samchain/econo-pairs-v1 huggingface dataset:
The same is true when the assets are people. The diversity benefits in moving from 2 to 4 people are large compared with the diversity benefits of going from 102 to 104 people. There are probably diminishing returns to diversity. The second factor important for the wisdom of crowds is deliberation. Complex decisions require an investment of time, a period of deliberation. This is needed to understand a complex problem, consider it from different angles, to test it with different solutions. Solving complex problems does not in general call for instinctive, “fast thinking” of the type described by Daniel Kahneman in his famous book, Thinking Fast and Slow. 30  It instead calls for “slow thinking”, for System 2 rather than System 1 thinking. Time is also important when harvesting the benefits of interactions within a diverse group. It takes time for groups to explore and test their ideas, winnowing out the winners and filtering out the losers. It takes time for people to change their minds. As with diversity, there are decreasing returns to deliberation time. Research suggests that spending as little as 1 hour on a complex problem can improve performance by 10%. 31  These  benefits are likely to be smaller when moving from 100 to 101 hours spent on the same problem. While diversity and deliberation are the cornerstones of the wisdom of crowds, it is clear that crowds are not always and everywhere wise.

Apart from portfolio management and marketing activities, companies now carry out middle-office functions such as regional trading and research. Others have centralised regional back office operations in Singapore, making full use of our efficient infrastructure, conducive business environment and stable political climate. MAS also made a major effort to develop Singapore’s capital markets. A cornerstone of this effort was the easing of restrictions on the lending of the Singapore dollar $ to non-residents. Originally, banks required MAS’ permission for any form of lending to non-residents above $ 5 million. This blanket restriction effectively discouraged $ speculation, but it also stifled the growth of capital markets. Starting in 1998, we progressively refined the restrictions to focus more sharply on lending for the purpose of $ speculation. We lifted restrictions on the trading of $ derivatives like futures, options and cross-currency swaps. We allowed non-residents to raise $ funds through debt and equity  BIS Review 39/2004  1  issuance. Eventually the policy changed so substantially that it was no longer apt to describe it as the non-internationalisation of the $ So in May this year we renamed it the policy on the lending of $ to non-resident financial institutions. Consequently, our capital markets have broadened and deepened. The debt market has matured significantly, and now provides a cost-effective alternative funding source to a diverse range of local and foreign borrowers. The SGS yield curve has been extended from 7 to 15 years. Some statutory boards have even issued bonds up to 20 years in tenor.
These changes likely supported economic growth and the creation of employment relative to what would have been realized in the absence of the program. 4 Second, the LSAP2 program appears to have raised inflation expectations from unusually low levels and reduced the threat of deflation. The downside risks to inflation had become quite threatening by last summer. Breakeven inflation rates had moved to levels that were well below those consistent with the FOMC’s mandate, even for forward measures covering periods beginning several years ahead. In addition, the pricing of deflation risk, as computed by looking at Treasury inflation-protected securities with different amounts of accrued inflation, reflecting fairly substantial odds of deflation over the next several years. 5 Since that  1  Estimates of the contribution of additional risk coming from the increased size of the portfolio range from 60 percent to 80 percent, while estimates of the impact of its longer duration range from 20 percent to 40 percent. 2  See, for example, Chairman Ben S. Bernanke (2010), “The Economic Outlook and Monetary Policy”, remarks at the Federal Reserve Bank of Kansas City Economic Symposium, Jackson Hole, Wyoming, August 27. 3  One would expect market prices to incorporate nearly all of the effects of the programs in advance rather than during the actual implementation of the program. Thus, the period before the November implementation is the most relevant period for assessing the program’s effects.

As another example, many of you have probably heard of the recently passed Volcker Rule, named after another former Fed Chairman Paul Volcker. The Volcker rule can be seen as a watered down version of the Glass-Steagall Act. Recognizing that it is difficult to separate investment banks and commercial banks entirely, the Volcker Rule prohibits commercial banks from short-term proprietary trading of securities, derivatives, futures, and options on these instruments. The goal is that eliminating these risky practices will make banks safer and at the same time force them to refocus on core banking businesses which in turn should benefit consumers. Basel III and the Volcker Rule are just two examples of re-regulation. There are several others, notably the U.S. Dodd-Frank Act, the OTC derivatives markets reform, and the proposed oversight and regulation of shadow banking. Taken all together, these make a comprehensive set of regulatory reforms that will busy both regulators and financial institutions over the next several years. I would like to stress however that, for financial institutions, the compliance with the new regulations is not a one-way process, but a two-way one that you can help shape through industry consultation and collaboration with regulators. The challenges for country regulators are whether and when to adopt certain parts of international standards that may be irrelevant, too stringent, or lead to new risks for the domestic industry.
Figure 5 Real exchange rate (*) (index, 1986=100) 120  120  110  110  100  100  90  90  80  80  70  70 88  90  92  94  RER  96  98  00  02  1993-2012 average  04  06  08  10  12  1998-2012 average  (*) Includes information up to 28 June. Source: Central Bank of Chile. 10  BIS central bankers’ speeches  Figure 6 MPR and expectations (percent) 9  9  8  8  7  7  6  6  5  5  4  4  3  3  2  2  1  1  0  0 07 MPR  08  09  10  11  FBS, second half June 2013  12  13  EES, June 2013  14  15  Forward, June Report  Source: Central Bank of Chile. BIS central bankers’ speeches  11

Norman Chan: Sound banking Closing remarks by Mr Norman T L Chan, Chief Executive of the Hong Kong Monetary Authority, at the HKMA Conference for Independent Non-Executive Directors (INEDs), Hong Kong, 16 March 2017. * * *  What is sound banking? Sound banking is not (a) excessive risk taking; (b) irresponsible or unfair treatment of customers and counter-parties; and (c) maximisation of short term profits. Sound banking is: (a) Prudent and profitable; (b) responsible and fair to customers; and (c) sustainable. Trilogy of sound banking (I) Robust Regulation and Supervision – it will provide an externally imposed set of rules and codes that define what is acceptable and what is not. However, no matter how well designed and robust the regulatory regime is, it normally works better in setting minimum standards for compliance and is not so effective in promoting good or best practices. (II) Good Corporate Culture – culture consists of a set of formal and informal values that guide the mindsets and behaviours of management and staff. Unlike externally imposed rules and regulations, which normally entail sanctions if breaches are detected, good corporate culture and values reflect the attitude that “we do things the right way not because we are afraid of being caught but because this is the way it ought to be done”. A simple illustration of the importance of culture and values is the example of combatting littering on the streets.
22.11.2019  Reflections on the Past and Future of Central Bank Independence Seminar on The Relevance of Central Bank Independence: Challenges and Outlook/Banco de México Pablo Hernández de Cos Governor  Good morning. It is my pleasure to participate in this conference on the occasion of the 25th anniversary of the autonomy of the Banco de México. I take the opportunity to congratulate you on this landmark. Events such as this contribute to highlighting the relevance of the independence of monetary authorities, and my words today will be along these lines. In my address I shall first briefly refer to the independence of the Banco de España, both as a national central bank in itself but also as a member of the European System of Central Banks. Then, I would like to share with you some more general thoughts about current challenges to central banking from the perspective of their independence. The independence of the Banco de España The Banco de España was granted institutional independence in July 1994. So this year, as is also the case for the Banco de México, marks the 25th anniversary of our Law of Autonomy. The independence of the Banco de España came about as part of the European economic integration process. Following the requirements laid down in the Maastricht Treaty, central banks in the European Union were meant to pursue the primary objective of price stability and be vested with a large degree of independence, both political and operational.

As economic agents underestimate the total risks of their positions, the volume of investment in financial –and, in some cases, also real estatemarkets rises at a strong pace, and with it, asset prices and the overall level of credit, perhaps, with both being further fuelled through the feedback mechanism operating between collateral value and credit capacity. In that situation, there is a risk that a sharp asset price reversal might have a sizeable impact on the stability of the whole system. Therefore, an otherwise beneficial context of price stability and low financing costs might sometimes sow the seeds for the emergence of financial imbalances. This latter, somewhat ironic conclusion has spurred a recent debate on the role to be assigned to monetary policy as an instrument of use in correcting financial and real estate market excesses. Should central banks react to asset prices over and above their direct effects on purely monetary goals, such as inflation? The answers vary depending mainly on the confidence that one places in the ability of central banks to detect price misalignments early and to undo them without causing major damage to the economy. I tend to think that while in normal conditions monetary policy should react only to changes in economic variables insofar as they bear some influence on inflation dynamics, there are exceptional circumstances in which policymakers have enough signals to conclude that the economy, as a whole, is facing significant risks, thus warranting a more pre-emptive policy approach.
This is because long-term lending is inherently riskier than short-term lending, as short-term interest rates (and, hence, the opportunity cost of long-term lending) may perform quite differently to what was previously anticipated by market participants. By p urchasing government bonds in secondary markets, the central bank absorbs part of that long-term risk, through what is called the duration extraction channel. This leaves less duration risk for private markets to absorb, so the term premium falls, driving down the long-term interest rate. Third, there is the risk that a bond issuer will default on its future payment obligations, and investors demand a default premium to compensate them for this risk. As in the case of the term premium, central bank purchases shift this risk from private investors to the central bank, which reduces default premium and, therefore, yields – a channel called default risk extraction. All three of these asset purchase channels reduce long-term rates and thereby stimulate the economy. Indeed, according to many empirical studies, the ECB's APP made a significant contribution to boosting euro area economic activity and supporting the convergence of inflation to its aim. 6 The existing evidence also shows that in the case of PEPP 7 - that was designed to permit flexibility in the allocation of purchases across jurisdictions, as well as  6  A number o f academic studies have examined empirically the effects o f this unconventional po licy.

In particular, in the UK, after the go vernment anno unced large tax cuts and no curb in go vernment expenditure in September, the Bank o f England was fo rced to intervene quickly in respo nse to rising government bo nd yields which threatened the so lvency o f British pensio n funds. The Bank o f England made it clear that it was acting to ensure financial stability, rather than changing its mo netary po licy stance, and ended its interventio n in Octo ber. 7  There are, however, some arguments that point towards attenuated effects of QT compared to QE. First, markets are already pricing in QT to some extent. This is important because much of the impact of asset purchase programmes stems from the advance information provided to financial markets about their overall scale and design. Since markets are forward-looking, the whole expected future path of asset holdings plays a role in determining market yields at any given point in time. That is what is typically known as “stock” or “announcement” effects. In contrast, beyond potential “stock effects”, several studies that have sought to measure the “flow effects” of asset purchases – the changes in yields directly related to the amount purchased or held at a given point in time – tend to conclude that these effects are relatively smaller. 13 For this reason, we might expect that yields already reflect, at least to certain extent, current expectations on the implementation of balance sheet reductions.
Nor Shamsiah Mohd Yunus: Aiming high - navigating the next stage of Malaysia's development Keynote address by Ms Nor Shamsiah Mohd Yunus, Governor of the Central Bank of Malaysia (Bank Negara Malaysia), at the world Bank's Aiming High Webinar Series, 27 May 2021. * * * The Economist magazine recently published an article comparing the welfare of citizens across countries, based on a survey of various aspects of well-being. The title of the article was “Money really can buy happiness and recessions can take it away.” It maintained that citizens in highincome countries felt better off about their current life situation, have money for food, and access to good and affordable housing nearby. Quality of life is also better due to less tangible factors such as corruption not being widespread, feeling safe when walking alone at night, feeling well rested and having helped a stranger in the past month. Implicit in these findings is the idea that economic growth should go hand in hand with greater welfare. More than the dollars and cents of becoming wealthier, it is the improvements in the quality of life that countries aspire to achieve. And so, I was heartened to read in the World Bank’s Aiming High report that Malaysia is likely to transition to a high-income economy between 2024 and 2028. This panel discussion is thus very relevant to our situation, now more than ever. For Malaysia, the journey to become a high-income economy will not be easy.

Everyone is affected, and events in one country affect all other countries too. I hope that this is clear to the decision-makers. In terms of monetary policy, we will do our part to prevent fragmentation in the euro area. The border closures and all the different national arrangements we’ve seen suggest that it is more like “everyone for himself” at the moment. 2/4  BIS central bankers' speeches  The primary goal has to be to contain the spread of the virus. It may be that closing borders is an appropriate step from that point of view. That’s something that virologists are best placed to judge. But it’s clear that all protective measures come at an economic cost. And that is precisely why we need coordinated action, so that we can avoid deepening the crisis. But not every country can afford that. That’s true, and that’s precisely why we need European cooperation. What we need now is European solidarity, also in financial terms. That is in the interest of all European countries. Is it even possible now to prevent a recession as a result of the virus crisis? We are experiencing a very severe economic shock. Supply chains are being disrupted and, at the same time, demand is contracting as governments introduce protective measures: people are travelling less than before and cannot go out to restaurants and bars. Falling confidence may also dampen consumption and investment. And if people are not able to go to work, that has an impact on production, depending on the sector.
To illustrate this problem we can cite certain analyses published in 2012 which concluded that around half of all investors did not believe banks’ RWA figures, while 80% considered that the risk measurement framework should be simplified in order to be more credible. The Basel Committee conducted various studies attempting to cast light on this matter. Work on the credit and market risk areas was carried out. While this type of study should be viewed with all due caution, it is worth recalling some of the conclusions reached. 4/7  For instance, according to a study by the Committee published in July 2013, when different banks applied their own internal models to a single portfolio selected for the purposes of the study, there was seen to be high variation among the resulting RWAs. Only a portion of this variation was due to genuine factors, i.e. to risk factors, and to methodological differences permitted by the supervisors (and which were, therefore, in principle, acceptable or relevant differences). What was most interesting, or worrying, depending on one’s standpoint, was the fact that 25% of the variation could not be explained by either of the factors I have just mentioned. Market criticism and doubts, combined with the findings of the studies, led the Basel Committee to launch a far-reaching internal debate. At the risk of excessive simplification, at one extreme are those who have lost confidence in banks’ capacity to properly use their own models, and also in supervisors’ ability to validate and oversee increasingly complex models.

It is our expectation that the board of directors and senior management of institutions to play their roles in ensuring that the compliance programme is fully implemented and that any money laundering and terrorism financing activities are promptly detected and reported. Hence, I urge all reporting institutions to improve both the quantity and quality of STR submitted. In the same vein, the FIU will continue to improve its feedback mechanism to reporting institutions. The fourth area is to give greater emphasis on compliance. This is important so as to improve the compliance level among the reporting institutions in order to preserve the integrity and stability of the financial system. More focus will be given to enhance and raise the compliance level among DNFBPs in view of the emerging risks. To this end, greater collaboration between the FIU and the various self-regulatory organisations would be pursued actively during the year. BIS Review 46/2009  3  The fifth and last area is to ensure that the enforcement of the AML/CFT regime should be achieved without undue increase in the regulatory cost. It is important that the controls in place are commensurate with the associated money laundering and terrorism financing risks and the risk mitigation measures are adequate. This underscores the progressive introduction of more risk-based approach in the national AML/CFT regime. I understand that this is among key topics to be discussed in this conference, and I am sure it will generate interesting discussions between the experts and the participants.
Aizenman, J., Y. Jinjarak and D. Park (2010), “Reserves and Swap Lines : Substitutes or Complements ?”, NBER Working Paper No 15804 March. Backus, D., Henriksen, E., Lambert, F. and C. Telmer (2009), “Current Account Fact and Fiction”, NBER Working Paper, 15255, November. Baclet, A. and Vidon E. (2008), “The World Distribution of External Imbalances: Revisiting the Stylised Facts”, Banque de France Occasional Paper, 6, June. Bernanke, B. (2005), “The Global Saving Glut and the U.S. Current Account Deficit”, Remarks at the Sandridge Lecture, 19 March. Blanchard O., Milesi-Ferretti G.M. (2009), “Global Imbalances: In Mid-Stream?” IMF Staff Position Note. Blanchard, O., F. Giavazzi and F. Sa (2005), “The U.S. Current Account and the Dollar”, MIT Department of Economics Working Paper, No 05–02 and NBER Working Paper No 11137, February. Bracke, T., M. Bussière, M. Fidora and R. Straub (2008), “A Framework for Assessing Global Imbalances”, ECB Occasional Paper No. 78, January 2008. Bussière, M., M. Fratzscher and G. Müller (2010), “Productivity Shocks, Budget Deficits and the Current Account”, ECB Working Paper No. 509, August 2005, forthcoming Journal of International Money and Finance (December 2010).Caballero R. (2006), On the Macroeconomics of Asset Shortages. Caballero R. (2009), “The ‘Other’ Imbalance and the Financial Crisis”, Paolo Baffi Lecture, Bank of Italy. BIS Review 120/2010  9  Caballero R. and P. Kurlat (2009), “The ‘Surprising’ Origin and Nature of Financial Crises: a Macroeconomic Policy Proposal”. Caballero, R. (2009), “Sudden Financial Arrest”, IMF 10th Jacques Polak Annual Research Conference. Caballero, R., E. Fahri and P-O.

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