Is Italy the weak link in the euro area?
While these have proven effective in other countries, they are still relatively novel here.8 By acting, assessing, and if necessary re-calibrating, we are more likely to strike the right balance to support durable growth over the medium term. That’s why authorities have already moved. Last autumn we took our foot off the accelerator by removing capital relief for banks on new mortgages and, with the Treasury, by re-focussing the Funding for Lending Scheme away from mortgages towards business lending. Those steps were followed by the implementation in April of the Mortgage Market Review to reinforce banks’ underwriting standards and the stress test to underpin their capital discipline. The FPC has a wide range of other tools if further action is justified. We can direct lenders to raise capital held against mortgages or against all credit. Thanks to the FCA, we are now able to recommend a tougher interest rate stress to which new borrowers are subjected when banks assess affordability. We can also make prudential recommendations about the share of high loan to income, loan to value and long tenor mortgages in banks’ and building societies’ new lending. In this regard, I applaud the Chancellor’s intention to grant the FPC additional directive powers in relation to these aspects of mortgage portfolio composition. I also welcome the Chancellor’s commitment to adjust the Help to Buy Mortgage Guarantee Scheme to comply in full with any FPC actions.

Rather than appeal to the stately Duchess of York on which my predecessor sailed, I will look to the trusty canoe – a craft that can navigate the most rapid and treacherous waters…provided its paddlers work in sync. Those economic currents are flowing swiftly, with the economy expanding at an annualised rate of 4% and jobs growing at a record pace.2 But there are rapids ahead, with old imbalances persisting and new ones emerging. The economy is still over-levered. The housing market is showing the potential to overheat. And the current account deficit is now at a record level. Navigating these hazards requires close coordination between all those in the boat; that is, between fiscal, monetary and prudential authorities. Tonight I want to explain the Bank’s contribution to delivering a durable expansion characterised by balance in the macroeconomy, the housing market, and the financial sector. Before doing so, I would like to join the Chancellor in paying tribute to two individuals. The first is Sir David Lees, who as Chairman of Court has overseen the transformation of the governance and responsibilities of the Bank. David, I am extremely grateful for your support during my first year as Governor. I’m also enormously grateful for the wise counsel of Charlie Bean during the past year. Always working, Charlie is tonight discharging his duties as President of the Royal Economic Society. Throughout his career, at the Treasury, in academia and at the Bank, Charlie has been a leading thinker and practitioner in the pursuit of macroeconomic balance.
  With the widespread use of IT, it is important that the legal framework is in line with the new environment. Thailand has started to legislate five new Information and Communication Technology (ICT) Laws to embrace information technology since 1998. They are the Electronic Transactions Law, Computer Crime Law, Data Protection Law, Electronic Funds Transfer Law, and the National Information Infrastructure Law. The Cabinet has appointed the National Electronics and Computer Technology Center (NECTEC) to take charge of the drafting of these laws. The Electronic Transactions Law was promulgated on April 3, 2002 while the others arc in the process of enactment. BIS Review 35/2005  1  2. E- banking products in Thailand and supervisory concerns  What I would like to do next is to give you some examples of IT-related financial products and services currently offered in Thailand and the pertinent risk issues that bring up supervisory concerns. Let me start by briefly showing you our data on e-banking service usage by category. In the first four rows of the table, the figures show customers' e-banking transactions that have high transaction volumes but low average values. In the remaining rows, you will find that the Bank of Thailand is the sole service provider facilitating wholesale payment transactions between financial institutions and the central bank. Even the number of transaction is much smaller, the value is certainly much higher. This type of transaction of course has different risk implications from that with higher transaction volume in smaller amount of money.

Fundamental to the growth of internet banking over the years is the confidence which the public has in its convenience and security. This is something that we cannot take for granted and must be continuously preserved. Advancement in technology and innovation has resulted in greater consumer convenience and enhanced efficiency. However, the same technology and innovation have also created new methods of perpetrating fraud that could be executed faster and with greater reach. Cyber criminals have been active ever since the advent of the internet, and are constantly finding new ways to defraud innocent victims. Safety and security of transactions in the banking system is fundamental in ensuring consumer confidence. Hence, an important function and responsibility of the Central Bank is to ensure online transactions can be made in a safe and efficient manner in the economy, in the pursuit of monetary and financial stability objectives. The need for constant vigilance & cooperation This fight that the banks are launching today is something that requires the support of all parties. We are aware of the creative ways in which criminals have attempted to deceive customers over the years and measures were required to be taken by the banks to protect the customers. While it is good to know that banks have played their roles in investing in robust security systems, they must also ensure that customers play their part in protecting their own assets and savings. The reminder and greater awareness from the Banks through this campaign is timely.
Consistent with that, my subjective distribution of risks around these projections is now symmetric. On the upside, the fall in sterling has had a quite pronounced and, as importantly, persistent impact on financial market and, to a lesser extent, consumer measures of inflation expectations. Financial market measures of expected inflation five years ahead over the following five years have risen by around 60 basis points from their mid-year low-point. There has also been a tick-up in equivalent measures in the US and euro-area over the past few months of around 50 and 30 basis points respectively (Chart 16). In each case, this does no more than take inflation expectations back to around where they were at the start of the year. In other words, recent adjustments have removed the downside skew to inflation expectations which had emerged. In that sense, the recent adjustment in inflation expectations is benign and helpful. Nonetheless, a further large upwards shift in expectations from current levels would, I think, be less benign and possibly unhelpful, especially if it were expected to persist. On the downside, I think there is still a material chance that growth could under-perform relative to expectations during the course of next year – for example, if the squeeze on household incomes prompts a larger adjustment in household spending. In that event, the upside pressures on inflation would be weaker than expected.

Male life expectancy in London and the South East (at around 80 years) is 2 to 3 years longer than in these parts of the UK. 13  So this is a story of wide regional differences in incomes and well-being sourced, to a significant extent, in regional differences in firm-level productivity. Those differences are themselves rooted in differing levels of investment in machines and people, in technology and skills, in physical and human capital. We have red and blue firms hiring red and blue workers, resulting in red and blue car levels of income and productivity. Which is the North-East? Levels of GDP per head, wages and productivity in the North-East are, respectively 25%, 8% and 11% below the UK average. Levels of physical and human capital accumulation are also lower. Levels of unemployment are currently 1.3 percentage points higher and 4.4 percentage points higher for young people. North-Eastern households own half as many assets and fewer cars than South-Eastern households. Redcar is a Red Car region. The Role of Monetary Policy  These maps lay bare both some of the challenges, and the opportunities, facing the UK economy. 13  See ONS ‘Life Expectancy at Birth and at Age 65 by Local Areas in the United Kingdom’, available here. 7  All speeches are available online at www.bankofengland.co.uk/publications/Pages/speeches/default.aspx  7  The challenges include the fact that growth in income and productivity at an aggregate level has recently been slower than in the past - the economic pie has not risen rapidly.
By reducing the probability of a systemic financial crisis, the actions taken by the Fed on and after March 14 have helped avert substantial damage to the economy, and they have brought a measure of tentative calm to global financial markets. Relative to the conditions that existed on March 14, risk premia have narrowed, foreign exchange markets are somewhat more stable, energy and commodity prices are lower, perceptions of risk in the financial system have diminished, and the flight to quality is less pronounced. Nevertheless, liquidity conditions in markets are still substantially impaired and the process of de-leveraging remains underway. And this will amplify the headwinds facing the U.S. and global economy. In this context, policymakers and financial market participants need to continue to act forcefully. And their actions need to be proportionate to the challenges. Financial institutions need to continue to improve the quality of disclosure, and even the strongest institutions face compelling incentives to raise new equity capital so that they can take advantage of the opportunities ahead. Actions to strengthen the capacity of the major government sponsored enterprises, the Federal Housing Finance Board and the Federal Housing Administration to provide finance to the mortgage market and help reduce the risk of avoidable foreclosures are a very important complement to the broader policy actions already in place to contain the downside risks to the economy. The Federal Reserve, working closely with other major central banks, will continue to provide liquidity to markets to help facilitate the process of financial repair.

And the pace of policy reform – in the UK, but also in the EU and globally through the International Association of Insurance Supervisors (IAIS) – is likely to be on a longer timetable due to Covid-19 being a shared and pressing priority. We recognise that there are certain aspects of the design and implementation of the Solvency II regime that do not fit so well to UK specificities. Our views on these areas are well known, and I believe shared by industry. We understand that the first priority for the industry is the Risk Margin. The current design is too sensitive to long term interest rates and this has the unintended and perverse consequence of driving a high proportion of longevity risk on new business offshore. We are committed to reform of the risk margin. The timing and nature of reform depend, like many questions of regulatory reform, on the final relationship between the UK and the EU. There is a wide range of options that could be pursued and it is encouraging that EIOPA intends to look at the design of the risk margin in the final stages of the 2020 review. Second is the matching adjustment. The PRA supports the concept of the matching adjustment. It provides the right incentives for insurers to invest in assets that are suitable for their business models. This in turn also reinforces a macroeconomic role of insurers, who provide stable, long-term investment.