samchain/econo-pairs-v1 huggingface dataset:
They are largely exempt from reporting and disclosure requirements and there are no restrictions with regard to investment strategies, financial instruments or leverage. The term “hedge fund” goes back to the 1950s, when the first hedge funds were established. These funds were designed to be neutral to general market movements. Their investment strategy was to combine short and long positions to hedge some of the market risk and thus to achieve absolute returns in different market conditions. Nowadays, they no longer just “hedge” since they apply a wide range of investment strategies. They make intensive use of short selling and of complex financial instruments such as derivatives. The term “highly leveraged institution” is also of limited value in terms of defining the entity it designates. 2 At a rough estimate, HLIs have an average leverage of 1.4. 3 This is indeed a much higher leverage than traditional investment funds have, for which there are strict restrictions on indebtedness. In Switzerland, for instance, traditional investment funds are only allowed to have a leverage of up to 0.1, and this only on a temporary basis. However, a leverage of 1.4 is low compared to large international banks which have a leverage of ten to fifty. In terms of market share, the role of HLIs is less important than is generally believed although, in the last few years, their activity has grown tremendously. Since 1999, HLI assets under management have increased by a factor of five. An important driving factor has been the increased inflows from institutional investors.

In assessing these risks, particular attention should be given to the liquidity profile of hedge funds and how margins are agreed upon and – in the event of market turbulence – how they are adjusted. Such stress tests could help to assess the risks of disorderly unwinding in adverse market situations, and enhance the understanding of how third parties impact market prices and liquidity. There may be situations in which intervention by a regulator is justified. The protection of less sophisticated retail “investors” who are indirectly – through pension funds – exposed to HLIs might be a legitimate concern. However, regulations are better implemented on the pension fund side by the relevant regulator than by directly regulating HLIs themselves. 14 A realistic assessment of the systemic importance and the disruptive capacity of HLIs leads us to the conclusion that direct prudential regulation would be difficult to justify. There is no market failure which needs to be addressed through regulatory measures. Thus the apparent benefits to be delivered by regulation appear not to justify the related costs, such as reduced market efficiency and slower financial innovation. Furthermore, the HLI industry is very heterogeneous and many funds are registered in exotic off-shore locations and, hence, beyond the jurisdiction of the main regulators. Therefore, we doubt that direct regulation is feasible and superior to market discipline or to a best practice approach. 5. Conclusions  The HLI industry has become increasingly important in recent years.
The exchange rate of the krona against the D-mark was thus significantly weakened over a long period of time. This meant that Sweden's competitiveness in relation to Germany actually increased somewhat.1 However, a comparison of unit labour costs in Sweden and Germany in the same currency shows that the difference just before the crisis in the early 1990s was nevertheless approaching the same level as prior to the devaluations at the beginning of the 1980s. As the social partners were able to count on devaluations, there was no strong incentive to try to avoid cost problems. The problems worsened during the second half of the 1980s and the early 1990s when Sweden suffered a period that, in many respects, can be described as a classic financial crisis. The phase-out of credit and currency regulations was followed by a dramatic expansion of credit, overheating of the economy, major current account deficits and, finally, a collapse. Inflation in Sweden in line with that in Germany since the early 1990s Since the beginning of the 1990s, inflation in Sweden has been roughly the same as in Germany (see Figure 1). There are of course several reasons why inflation in Sweden has fallen to a low and relatively stable level. The crisis that Sweden suffered in the early 1990s  1  Here and below the term "competitiveness" is used in the sense of relative unit labour costs in the same currency. 2  BIS Review 154/2008  was the most serious recession since the Depression of the 1930s.

See chart “Real exchange rate against Norway’s trading partners” at the end of the speech. Substantial oil revenues are now being ploughed into the Norwegian economy. Since the turn of the millennium, annual petroleum revenue spending has increased by a good NOK 100 billion. According to uncertain forecasts in government documents 5, another NOK 40 billion or so will be phased in over the next ten years. The cost level in Norway is a thermometer indicating how much the Norwegian economy can sustain without developing a serious case of Dutch disease. The temperature is now high. 4  Measured in international currency at the exchange rate prevailing on 31 December 2008. 5  See Table 3.6 in Report No. 2 (2009–2010) to the Storting: Revised National Budget 2010. BIS Review 78/2010  3  Measured against Norway’s trading partners, the cost level is now almost 20 per cent higher than the average for the oil age. Norwegian labour has never been as costly as today. Norwegian businesses will often lose contracts given the current high level of spare capacity in other countries. And it has never been more profitable to relocate activities abroad. The economic geography of Norway will change over the next 10–15 years. Norway’s cost level and low growth in Europe will bring pressure to bear on jobs and businesses in manufacturing communities. Job losses will have the most severe effects in areas where manufacturing is the most important industry. Entire manufacturing sectors may be lost.
Interbank funds and securities transfer are performed via the Interbank Clearing – Real Time Gross Settlement System that is supervised and operated by the Central Bank. This system commenced operation in April 1992. In 2000, the second generation Electronic Fund Transfer System replaced its predecessor. Today, Electronic Fund Transfer System is a real-  BIS Review 21/2008  1  time gross settlement system in line with best international practice. Payments are settled individually on the accounts and transferred to receiver immediately. Thanks to the infrastructure provided by Electronic Fund Transfer System, institutions and individuals can make any kind of payments in real time through telephone banking or internet banking services free of charge or with minimum cost. A noteworthy feature of the payment system is that it was designed to process both large value and low value transactions. The Central Bank of Turkey also established Interbank Clearing – Electronic Security Transfer and Settlement System for real time electronic transfer and settlement of government bills and bonds. The system has been taken into operation in 2000 under the supervision of the Central Bank of Turkey. It is fully integrated with the Electronic Fund Transfer System and operates under delivery versus payment principal. The third pillar of the payment system in Turkish economy is the Interbank Cheque Clearing Houses Center. The Clearing House is a private legal entity that carries out the clearing and settlement of cheques under the supervision of the Central Bank.

The Colombo Stock Market has gained by 35% on average during the past 5 years. The growth during the last year was over 50% and the trend has continued so far during the year. With the expansion of CSE to regional cities such as Matara and Kandy, the contribution of outstation customers in stock market activities have increased significantly and this trend should be encouraged. However in comparison to other regional countries, our Insurance penetration rate is still low, although the developments in the industry during recent years have been impressive. As the country observes these developments in the financial sector, the regulatory mechanism has strengthened as it should be. The Central Bank continues to supervise the banking sector, finance companies, leasing companies, and money changers. Stock exchanges and stock brokers are regulated by the SEC. IBSL has the role of regulating the Insurance Industry. All these developments have necessitated more and more people who are skilled, knowledgeable and trained on financial services. As stated in the bestseller of Robert Kiyosaki, the reason as to why most of the poor and middle class people financially struggle, while the rich continue to remain rich for generations, is mainly because of the lack of financial intelligence and insight, as the real financial education is usually conveyed by parents to their children and not taught formally at schools. Perhaps, this applies not only to individuals but to countries as well.
In this regard, we welcome the announcement of the People’s Bank of China in August regarding the introduction of a pilot scheme allowing eligible entities in Hong Kong to make use of their RMB funds to invest in the Mainland's interbank bond market. The launch of this scheme has opened up a channel for offshore RMB funds to invest on the Mainland. Market responses to this scheme have been very positive. 30. As I mentioned at the beginning, Mainland China is now the second largest economy and the single largest source of new economic activities in the world. The increasing use of RMB in the international stage – although that will be a gradual process – will have profound implications on the global financial landscape in the years to come. 4  BIS Review 153/2010  Concluding remarks 31. So, the trends are very clear. Now is a critical time for market players, including banks, financial institutions and asset management companies, to prepare themselves well for the unprecedented opportunities presented by these two important trends in China. 32. Before I conclude, I would like to say a few words about the Linked Exchange Rate System in Hong Kong. As the offshore RMB business continues to develop in Hong Kong, there are views that the RMB may undermine the status of the Hong Kong dollar. Some have even said that it would be natural to consider pegging the Hong Kong dollar to the RMB instead of the US dollar. We do not agree with these views. 33.

The second dimension is RMB trade settlement. The RMB trade settlement pilot scheme was introduced in July last year. The initial scope of the scheme was rather limited. But in less than a year, the pilot scheme was already expanded to cover enterprises in 20 provinces and cities on the Mainland, and their trade transactions with any parts of the world can now be settled in RMB. The expanded scope has led to a rapid growth in the transaction volume of RMB trade settlement in Hong Kong, which was increased from a monthly average of 4.5 billion yuan in the first half of this year, to more than 26 billion yuan in the third quarter, representing an almost six-fold increase during the period. 23. To date, more than 75% of Mainland’s RMB trade transactions with the world are handled by banks in Hong Kong. This clearly demonstrates the strong preference of market players for making use of Hong Kong’s platform for RMB trade settlement. The highly efficient and reliable RMB Real Time Gross Settlement (RTGS) system in Hong Kong has played a significant role here. We are the first and so far the only place outside Mainland China that has developed a full-fledged RMB RTGS system, enabling us to handle the  BIS Review 153/2010  3  settlement of cross-border trade between the Mainland and other economies in a safe and efficient manner. 24.
But capital does help to reinforce the system, because it provides an incentive for institutions to reduce the risk that they pose to the system. Banks which show that they are less risky should be subject to lower requirements, thereby incentivizing responsible and safe behaviour. Instead, those banks that pose higher risks should meet more stringent requirements. Let me stress, yet again, that my point is not about having all global banks following this organizational philosophy. On the contrary, I do believe a diversity of institutions from either a business model or an organizational perspective is needed to ensure that financial globalization promotes global growth. But we should also be aware that, if the regulatory framework in areas such as SIFIs capital surcharge is ill defined, we may end up promoting the convergence of global banks towards the most complex business model of the current landscape. BIS central bankers’ speeches  3  In this respect, I would like to draw your attention to the fact that we have recently raised core capital requirements – to 8% – for all institutions operating in Spain, in order to boost the stability of the financial system. However, we have also gone a step further and placed an additional 2% charge – to reach 10% – on those institutions which could potentially create more problems for the supervisor.

In my opinion, this work is going in the right direction. For example, we have a general agreement that not all SIFIs are the same or pose the same degree of risk to the system, and that the framework should recognize this. Along the same lines, the idea is to have a system which builds in a sufficient degree of supervisory judgement to reflect aspects that cannot be quantified, but balanced with “constrained discretion” and a peer review process to ensure that there is a level playing field. And I think, and others think, that the resolvability of an institution should be taken into account in determining the systemic risk of a Global SIFI. For instance, a proper “living will” is a mechanism to reduce the impact of a bank failure and, therefore, to reduce the systemic risk these institutions pose. Finally, the FSB places strong emphasis on the importance of intensive supervision. The aspect of the FSB approach to SIFIs which has attracted most attention is the setting of higher capital requirements (or “loss absorbing capacity”) for SIFIs. We would be extremely naïve to think that extra capital is the answer to systemic risk. Holding extra capital does not resolve the problems of poor management or ill-advised risk taking. And we will never be able to require SIFIs to hold a level of capital sufficient to absorb the huge costs related to their potential bankruptcy.
We're heading into the summer: all the summer activities, whether it's transportation, whether it's hospitality, whether it's vacation, all of that is going to go well. So, that persistence is to be expected in the short run. There will be remaining persistency going through into 2024. It declines in 2025 and we have not revised upwards significantly for 2025 because we believe that other elements will kick in, which will reduce inflation numbers – unless risks were to materialise. But under the baseline, the indirect effect of energy costs will continue to fade. You can still find them in prices, but it is going to gradually fade out. The same goes for food. We expect the persistence of inflation to gradually fade away. As much as it persists, we will persist. You have delivered quite a strong message about wages, and I'm a little bit scared. Has the risk of an inflation spiral increased since March? The second question about the projections: if 2025 is not acceptable, do we need to see 2% inflation in 2024 for the ECB to consider that the objective will be achieved in a timely manner? Or what is exactly a timely manner? Well, first of all on wages: we are not seeing second round effects. We're not seeing this wage price spiral.

The equity committed by the U.S. Treasury facilitated broad support for large employers.8 The facilities’ combined capacity leveraged Treasury’s committed equity contribution of $ billion by up to 10 times. Third, the support provided by the facilities is broad. Excluding banks, all U.S. domiciled firms with an investment-grade rating prior to the facilities’ announcement were eligible, thus concentrating support for firms that primarily faced liquidity strains due to the pandemic. The facilities also provide support for firms with ratings just below investment grade to mitigate the “cliff effects” at the boundary of our support.9 Together, these programs backstop about 80 percent of corporate bonds outstanding, excluding those issued by banks.10 Finally, policymakers signaled their willingness to adapt. Even before purchases began, the size of the equity injection and purchasing power of the facility was increased, and the scope was broadened to allow support for “fallen angels,” or bonds downgraded below investment grade (but no lower than BB-) after the CCF announcement. Implementation Matters In addition to program design, the principles that guided the implementation of these facilities—access, transparency, and accountability—reinforced their credibility and impact. Providing broad access to the facilities for corporate borrowers was essential, both to expand the reach of backstop support for the economy, and to ensure that the facilities avoid the allocation of credit. Our initial purchases were in a diversified set of ETFs that provide broad exposure to the market for U.S. corporate bonds. Purchasing via ETFs offered efficient and rapid transmission of broad-based support to the secondary market.
If interest rates had not moved up, the business sector could have continued to build up debt for a somewhat longer period, which would hardly have promoted long-term stability. Somewhat higher losses on corporate lending are now expected, although there is hardly any imminent risk to the financial strength of the banking system. However, there is cause for concern about the evolution of the structure of the Norwegian financial industry in the longer term. The free flow of capital in Europe paves the way for structural changes in the European financial industry. These changes will be prompted by the increased use of fund-based pension systems and the ever wider application of technology in the euro area. Banks in Europe will become larger, more efficient and more competitive, and securities markets will be larger and more liquid. Structural changes are also taking place in the financial industry in the Nordic countries. Nordic financial institutions are adjusting capacity, enhancing efficiency and realising economies of scale. The largest banks are developing their activities, with the Nordic area as their home market, by building up their branch networks or through acquisitions. Not many Norwegian financial institutions have found it profitable to participate in this process. The government’s ownership in the banking sector was expanded as part of the solution to the Norwegian banking crisis. It was not necessary to allow ownership to be permanent. Currently, the government owns the state banks, Postbanken and more than 50% of Norway’s two largest commercial banks.

And you have then there, for instance, the shocks admitted on sovereign bonds imply a loss of € billion for the banks in the exercise that administrative costs and other expenses imply a drop in profits and in capital of € billion. And that loan losses coming from the assumptions of the stress test on the probabilities of default and the loss given default of the credit portfolio of the banks imply a loss of € billion. And that’s how you reach € billion. And the difference with € billion that I showed before is just a matter of approximation – it’s the same figure. And this is the disaggregation of the figure. So this really shows that the exercise was indeed quite strict. It was implemented by officials and private experts. And the results, as I said, guarantee that going forward the economic recovery will not be hampered by credit supply restrictions. BIS central bankers’ speeches  3
These adjustments have allowed us to learn how ON RRPs might be used to support the monetary policy objectives of the FOMC. Our testing has demonstrated that ON RRP operations can set a soft floor on short-term interest rates. That is, while some trades may occur below the ON RRP offering rate, the volume-weighted averages of most money market rates have been above the ON RRP rate on nearly all days (Figure 2). Data across a range of money markets provide evidence that changes in the ON RRP rate affected pricing for both unsecured and secured instruments and that the operations successfully set a floor on short-term interest rates. While market participants are aware of the success in producing a floor from such volume-weighted rates as the fed funds effective rate and GCF Repo Index®, the Desk has been also examining detailed transaction-level data for evidence that the ON RRP sets a floor on nearly all overnight money market transactions. 12  The payment of interest on reserves has been in place since October 2008, although the Federal Reserve Board recently requested public comment on proposed technical changes to the methodology for calculating IOER. The proposal intends to enhance the effectiveness of changes in the IOER rate in moving the federal funds rate into the target range when changes in those rates do not coincide with the beginning of a reserve maintenance period. Further information is available at http://www.federalreserve.gov/newsevents/press/ bcreg/20150413a.htm.

Sim Kee Boon helped to chart Singapore’s economic development through the turbulent 1970s, when stagflation and oil price shocks shook the world’s economies. We are living in even more interesting times today. 27. The Institute has gathered an impressive collection of talent here today. I wish you fruitful discussions. Thank you. 4  BIS central bankers’ speeches