samchain/econo-pairs-v1 huggingface dataset:
Hong Kong received a good FATF score card in 2019, but that only means that we are capable of doing more, sharing more, and contributing to better outcomes globally in a continuous manner. 19. Going forward, I believe that being adaptable in our implementation efforts will require changes in the way we do things. More specifically, while the pandemic continues to challenge all of us, I think it should be a catalyst for the wider adoption of latest technology, in the form of Regulatory Technology (Regtech), as well as more efficient and effective AML/CFT measures. Those I believe are also the views of David Lewis, Executive Secretary of the FATF who also said “As AML professionals, we all need to take more risks and stop just ticking the boxes.” I think he is referring to the much needed adaptability in our implementation efforts. The guidance from the FATF is reassuring in this regard, and this leads to my second point. The AML/CFT Regtech adoption is a journey for banks and we should begin to drive more effective outcomes in better leveraging that process. 20. We have seen in the past two years an increasing trend for regulators globally to call for, and through their actions, enable more innovation and flexibility in combatting money laundering and financial crime. That I think is a very welcome development. 21.

Regarding the future direction of the Regtech journey, I think the key is that regulators globally should call out specific issues and problems, so we can collaborate and leverage technology to innovate and make progress. Our work in the HKMA involves discussion across the global and regional networks of regulators, and we see benefits in our active participation in the FATF, including co-chairmanship of its Evaluation and Compliance Group for the current term. This sentiment seems to be shared by my colleague from the Monetary Authority of Singapore, which is also very active in the FATF. 28. Transformation is not just for the private sector – at the HKMA we are also implementing a series of changes which will not only apply current technology solutions to our risk based AML/CFT supervision, but will also allow us to adopt future technologies and techniques. In keeping with international trends in AML/CFT, we have been significantly enhancing our ability to source, capture, store and process data across the full spectrum of activities, augmenting the supervisory skills of our existing AML/CFT experts by hiring data specialists. Investing in people is the only way to get the most of out of technology. We need to encourage them through the right culture, and empower them with relevant, practical opportunities. 29. So, if we manage to identify the appropriate Regtech solutions and then throw enough expertise and resources behind those, is that all we need to do in order to face the upcoming challenges? We would need something more, I think.
From that perspective, climate change introduces challenges for supervisors related to time horizon, data limitations, and inherent complexity. 7 One question that gets particular attention centers on time horizon and prioritization. More specifically, given the many risks that financial firms face—cybersecurity, geopolitical uncertainty, and the credit cycle to name a few—and the relatively long time horizon around climate change, why should supervisors focus on this particular risk? I think that is a fair question and there are good answers. First, we are already observing the impacts of climate change on financial firms. Evidence continues to grow that climate change is affecting economic and financial outcomes.8 Moreover, evidence from climate science suggests that some further physical climate impacts are lockedin due to past emissions.9 Some investors consider an assessment of sustainability to be integral to their fiduciary responsibilities.10 And, as I described earlier, supervised firms are choosing to build capacity in this areas, so supervisors need to understand and assess these changes. This is a risk management question for today with direct implications for safety and soundness. Second, given the complexity of the problem, we all need time to build data, models, and intellectual capacity to address risks as they arise in the future. It took the better part of a decade to approach a steady-state in central bank stress testing capabilities for more familiar and arguably less complex risks like credit card losses or shocks to asset values from interest rate spikes.

I think we can all admit that even with the best of intentions it is difficult for us to take a fully objective view of our domestic structure of laws and institutions, in particular when looking for weaknesses. The role of being the scapegoat for bringing bad tidings from the results of the FSAP assessments is well-known to the IFIs from their traditional work and it is actually a much appreciated role by the domestic authorities. On an FSAP mission it is quite common that high officials from the country concerned, in private, remind the IFI representatives not to forget to mention certain shortcomings. If you plan to conduct FSAP-like assessments without the involvement of the IMF or World Bank, it is important that you establish a process which ensures the integrity of the assessment. The FSAP is not only a way to identify weaknesses but also a tool for prioritisation of remedying these weaknesses and for providing technical assistance. An important part of the FSAP outcome is to leave behind a list of recommended remedial action, setting out the priorities. Since the scope of the FSAP is broad, prioritisation should become easier and more balanced than if assessments were conducted following a piecemeal approach. The FSAP process also contributes by informing about new research findings and about good practices used in other countries. 2  BIS Review 52/2006  The future FSAPs By now, FSAPs have been performed in more than 130 countries.
So it shows that a smaller country can still benefit by negotiating Partnership Agreements with a much larger economy. For that to happen, the Agreement has to be based on two principles. One is the principle of non-reciprocity, that is, the larger country has to do much more than the smaller country. And two, special and differential treatment in terms of the phasing of the trade liberalization. So you build in mechanisms which take into account the asymmetry in the economies. Both China and India recognize  the  principles  of  non-reciprocity  and  special  and  Page 13 of 17  differential treatment. Their negative lists would be much shorter than ours; their positive lists would be much longer than ours. They will allow us, I am confident, o negotiate safeguard agreements. These mean that if you have a sudden surge in  imports,; if say imports go up by say 20-25% over a short period of time, you can automatically put in place safeguards through increased tariffs. That’s a well-used practice, so that you get  protection as a small country against import surges from larger countries. Equally, you can negotiate a good dispute resolution mechanism, which gives you a chance to address your issues that come up when in dealing with a larger country. So, there are these mechanisms, well tried and tested mechanisms, which can be used for us to ensure that we get a good deal.

The growth of domestic demand is likely to be held back by the relatively tight fiscal policy as well as by the monetary policy tightening since May; and the effect this year of “windfalls” as a result of building societies’ demutualisations will be very much smaller. And we expect a deterioration in our net external trade position as a result of the strength of sterling’s exchange rate and now, too, as a result of the recent developments in Asia. The difficult questions for policy relate to the timing and the extent of the slowdown that is necessary on the one hand and likely on the other. These are difficult judgements at any time. They are particularly difficult when the economy is already close to full capacity. It is not surprising BIS Review 3/1998  -3-  that commentators differ in degree in their assessments. Economics is not - as I say - a precise science. Neither we at the Bank nor anyone else know with any great precision exactly where we are in relation to full capacity or exactly how fast capacity is growing; and we don’t know precisely either how demand will in fact respond to the policy tightening that is already in place. Our own best - and very carefully informed - guess is embodied in the forecasts that we publish each quarter, and we monitor immensely carefully the new information that becomes available day by day in the light of that forecast for early warning signs of emerging imbalance.
The major economic policy challenges facing the nation today - pick your favorites among the usual suspects of low public and household savings, concerns about educational quality and achievement, high and rising income inequality, the large imbalances between our social insurance commitments and resources - are not about monetary policy. Poor monetary policy choices would make these problems harder to address, but monetary policy itself can't do much to fix them. The issues about monetary policy regimes we spend most of the time debating these days - such as those involving communications and disclosure and variants on inflation targeting - are high class problems to have. Even if they were resolved in the direction of what seems to be the broad academic consensus, they would still leave us with all the hard questions in monetary policy. The color of truth in monetary policy (apologies to McGeorge Bundy) is often grey, not black or white, and moving further along the spectrum toward greater transparency or more explicit rules, will not make easier the hard choices of what to do in the face of the normal fog that surrounds the forecast. In thinking about the durability of these gains in monetary policy delivered under Volcker and Greenspan, there are a few aspects of our history and about the world today that deserve note. The actions of individual chairmen have been very important in the history of the Fed.

Today’s MoU is meant to extend this support for another two years commencing with the 2009/2010 academic year. In addition, the MoU aims at strengthening the framework of cooperation between the Bank of Zambia and the Economics Department of the University of Zambia. Under this agreement, the Bank has committed up to K605 million per annum in support to the Economics Department of the University of Zambia. BIS Review 91/2010  1  This support will include monthly salary supplementation for 15 lecturers in the Department; scholarships to four outstanding UNZA students of Economics at Masters Degree level; acquisition of books and periodicals; research support; and the purchase of computers and software for use in research. It is the hope of the Bank that this support will help address some of the challenges facing the University, including recruitment and retention of academic staff, funding for research and the acquisition of vital equipment and software. Ladies and Gentlemen; through this support, the Bank of Zambia would like to be associated with the University’s mandate of building human capital, through delivery of quality education, and the extension of the frontiers of knowledge through research. This synergy between the Bank and the University is based on the understanding that both institutions are knowledge based. It is therefore, our belief at the Bank that this cooperation will continue to generate positive externalities not only to the two partners but to the wider community through the developmental impact of enhancing knowledge.
These are the areas that institutions need to focus on to avoid becoming a “problem bank case” themselves. Let me move on now to consider the role of the banking supervisor in ensuring that an institution’s internal controls are adequate and effective. This is an area on which there has been greatly increased emphasis in recent years. Of course supervisors, like the management of financial institutions, have always been concerned with the quality of control systems. However, the approach has been rather piecemeal, and has focused on certain types of risk which are easily quantifiable, rather than the more intangible types of risk. What we are trying to do nowadays is to move towards a more systematic identification and assessment of the risks facing a bank across the whole range of its activities and the adequacy of the controls over these risks. This “risk-based” approach is intended to focus our attention on what we see as the institution’s key risk areas. Of course, the correct identification of the institution’s key risk areas is crucial in this. For most of Hong Kong’s local banks, credit risk, liquidity risk and perhaps BIS Review 48/1998  -4-  reputational risk remain the highest risk areas, but for individual institutions other forms of risk such as interest rate risk and market risk also come into the equation.

From a global viewpoint, there is reason to believe that the worst of the crisis is over. The Norwegian economy is in a unique position. The wealth in our time is not a short-term asset. We are likely to benefit from revenues and positive impulses from oil activities for many decades ahead. But that source will not spring eternal. If we are to maintain our prosperity over time and reduce the vulnerability to a fall in  8  BIS central bankers’ speeches  petroleum revenues, we must generate a larger number of profitable investments in the mainland economy – both in the public and the private sector. We must also provide stronger incentives for participating in the labour market and generating value added. Perhaps Norway is not so much an economy apart after all. There will be new times. Come what may. Thank you for your attention. Charts  BIS central bankers’ speeches  9  10  BIS central bankers’ speeches  BIS central bankers’ speeches  11  12  BIS central bankers’ speeches  BIS central bankers’ speeches  13  14  BIS central bankers’ speeches  BIS central bankers’ speeches  15  16  BIS central bankers’ speeches  BIS central bankers’ speeches  17  18  BIS central bankers’ speeches
The increasing relevance of China in the world economy and in world trade following its accession into the WTO, generated a booming effect in commodity markets and world demand that more than compensated the negative effect of increases in world interest rates, giving important support for the balance of payment, fiscal accounts and the investment outlook in emerging economies. We are now at the early stages of a new and historical tightening cycle in the United States. It is reasonable to ask ourselves how comparable the current situation is relative to previous experiences. I want to make a few points here. We expect the Fed to move more gradually than on previous occasions  Why? First, the Fed prefers to err on the side of moving slowly, and markets expect so. In part, as seen in Figure 3, inflation measured as the PCE core is still low compared to its level on previous hiking cycles. Also, neutral rates are estimated to be very low this time, so the Fed considers that monetary policy is not as expansionary as the headline Fed Funds Rate suggests.  Besides, the Federal Reserve is very much aware of the financial stability risks of abrupt changes in rates. The term premium implicit in long term yields is very low, and the taper Tandrum episode of 2013 shows that it can change fast if markets misinterpret the Fed communication.

The impact of the Fed’s tightening cycle in the 1990s on emerging markets was not as widespread as the 1980s episode had been, and countries like Chile and Colombia were able to  st  1 Remarks at the 2017 IIF Latin America Economic Forum, Asunción, Paraguay on Saturday April 1 , 2017. I acknowledge the support of Diego Gianelli and Mauricio Hitschfeld in the preparation of this speech. These remarks do not imply endorsement by the Central Bank of Chile or any of its Board members. 2 There is a third episode between June 1999 and June 2000. This process of 150 bp hikes can be understood as the final adjustment along the 1994 episode. 3 See, for example, the discussion in García‐Herrero, A., 1997, Banking Crisis in Latin America in the 1990s: Lessons from Argentina, Paraguay and Venezuela, IMF Working Paper 97/140. See also Sachs, J., A. Tornell and A. Velasco, 1996, Financial Crisis in Emerging Markets: The Lessons from 1995, NBER Working Paper 5576. 1                weather this period relatively well and to keep high growth rates.4 But there is ample evidence that, in a context of several macroeconomic imbalances in several emerging economies, the 1994 episode triggered a series of difficulties and crisis that configured the macroeconomic map in the developing world in the second half of the decade. In contrast, the monetary policy normalization process starting in 2004, did not have a negative effect on emerging economies.
Of course, fixed income and equity markets have different characteristics but perhaps a more important distinction is the role of heterogeneous beliefs and how this might be reflected in asset prices. The economics profession has made great strides in its use of expectations in models but one of the short cuts required to produce these great strides was the simplification to homogenous beliefs. For much of the period leading up to the crisis this simplification was of no consequence. However, as we now understand from sophisticated analysis of models with heterogeneous beliefs, it can produce high valuations for certain set of assets and large abrupt moves in certain market prices when leveraged positions are unwound.10 How does this unwind express itself in real time in the views and actions of market participants? First, the views tend to become even more dispersed, as do the views regarding what the central bank should do about it. Second, market participants become more suspicious of each other and rumors can spread like wildfires. Many participants take defensive actions which if one is tracking market prices at a daily frequency add tremendously to the inherent noise in high frequency market moves.11 More importantly, when the probability of a failure of a counterparty starts to increase the signal in market prices becomes a mixture of fundamentals and assessments of the likelihood of government intervention.

The basic skills that economists can bring to such meetings are a framing of developments based on the efficient markets hypothesis, which holds that financial markets will quickly incorporate all relevant information in asset prices, along with an understanding of economic fundamentals. Many commentators have associated a blind faith in efficient markets by market participants and regulators as one of the main underlying causes of the crisis.6 This seems an overly simplistic and mostly incorrect characterization. A partially correct aspect of this critique is that market discipline failed in the period before the crisis. However, this is not a true rejection of the efficient markets hypothesis, as expounded by Gene Fama, but rather a failure for incentives to be appropriately aligned.7 An efficient markets explanation usually involves a great deal of the Monday morning quarterbacking: after observing market moves that prove an analysis incorrect, there is usually a tweak to this previous analysis prompted by the market move, which does not require any substantial changes to an underlying view. To outsiders this might sound like cheating, but if the efficient markets hypothesis has validity, then unexpected market moves always contain new information over the original analysis. Indeed, the ability of individual markets to efficiently aggregate diverse sources of information most of the time is why the efficient markets hypothesis gained empirical support.8  6  See Adam B. Ashcraft and Til Schuermann (2008), “Understanding the Securitization of Subprime Mortgage Credit” Federal Reserve Bank of New York Staff Reports No.
Looking through the blip in the first quarter, the economy has now been growing above trend for a year and unemployment has fallen sharply over the past two. Consumer confidence is around its highest level for over a decade. Businesses investment intentions are solid. Momentum in the housing market is showing signs of returning. 23 Survey data point to continued momentum in real activity over the remainder of this year. 22  Based on average quarterly GDP growth since 1993. 23  The impact of Buy to Let changes will be examined in August Inflation Report. 8  BIS central bankers’ speeches  To be sure, the international risks to the growth outlook remain. The situation in Greece is fluid, and the on-going slowdown in China could prove more significant. But on balance we can expect the global economy to proceed at a solid, not spectacular, pace. 24 Second, domestic costs need to continue to firm. After a period of particularly weak wage growth, which reflected a marked expansion in labour supply that is now largely absorbed, wage growth is picking up. 25 The recent growth in wages has been stronger than we had expected in May, though most of the upside news was in bonuses, which are a less reliable guide to firms’ future labour costs.

Last year, the Mainland of China ran a trade surplus of $ billion, equivalent to 4.5% of GDP. Foreign direct investment amounted to $ billion. Its foreign reserves are the second highest in the world. Its foreign debt amounted to only about 14% of GDP and consisting of mostly long-term loans from official sources such as the World Bank and the Asian Development Bank, and the debt service ratio at well below 10% of exports. The fiscal deficit in 1997 was small at below 1% of GDP and the monetization of such deficits is now prohibited. My contacts in Beijing have told me that even on the basis of very extreme assumptions with the amount of foreign direct investments and the growth rate of exports being halved in 1998, there will still be a balance of payments surplus. In the circumstances there really is no pressure to devalue the RMB. 17. The stability or otherwise of the RMB, understandably, would appear to some observers to have implications for the Hong Kong dollar’s link with the US dollar, particularly given the economic closeness between Hong Kong and the Mainland of China. But this does not necessarily mean that the Hong Kong dollar will need to move in sync with the RMB, in the highly unlikely event that the RMB is devalued. The Hong Kong dollar is linked to the US dollar and not to the RMB. The economic relationship has always been very close between Hong Kong and the Mainland of China.