samchain/econo-pairs-v1 huggingface dataset:
In concert with better risk modeling, securitization and credit derivatives have facilitated the dispersion of credit risk across firms and across sectors of the financial system. These changes have led to significant risk transfers within the banking system, as well as a net transfer of credit risk from commercial banks to other financial intermediaries. As a result, we believe we are seeing a more efficient risk allocation within the financial system as a whole, since risks can be transferred to firms where they will diversify, rather than reinforce, risks arising from core businesses and to parts of the financial system that are significantly less leveraged than banks and securities firms, such as institutional investors and mutual funds. These risk management advances have been accompanied by the growth of key derivatives markets that have lowered the costs of hedging market-price-sensitive positions and activities. One important example of this is the growth of the market for long-dated swaps, which are now used by banks to hedge mortgage securities and whole loans. The notional value of long-dated interest rate derivatives (those with maturities of more than 5 years) has more than tripled since the end of 1998, considerably faster growth than for comparable shorter-dated instruments. The growth of these markets reflects a very substantial increase in hedging capacity, and this “wider pipeline” seems likely to facilitate the ease with which the market adjusts in conditions of stress. Growth in these OTC derivatives markets has been accompanied by welcome improvements in market practice.

It is the challenge of ensuring that the strength of the infrastructure of controls within financial institutions will stay abreast of the pace of change in the complexity of risks and the tools we have to manage them - a process that we as supervisors will actively reinforce. A second issue relates to the degree of concentration in some core financial intermediation functions. The two largest government-sponsored enterprises in the mortgage market now hold 36 percent of Agency mortgage-backed securities, as compared with less than 10 percent at the end of 1993. The  BIS Review 33/2004  3  exposure of banks to these GSE’s, primarily through holdings of the GSE debt funding these MBS positions, is as a consequence very large. Two institutions now account for essentially all of the market for the clearing function for government securities and agencies, as well as for tri-party repo activity. A relatively small number of institutions now account for a large share of activity in the over-the-counter derivatives business generally, as well as in certain categories of risk-transfer instruments. These developments have different sources. Some are the result of public policy choices. Some are the consequence of the economies of scale inherent in these businesses. Overall, we have a very competitive financial system, with a larger diversity of institutions, and therefore a stronger overall system of financial intermediation.
However, in a wider perspective we can note that even in the future the worlds’ banks will have capital that only amounts to a few per cent of their assets. This is almost within the margin of error for a valuation of the total assets. The equity/assets ratio in the banking sector is only one fifth, or even one tenth, of that for companies in other sectors. However, a central element of the Basel III Accord is that the standards are minimum regulations – countries that want to impose stricter requirements may and should do so. We have already seen cases of this – for example in the United States, the United Kingdom and Switzerland. Decisions have also been made in both the United States and the United Kingdom on more structural measures to protect the central functions of the financial sector, for example through the Dodd-Frank Act and the follow-up of the Vickers Report. In the EU, the Liikanen Report has taken up the issue of ring-fencing, that is separating the different operations of the banks from each other. The reason is that the financial systems are different in different parts of the world. It is therefore important to design regulations that are tailored to the banking system that has to comply with them. We also need to maintain a respectable distance to the minimum regulations. Considering what we know about the Swedish banking system, there are good reasons for ensuring that Swedish banks comply with the global standards by a broad margin.

I can only wish for a holistic approach someday; but we certainly cannot wait until we know everything on all nature-related risks before we act on climate. Page 6 sur 13 B. What we don’t know yet Drawing a parallel with the progress made on climate, we face two significant challenges ahead for biodiversity issues: metrics and scenarios (“IPCC type”) and macroeconomics and finance (“NGFS type”). 1. Biodiversity metrics and scenarios Biodiversity – and even more so nature – is complex and multidimensional: for example, biodiversity measurement cannot be reduced to a single metric like the concentration of greenhouse gas in the atmosphere and the associated rise in temperature for climate change. We still lack understanding on, and especially awareness of, this phenomenon. Thankfully, the IPBES, which we could describe as the IPCC equivalent for biodiversity, is advancing knowledge and raising awareness about biodiversity. It provides landmark assessments of biodiversity loss and ecosystem services, including work on scenarios that we could explore further as we aim for improved risk assessment by the financial sector, just like we did with IPCC scenarios.
However, even if there are rewards to be earned from coordination, it will probably be some time before the EU member states are sufficiently mature to take further big leaps. Ultimately it now boils down to the sensitive issue of how much power should be placed in European rather than national hands. But there is no doubting the strength of the tension between the single monetary policy and the remainder of economic policy that is still handled at national level. In this tension lies the seeds of continued economic policy coordination in Europe. 5  BIS Review 102/2000

The Fund therefore purchased a large volume of equities from 2001 to 2003 and is buying a considerable volume now. Of the equities now owned by the Fund, 40 per cent were purchased last year when prices were moving down. 9  Knut Hamsun (1976): August. In Samlede Verker 11, Gyldendal Norsk Forlag, p. 120. (Unofficial translation by Norges Bank’s translators). BIS Review 16/2009  19  As a result, ownership in the business sector in the US, Europe and Asia has increased – in companies’ human capital, in their machinery and equipment, brands and organisation. In the long run, and even though many companies have now folded, it may perhaps be at least as safe as extending loans. Conclusion Let me conclude. At the moment, activity is falling in the Norwegian economy, as elsewhere. The source of the downturn is external. We cannot shield ourselves from its impact, but we can decide how we will address the turnaround. The global financial highway is now being modernised and overhauled. It is essential that traffic again flows smoothly. Rimbereid asks: “In which landscape Will we lay our next lucrative track?” 10 Norway has a credible and robust economic policy, and a business sector that is quick to adapt. This is a good point of departure. Thank you for your attention. 10  20  Øyvind Rimbereid, 2008: Herbarium, p.54. (Unofficial translation by Norges Bank’s translators). BIS Review 16/2009
It is true that, more often than not, we come to the conclusion that the balance of advantage lies in not intervening; and, I must confess, I would be alarmed if we didn’t. Yet, in all cases, the decision is made positively, and not by default, and it is not the non-outcome of a do-nothing approach. But, there are many examples of the Government deciding, usually on the advice of its boards and committees, to intervene, in one way or another, in the free play of market forces.” Indeed there are many examples of intervention. We built the airport because, without government intervention, it would simply not have been economically viable. We built roads and bridges. We provided public housing, medical services, the list is long. But we tend to do less than other jurisdictions and so the size of our public sector in relation to gross domestic product is one of the smallest in the world. Specifically in the monetary and financial systems, there is significant intervention in the form of the regulation of financial markets and the supervision of financial institutions. This is precisely because we feel that, in the words of Sir Philip, ‘the balance of advantage’ lies in so intervening and because ‘imperfections in the operation of the market mechanism [may lead] to economic inefficiency’. In very much the same spirit, we intervened in 1996 and built a real time payment system because the private sector was not able to come up with this highly desirable piece of financial infrastructure.

We have been intervening since the beginning of 1990 to develop the Hong Kong dollar debt market, again because the market was considered essential for effective financial intermediation, and, regrettably, the private sector was not able to develop one that is properly structured. The linked exchange rate system is also a product of the policy of positive non-interventionism. The Government intervened to fix the exchange rate because we found out in 1983, and since, that there is a need for a monetary anchor. In the absence of such an anchor, the value of our currency will be, in mathematical terms, an indeterminate. In other words, it is not something that the free market can determine in the best interest of the community without intervention. We have had four speculative attacks on our currency since the outbreak of financial turmoil in the region in the middle of last year. BIS Review 67/1998  -3It is very well known to almost everyone in the market that a handful of hedge funds have on each occasion conducted a double play in the stock futures market and the currency market. We have come to realise how this double play works, although it has only become apparent, at least to us, in the third and fourth attacks in June and August this year respectively. On each occasion, interbank interest rates were pushed higher, to varying degrees, with a view to engineering a sharp fall in the stock index futures.
After all, we have seen our hopes for a more rapid improvement in the economy dashed several times in this recovery. For instance, early last year most forecasters thought that the recovery was gaining traction and that economic activity would increase at a solid – though not spectacular – pace through 2012. Then, as now, the labor market was beginning to show some long-awaited improvement, and households and businesses seemed to be making good progress in repairing their balance sheets following the huge losses in wealth sustained during the recession. Analysts thought that higher prices for energy and other commodities would weigh on output growth, as would the supply-chain disruptions from the disaster in Japan. But these factors were expected to be transitory, and most forecasters thought growth would improve significantly once these influences had passed. Unfortunately, this forecast proved to be too optimistic. Revised data indicate that annualized real GDP growth was only 1 percent in the first half of 2011 and improved only modestly to 2 percent in the third quarter. Consumer spending was particularly sluggish, weighed down by slow growth in employment, income, and household wealth, as well as some continued limits in access to credit. Furthermore, the weakness in GDP growth began before the bulk of the effects of higher energy prices hit the economy and before the disaster in Japan happened. This timing, along with the continued softness of most economic indicators into the early summer, indicates that the slowing in output growth was not all due to temporary factors.

The forecasts were made under each participant’s unspecified views of appropriate policy, which is defined in true Fedspeak as: “the future path of policy that each participant deems most likely to foster outcomes for economic activity and inflation that best satisfy his or her interpretation of the Federal Reserve’s dual objectives of maximum sustainable employment and stable prices.”  BIS central bankers’ speeches  5  Being more explicit about appropriate policy can clear up a lot of uncertainty. For example, suppose inflation were running higher than we would like, and the economic projections in the SEP showed it coming down over the next couple of years. In the absence of information on participants’ policy projections, the public would not know whether the FOMC thought inflation would simply come down on its own or whether it thought that a monetary tightening would be required to reduce inflationary pressures. Including policy projections will help clarify such judgments. In my opinion, this is a substantial, first-order improvement in policy communications, and this greater clarity may have significant additional value for improving how the economy operates. Expectations of the future path for policy and the degree of uncertainty surrounding those expectations are key determinants of private borrowing rates and other asset prices. These play an important role in the spending and saving decisions of households and businesses.
Conversely, as the recovery became more firmly entrenched, Malaysia was the first in the region to normalise interest rates in March 2009 from the record-low level, well ahead of the regional counterparts. We shall continue to strive to make monetary policy decisions based on prevailing data and the assessment to the best of our ability, even if it might be against conventional wisdom or no matter how unpopular the decisions might be. In managing the exchange rate, a similar philosophy of pragmatism is applied. We should recognise that in today’s world of greater interconnectivity, we are all susceptible to the vagaries of the global financial markets. But to distance ourselves from the global financial markets is not an option. In this regard, despite the extreme volatility experienced in recent years, our thinking has 6/8  BIS Central Banker's Speeches  remained the same – market forces ought to determine the direction and level of the exchange rate. The central bank’s role should be to contain the degree of volatility, which we know has significant implications for an open economy like ours. As such, there will be times when the Bank’s presence is apparent in the market, to manage the degree of volatility, but there will be times when the ringgit movements will be more volatile than normal so that it will take its course in line with demand and supply in the market that reflects underlying trade transactions.

On capital adequacy, MAS is putting in place across the financial sector a risk-based framework based on common principles and objectives. The existing capital frameworks for insurance companies, securities dealers, and futures brokers, are being revised, so as to move towards a risk-based approach, not dissimilar to banking. In insurance, industry working groups are looking into the valuation and solvency framework for both life and general insurance business. In securities and futures, MAS has been working with the Singapore Exchange to establish a risk-based capital adequacy framework for licensed securities dealers and futures brokers. This framework will allow the brokers to better manage the risks they face, in the light of market and product developments. The new framework is expected to be introduced in the second half of 2001, and will take into account comments and findings from two rounds of consultation with the industry. In banking, where risk-based capital standards already exist, MAS welcomes the key thrusts of the proposed New Basel Capital Accord. It has been working closely with the local banks to develop their capabilities and resources, so as to implement the internal ratings based approach. Liberalising access Liberalisation efforts have kept pace. A more open and competitive environment will spur innovation and enterprise in the financial centre as well as provide Singaporeans with quality financial services. The insurance industry is completely open. The securities industry has been substantially liberalised and will be completely open from January 2002, when remaining trading restrictions on new members admitted to the Singapore Exchange will be removed.
Three years later, Banco de Portugal came on board thanks to Mr Rui Pimentel, to jointly create a conference that certainly grows into a recognizable brand name, set with the aim to inform of all relevant payment-related matters, to share knowledge and to educate, to influence and last but not least to network and socialize. Payment systems and market infrastructures – why this topic in the first place? There is no doubt that payment systems comprise vital part of countries’ economic and financial infrastructures. However, it was only the last two decades or so when this issue gained in topicality, concerning both, service providers and policymakers and central banks. This is because of the new global landscape, which shaped by the streams of globalization, the dramatically rising volumes of payments and the advancing fintech innovation has returned payment systems to the focus once again. With their safety, resilience and efficiency becoming critical to the financial stability and the well-functioning of the economy as a whole. We started this Conference as domestically oriented, having the domestic financial sector as target audience, to later on move to expand internationally from Southeastern and Central and Eastern Europe to the Black Sea Region and the Middle East with Northern Africa countries joining us lately. Allow me to extend my sincere appreciation to the Vice Governor Maja Kadievska Vojnovic and to Igor Velichkovski, Head of the Payment Systems Department within the NBRM for successfully turning this conference into a truly international one.

We express our deepest gratitude and appreciation to all speakers and Conference delegates for the great impact you make, keeping the Conference alive and growing. The engaging social events are another important hallmark of the Conference as they make an excellent opportunity to network and reconnect and finally to amuse and entertain. Moreover, Ohrid, the home of the Conference, a charming city surrounded by water and mountains, known as a Jerusalem of the Balkans and protected by UNESCO for its natural and cultural heritage, is a unique experience by itself. As we celebrate our 10th jubilee we are proud to be able to host a conference that certainly evolves into important meeting place for the payment system community in the region and beyond. This success would not have been possible without the wholehearted support of our colleagues and dear friends from De Nederlandsche Bank and Banco de Portugal. Support by someone reliable and eloquent truly matters and often makes the difference when striving to excel. We could not have done it without you and we are deeply grateful to you for that! It is why it is my particular pleasure that we have Governor Knot and board member Mr Rosalino here with us today. Your presence do us great honor and I am confident that our cooperation will be even stronger and deeper than before. Allow me also to express my sincere gratitude to Mr Yves Mersch, Executive Board member of the ECB, for honoring us with his presence at this highly important event.
6  There is of course a vast academic literature on these issues which generally goes under the heading of the “Phillips Curve”, the relatively constant, negative and non-linear relationship between wages and unemployment in 100 years of UK data that A.W. Phillips identified in 1958 (Chart 5). 5  7  Broadbent 2014  6  To illustrate this dependence, growth in hours worked has accounted for 80% of growth in output in the UK since 2013, where it accounted for just 27% of growth in the decade prior to the crisis. 7  Phillips found that the data for 1948-1957 fit the same relationship as seen over 1861-1913. There was greater variation in the war and inter-war years. 3  All speeches are available online at www.bankofengland.co.uk/speeches  3  That relationship has not remained constant since then – simple lines of best fit suggest that the relationship between the unemployment rate and nominal wage growth has moved lower and flatter over time (Chart 6). Phillips’s work has been extensively revised and adapted over the past 60 years, most importantly by adding some influence of inflation expectations to explain the apparent breakdown of the relationship in the 1970s when unemployment and pay appeared positively correlated. 8  The framework has been extended to prices rather than wages.

Employees and businesses have at times looked backwards – and may not recognise that the outlook has changed – when determining wages and conditions that influence employment and profitability. This was the case in 1974 and 1975 and again in 1986 and 1987. It was the case in 1998 and also in 2002. In each case, the result was high interest rates, stagnating production and rising unemployment. Should the recent sharp rise in employment result in unexpectedly high wage growth, the interest rate will again have to be set at a high level to keep inflation subdued. We may again experience a high interest rate level in Norway relative to other countries over a longer period. This could translate into a pronounced setback in production and employment. The Norwegian business sector has become increasingly efficient, inducing companies to increase their workforces. During the recovery after the turn of the millennium, productivity growth jumped up again. This resulted in strong growth and low inflation. Rising imports from low-cost countries and high prices for many of our export goods resulted in a substantial improvement in Norway’s terms of trade from the end of the 1990s. Norway’s situation differs from that of our neighbouring Nordic countries in that both Sweden and Finland have recorded a deterioration in their terms of trade. They sell large volumes of hightech products but at falling prices. Productivity and terms-of-trade gains have provided the Norwegian economy with a historically strong income boost.