samchain/econo-pairs-v1 huggingface dataset:
Since 1988, the Bank also assumed responsibility for the insurance industry and in 2002, the development financial institutions. The prudential regulatory and supervisory framework during these fifty years has undergone significant change. The prudential framework and supervisory approaches adopted by the Bank provided the flexibility to respond to the new developments and challenges that have confronted the financial sector. Several factors have guided the approach adopted by the Bank. The first is to recognise the limitations of the regulatory tools and instruments. Second, is the acceptance that change is required in the context of the changing environment, and the need to carefully assess the trade-offs that arise given the different stages of development within the financial sector. And finally, is the need to take into  BIS Review 12/2009  3  account the interlinkages within the financial system, and between financial systems across borders. Guided by these parameters, the Bank has evolved a prudential framework which at the start comprised simple prudential rules that addressed capital, gearing, liquidity and portfolio restrictions, to the now more differentiated and principle-based regulations that reflect levels of risk taken by an institution. As a result, significantly greater flexibility is now accorded to institutions that are able to demonstrate sound governance practices and risk management capabilities.

As we have seen in recent times, financial centres are important nodes in ensuring that the world economy continues to function well. They need to be responsive to the dynamic market place in order to perform their critical roles to sustain growth by ensuring that capital is channeled to the most productive uses. 13. Singapore as a vibrant and cosmopolitan Global City is well-positioned for businesses to connect to Asia and international markets. Over time, we have established the necessary infrastructure, global connectivity and pool of expertise with the requisite knowledge, understanding and experience of local conditions in Asia that can add value to companies entering the region. 14. As a financial centre offering a full suite of financial services, Singapore stands ready to play a wider developmental role in promoting Islamic finance in response to rising regional demand for Shariah-compliant products and services. MAS has worked closely with the industry and other government agencies to ensure a levelplaying field between Islamic and conventional finance such that Islamic finance is not disadvantaged for tax and regulatory purposes where the economic substance and risks are similar. 15. Many market players are already leveraging on Singapore’s strengths and capabilities to raise capital, create infrastructure and real estate funds and conduct wealth and asset management activities. For instance, the Islamic Development Bank and City Development Ltd have tapped our capital markets to raise Shariah-compliant Singaporedollar funding.
On 4 February 2021, the ECB issued a press release to announce that the Eurosystem aims to start making annual climate-related disclosures for its non-monetary policy portfolios within the next two years, using the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) as the initial framework. Several Eurosystem central banks already make climate-related disclosures for some of their non-monetary policy portfolios. 24. The speech by Frank Elderson at the recent Green Swan Conference hosted by the Bank for International Settlements (BIS) highlights the important role of the NGFS in coordinating central banks’ work on climate change. See Elderson, F. (2021), “The embrace of the horizon: Forcefully moving with the changing tide for climate action in financial sector policies”, 3 June. 25. On 22 September 2020, the ECB issued a press release to announce that bonds with coupons linked to sustainability performance targets will become eligible as central bank collateral. Contingent on the fulfilment of all other eligibility criteria, these bonds will also be eligible for the Eurosystem’s outright purchases for monetary policy purposes. The decision was implemented as of 1 January 2021. 26. The climate stress test relies on internal ECB analysis and models. The test comprises approximately four million companies and 2,000 banks worldwide. For an overview of the exercise and its preliminary results, see de Guindos, L. (2021), op. cit. 27. In contrast to the ECB’s economy-wide climate stress test, the supervisory climate stress test will rely on banks’ self-assessment of their exposure to climate-related risks.

See de Guindos, L. (2021), “Shining a light on climate risks: the ECB’s economy-wide climate stress test”, The ECB Blog, 18 March. 11. See Allen, T., et al. (2020), “Climate-related scenarios for financial stability assessment: an application to France”, Working Paper Series, No 774, Banque de France. 12. See Lagarde, C. (2020), “Climate change and the financial sector”, 27 February. 13. While there is widespread consensus about central banks’ potential role in mitigating the consequences of climate risks, a number of concerns have also been raised. Some refer to the possible interference with the primary mandate, others to the politicisation of monetary policy and the danger of mission creep, with potential negative ramifications for central bank independence and monetary policy effectiveness. See, for example, Cochrane, J. (2020), “Challenges for central banks”, October. 14. This includes various members of the ECB’s Governing Council. See, for example, Knot, K. (2021), “Getting the Green Deal done: how to mobilize sustainable finance”, 11 February; Villeroy de Galhau, F. (2021), “The role of central banks in greening the economy”, 11 February; de Cos, P.H. (2021), “Economic and financial policy geared to climate goals”, 25 February; Weidmann, J. (2021), “Climate risks, financial markets and central banks’ risk management”, 2 June. 15. See NGFS (2021), “Adapting central bank operations to a hotter world: Reviewing some options”, March; Villeroy de Galhau, F. (2021), ibid. 16. See Hauser, A.
Cross-border portfolio investment data revealed a strong initial flight-to-safety dynamic in March 2020, with a basic asymmetry across euro area countries: cross-border investors were net sellers of the bonds of the more vulnerable group of euro area countries and net buyers of the bonds of the less vulnerable group (Charts 6 and 7). Following the decisive policy action in mid-March (especially the announcement of the pandemic emergency purchase programme), the pattern of net selling of debt of  the more vulnerable group was still visible but already much less severe, and disappeared in the following months. [13] Further insight into the reallocation decisions of euro area investors was obtained by examining the portfolio shifts in the ECB’s Securities Holdings Statistics (SHS) for the main sectors, which was helped by the advanced releases of SHS data since the start of the pandemic. Chart 6 Cross-border portfolio investment flows by country group – assets (monthly flows as a percentage of euro area GDP)  Sources: ECB and Eurostat. Notes: “Less vulnerable” countries are Belgium, Germany, France, the Netherlands, Austria and Finland; “more vulnerable” countries are Greece, Spain, Italy and Portugal. The averages are computed over the period since January 2008. The latest observation is for February 2021. Chart 7 Cross-border portfolio investment flows by country group – liabilities (monthly flows as a percentage of euro area GDP)  Sources: ECB and Eurostat. Notes: “Less vulnerable” countries are Belgium, Germany, France, the Netherlands, Austria and Finland; “more vulnerable” countries are Greece, Spain, Italy and Portugal.

A coordinated approach across the EU could be a win-win situation, as it would reduce the statistical reporting burden of MNEs by removing the need to fill in questionnaires from 27 Member States in more than 20 languages. Sixth, further sectoral detail is needed to allow for an adequate analysis of risk exposures and account for the activities of purely internationally oriented entities. To this end, the ESCB feasibility study on establishing new data for foreign-controlled corporations in the balance of payments and the financial sector accounts is very welcome. Ideally, such data would be available for both financial and non-financial accounts. With regard to the need for a harmonised recording of SPEs in cross-border statistics, the definition provided by the dedicated task force of the IMF Committee on Balance of Payments Statistics and the provision of operational recording guidance are welcome steps. These developments will be helpful in ensuring the availability of internationally consistent statistics, with a separate breakdown for SPEs in due course. Within the EU, other important initiatives include the Early Warning System on large corporate events and the Asymmetry Resolution Meetings, which the ECB and Eurostat have set up as part of the regular statistical production rounds to reduce bilateral asymmetries in the measurement of foreign direct investment. Seventh, I would like to take this opportunity to highlight the importance of climate change as a fledgling field for macroeconomic statistics.
But we do have the consolation of knowing that there is a good chance that those who have perpetrated or adopted those misperceptions may have lost a lot of money as a result - if they were brave enough to put their money where their mouth was. Perceptions of the euro I shall turn now to the euro. I would be deceiving you if I said that the euro, as seen from Hong Kong, enjoyed a particularly positive image at present. Arguably one could expect no better for a currency which has lost around 18% of its external value in little over a year, regardless of whether this was judged to be the result of the strength of the US dollar rather than any intrinsic weakness of the euro itself. It is worth noting, however, that the euro was launched at a time when the Euroland currencies were particularly firm against the dollar - having climbed, in the case of the Deutsche mark, by almost 50% since its low point in 1985. Against this background, and the widening of interest differentials in favour of the dollar in recent months, the direction of the euro’s movement is, with hindsight, hardly surprising. BIS Review 23/2000  2  The depreciation of the euro is of course a fact, and it is perhaps the only concrete basis for the scepticism that one hears being expressed about the euro.

Very recently we informally polled ten leading financial institutions in London. Their forecasts for the dollar/euro exchange rate by the end of this year ranged from $ down to 90c. This is a considerably wider spread than the trading range already experienced and suggests a huge measure of uncertainty, to a horizon of only ten months. Of course, one might argue that this represents uncertainty over the dollar as much as the euro. Yes indeed, and I apologise for analysing things very much from a dollar base. Over time, all currencies have experienced considerable volatility - the dollar, the yen, the euro and its ancestors, sterling and so on. Yet in all of these, investors have been able to enjoy significant positive real rates of return over the long term. That may not be good enough for everyone: some seek short-term gains; others may be worried by mark-to-market volatility in the short term even if they are there for the long haul. But long-term investors will give considerable weight to the overall economic and monetary management of the economy. As I mentioned earlier, there are a number of aspects of the management of the Euroland economy about which perceptions from Asia may be somewhat sceptical. As for monetary policy, I would suggest that it is perhaps natural for outsiders to be rather hesitant in their assessments, in view of the new infrastructure for monetary policy, but as the ECB beds down one would expect confidence to grow.
In particular, important institutions cannot be allowed to stay outside in the sun during good times, but allowed to come inside the regulatory net when it is raining. •  We need a more robust capital regime for banks. Measures of regulatory capital lag far behind the real-time market-based measures of capital and risk. Moreover, the capital regime is procyclical. Banks are constrained in the amount of reserves they can build in good times as a buffer against cyclical downturns. Finally, banks balk at cutting dividends to conserve capital or replenishing the capital they sorely need in  6  BIS Review 28/2009  the middle of crisis. These incentives reinforce the downward pressure on the financial system during times of stress. •  We need a more effective regulatory system. We need a systemic risk authority that has both the responsibility and the powers to look across the entire financial system – both depository institutions and the capital markets. Our regulatory regime is incredibly balkanized, which makes coordination difficult and means that important information can fall between the cracks. It also leads to less accountability for supervisory shortcomings and failures, which is another area where we have to do better. This list is just a hint of the agenda that lies ahead. We need to put our financial system into the repair shop for intensive reconstruction.

To do this properly, we will have to work with international supervisors, regulators, and governments to achieve global solutions. On this score, lots of progress has been made in the credit default swap space – with several new CCPs likely to be up and running in months, if not weeks. But we can do much more in this area. •  We need an accounting and disclosure regime that allows investors to meaningfully ascertain the risks they are taking. For example, the same assets are often carried on different bank books at different prices. If you can’t trust the valuation marks on the assets, how robust can confidence be in the ability of the financial system to withstand stormy weather? •  We need a resolution mechanism for bank holding companies and non-bank financial institutions – legislation is needed here. Judging from the actions of the past year, there are indeed institutions that are “too big to fail”, at least in certain circumstances. Let’s set up a resolution framework that is robust and transparent so everyone understands the rules of the road and likely outcomes beforehand. An ad hoc approach increases uncertainty and reduces policymaker credibility. •  If large systemically important institutions are indeed too big to fail, then there needs to be an explicit quid pro quo for this. Otherwise, this implicit support will create moral hazard and discriminate against smaller institutions.
Percent 400  400  350  350  Projected value of GPFG in 2020 in different national budgets  300  300  250  250 Present value of remaining oil revenues  200  NORGES BANK ECONOMIC PERSPECTIVES 13 FEBRUARY 2020  200  150  150  100  100  50  50 0  0 2012  2014  2016  2018  2020  2020  Source: Ministry of Finance  The conversion has reduced the sensitivity of government revenues to oil price fluctuations, but has increased our exposure to global financial market volatility. The fund has built up a diversified portfolio of investments worldwide, which allows it to reap the gains from an upturn wherever it may occur – and means it is shielded from negative events in individual markets. But the fund is not immune to a broad-based downturn. As a small, open economy, Norway has always been exposed to global economic developments. The substantial foreign assets we have accumulated mean that our economy is even more closely intertwined with the world economy. It is then unfortunate that the rule-based order for world trade since 1945 is losing ground. Bilateral and regional agreements are gaining ground at the expense of multinational cooperation. This contributes to uncertainty about the outlook for the global economy. The value of the natural resources we found the first traces of 50 years ago has in large part accrued to society as a whole.

Gent Sejko: Launch of the EBRD Transition Report 2017-18 Opening remarks by Mr Gent Sejko, Governor of the Bank of Albania, at the launching of the EBRD Transition Report 2017-18, Tirana, 11 April 2018. * * * Dear Mr Colangeli, Dear Mr Sanfey, Dear participants, It is a special pleasure for us to host again the presentation of the Transition Report 2017–18 by the European Bank for Reconstruction and Development. The Transition Report 2017–18 addresses some very important issues for transition economies, such as convergence of firm dynamics and productivity, the importance of road infrastructure to economic growth, and the new opportunities from the green economy. It is a pleasure to note that the Report presents a positive assessment of the developments in the region. After some years of anaemic growth, the economic activity in the region shows recovery and the prospects remain positive, notwithstanding the geopolitical concerns and the internal and external challenges we face. Some regional countries grew faster than other countries around the world, of similar development level and market size. The capital inflows have been relatively considerable, driving to the narrowing of the interest rates spread in the region compared with those in large economies. More importantly, it seems that inflation is gradually returning to target levels and the accelerated economic growth in the Western Balkans is supported by bank lending and some major infrastructure projects.
According to these advocates, it should not be more difficult to use existing knowledge to assess when a financial imbalance is being built up than it is, for example, to calculate the output gap. And many central banks today calculate the output gap to make assessments of inflation. The argument that it is difficult to determine how large interest rate changes are necessary is usually met by saying that a higher interest rate in any case subdues credit growth and thereby also indirectly asset prices. By conducting tighter monetary policy than is required to keep inflation on target in the short term when asset prices and debts begin to accelerate, we can certainly have slightly lower inflation and weaker demand than is desirable, but one also reduces the risk of negative effects on production and inflation from a collapse in asset prices later on. For example, the Bank of Japan has  BIS Review 62/2006  5  been criticised in recent years for not having conducted a sufficiently tight monetary policy 15-20 years ago when the bubbles in Japan were building up. Those who maintain that there is too much uncertainty to dampen a price rise via interest rate adjustments are thus of the opinion that it is better to wait until a correction of abnormally high asset prices is a fact and take action then. Many believe that it is important in such a case to act forcefully so as to prevent a deep recession.

One can express this as, if many imperfections impact at the same time, it could lead to substantial financial imbalances. Empirical research confirms that asset prices and loans can increase substantially over a long period of time and my impression is that the mechanisms I have indicated have contributed to this. While debt and asset price levels have built up slowly over a number of years, price corrections have occurred quickly. The entire cycle from start to finish, from asset price and credit expansion until the repercussions of price falls and debt reductions have waned can take up to a decade. The IMF, for instance, reports in a study that the repercussions alone from a share price crash take on average two years to wane, while it takes approximately four years for the effects of a house price crash to fade. Can and should monetary policy subdue the growth of bubbles? Even if we as monetary policy decision-makers assess that there is reason to feel concern that debts and asset prices have been pushed up by over-optimistic households and companies, it is not selfevident whether and how this will affect the decisions. There is always some uncertainty as to whether it really is a question of an imbalance. And, as I have said, it is not easy to quantify a risk scenario, both with regard to the probability that it will occur and the effects it can have for inflation and demand.
The country is therefore saving today in order to consume in the future. Moreover, it is more profitable for Japan to invest abroad since there are fewer domestic investment opportunities and growth prospects are muted. Japan therefore exports capital abroad and has a current account surplus. There are thus structural reasons why countries have a current account balance above or below zero for an extended period. Surpluses or deficits therefore do not necessarily indicate an overvalued or undervalued currency, or present a risk for the country and the global economy. 5 How can we distinguish between those current account surpluses or deficits that can be explained by fundamental factors, and those that cannot? The IMF has developed a model for conducting a thorough analysis of the impact of various economic drivers on individual countries’ current account balances. These drivers include demographics, the level of development of a country, and fiscal policy – in other words, factors that influence savings and investment. The results of the model are incorporated into an annual report, the External Sector Report, which I mentioned in my introduction. Nevertheless, it is not enough just to apply the model in a mechanistic way. The IMF therefore also takes country-specific circumstances and features of balance of payments data into account in its assessments. In Switzerland’s case, it concludes that the current account surplus is in line with macroeconomic conditions and is not the result of an undervalued currency or inappropriate monetary or fiscal policy.

While a clear consensus on the best way to capture these risks has yet to fully emerge, these are very active areas of risk modeling at banks, and this is clearly a frontier area in both the regulatory and consensus economic capital regimes. In this regard, an important question to ask is how well the current capital frameworks capture the possibility of extreme events, those far in the “tail” of the distribution. Stress testing can play an important role in addressing these concerns. Stress tests should allow institutions to assess likely losses under extreme market events, those that happen too rarely to be captured under traditional value-at-risk measures, but that could cause very significant losses to the institution should they occur. Institutions have long engaged in this kind of analysis for internal management purposes. Now, however, those at the forefront of risk management are assessing the adequacy of their value-at-risk results against stress losses and finding ways of integrating the results of stress testing into their capital frameworks. Indeed, an important aspect of our supervisory process includes critically assessing stress-testing regimes. More rigorous and comprehensive stress testing of large shocks across multiple markets, geographic regions and business lines is vital, particularly for systemically important institutions. In this context, we need to see more attention paid to risks to market liquidity, and the effects on market liquidity that could result from the exit of a major dealer.