samchain/econo-pairs-v1 huggingface dataset:
And where the costs and benefits accrue to different segments of the economy, as in this example, the difficulty of instilling reforms is exacerbated since it is hard to create satisfactory compensation schemes while those who lose out tend to be concentrated and thus more effective in organizing political opposition to the reforms. There are, however, general empirical regularities on the conditions that make reforms more likely. 4 First, is the period of economic downturn or crisis that focuses the public’s mind on the need for reform. Second, there must be sufficient fiscal room to compensate the losers. Third, the success of previous reforms that may help create competitive pressure for reforms in other areas. Fourth, the longer the length of time remaining in office for the Government,  4  See OECD (2007), IMF (2004) and Rajan (2004) for a detailed discussion. BIS Review 98/2008  9  the more likely that reforms will be undertaken. And fifth, external pressure either in the form of foreign reform efforts that increase competitive pressure domestically or membership in an international economic organization that requires reform as part of the admission criteria. Next, even if the obstacles to the reforms have been overcome, the practical aspects of implementing them pose further challenge. One of the most important issue in this respect concerns the proper pace and sequencing of structural reforms.

The key hypothesis of the research is that the context in which monetary and financial stability is pursued in emerging market economies is different to that of developed economies, and so the challenge and the implications for policy are different. My lecture this evening is organized into two parts. In the first part, I will talk about the unique context of emerging market economies compared to developed economies in the attainment of monetary and financial stability, and discuss the underlying cause of the difference. In the second part, I will highlight the key implications of these differences for the pursuance of monetary and financial stability in emerging market economies, both in the context of shortterm stabilization challenge and the longer-term structural challenge in implementing structural reforms. The lecture will be brief, so that we will have time for a Q and A session afterward. 1. First, the unique context of emerging market economies. As a general statement, one can begin with the notion that the attainment of monetary and financial stability is something that policymakers everywhere place at the forefront of their agendas. And, monetary and financial stability are desirable because they are prerequisites for welfare-enhancing macroeconomic outcomes. Along this line, the context in which monetary and financial stability is pursued in emerging market economies is quite distinct from that in developed economies. For emerging markets, there are two stylized facts that are unique to its policy setting.
For those banks that do experience reductions in capital as a result of Basel II, some observers have questioned whether the lower requirements might provide certain advantages and make it easier for those banks to acquire other banks that do not share in the same benefits. History suggests that this particular concern may be unfounded. In a paper published this past February by the Federal Reserve, researchers reported that they did not find convincing evidence that past changes in capital requirements have had a substantial impact on mergers between banks. The issue of competition between banks has also come up in the context of competition between countries. Here, we should remember that Basel II is intended to help ensure that international competition in banking markets is driven by the strengths of each bank, rather than by differences in each country’s rules. One way that the Committee has sought to promote a consistent application of the new framework is by providing banks and supervisors with detailed requirements where necessary. As I have already mentioned, these details may add to the appearance of length and complexity in Basel II, but that is a small price to pay for greater consistency and a more level playing field. However, given the need to have a framework which can be adapted to a wide range of circumstances, cooperation among supervisors is clearly the most important tool in achieving an appropriate level of consistency.

Jon Cunliffe: Is the world financial system safer now? Speech by Sir Jon Cunliffe, Deputy Governor for Financial Stability of the Bank of England, at the Chatham House City Series conference on Global Financial Markets: new rules on market structure, trading and funding, London, 17 March 2014. * I. *  *  Introduction  On 17 November 2008, for the first time ever, the leaders of the G20 came together to try to find a way through the worst economic and financial crisis since the 1930s. As I sat there, in Washington, in the National Building Museum, Benjamin Franklin’s famous warning came to mind: “If we do not hang together, most assuredly we will hang separately”. That Washington summit, and the ones in London and Pittsburgh that followed in quick succession, were extraordinary in many ways. Most striking, there was no rancour, no finger pointing between the leaders of the G20. Rather, the dominant mood was that we were indeed “all in it together”, or in Franklin’s words, would hang separately if we did not hang together. And, in contrast to the familiar run of Summits and Councils and international meetings, from the outset, there was a powerful bias to action: “what can we do to counter this crisis?” And, also from the outset, “how do we make sure it cannot happen again?” History has already started arguing about whose idea that first G20 summit was.
Today, our communication on the Swiss franc is centred around two key statements: the currency remains highly valued, and the situation on the foreign exchange market is still fragile. By communicating our knowledge of the financial markets in a clear and simple way, we bolster participants’ confidence and contribute to the credibility of our monetary policy implementation. Page 6/9  A changing money market Lastly, I’d like to take a look at another market that has seen profound change since the crisis: the money market. This market is particularly important for the SNB, especially with respect to the implementation and transmission of its monetary policy. The money market has undergone two major changes, largely driven by external factors. First, the structure of the market has evolved, with the inexorable decline of the unsecured segment and concomitant rise of the secured segment; this structural change has meant that repos now take centre stage on the money market. Second – and this change is closely bound up with the first – we observe that the framework conditions within which the money market operates have been recast following the decline of the unsecured segment. I am alluding here to the replacement of the Libor as the reference interest rate for a variety of financial products, both in Switzerland and around the world. Coming back to the first point: the drop in volume for unsecured transactions, particularly on long-dated operations (more than one month), is a global phenomenon.

First, last February, concerns surrounding a faster-than-expected tightening of monetary policy in the US triggered a major stock market sell-off and a corresponding volatility spike (green curve). Then, in May, political uncertainty in Italy led to a considerable widening of the yield spread between German and Italian 10-year bonds (blue curve). Demand for various asset classes regarded as safe havens, such as the Swiss franc, increased. Finally, in August, we witnessed a huge sell-off of certain emerging market currencies and an increase in their volatility (yellow curve). Fears of global contagion resulted in the franc appreciating strongly. It remains a safe-haven currency during periods of high uncertainty. Indeed, an analysis of the options market confirms that the Swiss franc was in demand as a safe-haven currency during the three events described above. Risk reversal shows that during these events, participants were prepared to pay a higher premium to hedge against losses resulting from a steep appreciation of the Swiss franc vis-à-vis the euro than against a depreciation. As we can see from chart 5, three-month risk reversal for the EURCHF pair was significantly negative. Even today, risk reversal is still well below zero, indicating that the situation on the foreign exchange market remains generally fragile. And now I would like to hand back to Andréa Maechler. As we have just seen, without this kind of in-depth analysis as a supplement to traditional macroeconomic analysis, it would not be possible for us to capture the complexity of markets simply and comprehensibly.
Consequently, the rise in property prices will tend to be highest in those countries where income growth is highest. 8  BIS Review 15/2007  Norway is now reaping the considerable benefits brought by the strong expansion in Asian countries and changes in the international division of labour. Norway’s GDP is increasing sharply and this is reflected in high government revenues and saving, increased household purchasing power and buoyant earnings in the business sector. The rise in house prices is partly being driven by growth in household income. Moreover, this period of prosperity and government budget surpluses may have engendered a sense of security which is also affecting household saving and house purchases. It would appear that household saving has fallen markedly in Norway in the recent past. Saving was probably negative in the latter half of 2006, which would be the first time saving has fallen since 1988. Housing investment for the household sector as whole is being fully debt-financed, i.e. an increase in net debt. External and domestic interest rates are low in an environment of solid growth. Long-term interest rates have fallen sharply both in nominal and real terms since the beginning of the 1990s. Inflation has declined and contributed to a fall in nominal interest rates. A more stable inflation environment also results in lower real interest rates when investors become more certain about returns. Furthermore, it would appear that high saving in some parts of the world is pushing down long-term interest rates.

Mr Carse discusses the importance of ethics in banking  Speech given by Mr David Carse, Deputy Chief Executive of the Hong Kong Monetary Authority, at the Banking Conference on Business Ethics in Hong Kong on 15 September 1999. *  *  *  Ladies and gentlemen, I am pleased to have the opportunity to speak today at this important conference on business ethics. This is an area that is becoming a growth industry, and it is one that it is particularly relevant to banks given the position of trust that they occupy. Indeed, this is one of the daunting things about giving a speech about the importance of ethics in banking. It all seems too obvious. After all, what do we mean by ethics in business? It means, I would suggest, trying to be a good corporate citizen; trying as an organisation to adhere to certain ethical values; and trying to do the right thing by all the various stakeholders – customers, employees, suppliers and shareholders – that any business organisation has. It means, as one writer has put it, “choosing the good over the bad, the right over the wrong, the fair over the unfair”. Put this way, is there any respectable bank that would claim not to attach high importance to core ethical values such as honesty, integrity, fairness, responsible citizenship and accountability? Is there any bank that would claim that it was right to accept bribes in return for loans, to lend to connected parties and to cheat customers?
John Gieve: London, money & the UK economy Speech by Sir John Gieve, Deputy Governor of the Bank of England, at The University of Surrey, Guildford, 26 June 2007. *  *  *  Introduction The past year has been one of rapid growth and record profits for much of the financial sector worldwide. The strength of the world economy has provided a favourable wind but the spectacular growth of derivative markets and the spate of leveraged buy outs have also fuelled the growth. And, of course, London has been at the centre of the story. In a speech in March I discussed the renewed ascent of London as a centre of international finance and concluded that it was based on powerful economic forces which were likely to persist. 1 I showed how the leading position London built up in the days when Britannia ruled the waves gave it a strong comparative advantage based on language, law, time zone and, above all, by a concentration of expert labour. This allowed London to maintain an important role in international finance even while Britain’s overall economic and political position was eroded. In the last twenty years we have seen a resurgence in the City which has established a strong position not just in traditional markets like foreign exchange, where its share is around 30% of trading, but in new products, with a share in OTC derivatives markets over 40%.

The SNB is concerned about exchange rate developments. The SNB forecasts are based on the premise that the exchange rate developments will stabilise in the medium term. Should the exchange rate again be subject to significant changes, a reassessment of the inflation outlook would be required. Since the last monetary policy assessment, the M2 and M3 aggregates have been growing at about 7% year-on-year. Some of this high growth rate is attributable to the current low interest rates. Overall, ample liquidity is available in the economy and this means potential risks for price stability in the long term. Mortgage lending has also continued to increase substantially, growing at a rate of 4.7% in April. In an environment of low interest rates and substantial advances in real estate prices, a high rate of growth in mortgages can harbour risks for financial stability. In the speech that follows, my colleague Thomas Jordan will outline for you the SNB’s Financial Stability Report. In view of the potential risks for the financial sector, the SNB continues to closely observe the situation on the mortgage and real estate markets. 2  BIS central bankers’ speeches  Chart of conditional inflation forecast The (dashed) red curve on the chart represents the new conditional inflation forecast. It shows the future path of inflation, assuming that the three-month Libor remains constant at 0.25% over the next twelve quarters, and it covers the period from the first quarter of 2011 to the first quarter of 2014.
Without question, the Accord  5  BIS Review 32/2000  was a milestone achievement - for the first time, supervisors in G-10 countries were able to use a common yardstick for assessing banks’ capital adequacy. But the Accord has a number of serious shortcomings. It does not adequately differentiate among degrees of credit risk and, as a result, banks have had incentives to take on higher risk exposures within broad risk categories. Banks have also tended to engage in transactions that lower regulatory capital requirements without reducing economic risk. For example, through asset securitization a bank may physically transfer assets off its balance sheet, but still retain some or even all of the associated risk. In addition, it has proved difficult to incorporate into the Accord’s simple risk-weighting scheme the innovations of the last decade in the way banks manage and mitigate risk. As credit risk management techniques advanced, and as the importance of managing operational risk has been increasingly recognized, the long run relevance and efficacy of the Basel Accord has been eroded. In June of last year, the Basel Committee released a Consultative Paper laying out its vision for a new, more refined capital adequacy framework - one that more accurately distinguishes degrees of credit risk, and that is appropriate for banks of varying levels of sophistication.

William J McDonough: Future challenges for bankers and bank supervisors  Remarks by Mr William J McDonough, President of the Federal Reserve Bank of New York, before the 106th Annual Convention and Financial Services Forum of the New York State Bankers Association, held in New York on 6 April 2000. *  *  *  I am pleased to be with you today to discuss the new world that bankers and bank supervisors alike face in the wake of historic financial reform and continuing technological and financial innovation. Clearly, these are exciting, heady times. The American banking system has just posted its eighth consecutive year of record earnings, exhibiting substantial resilience and strength in rebounding from the troubles of the late 1980s and early 1990s. In doing so, banks have contributed substantially to, and benefited enormously from, the longest economic expansion in our nation’s history. Simply put, most people in our country have never had it so good. And yet even as we celebrate our good fortune, we must bear in mind that this very prosperity exposes the seemingly unstoppable US economy to certain very real risks. Today I would like to discuss the important issue of maintaining sound lending practices at this critical juncture in the extraordinary economic cycle we are enjoying. I’ll also address the impact of technology on banking, the Gramm-Leach-Bliley Financial Modernization Act, and conclude with an update on the effort to revise the Basel Capital Accord.
It will improve incentives for safe driving behaviours and better risk management practices by both risk owners and insurers. And it will address market distortions which have threatened access to motor insurance, particularly for higher risks. This is also a time when businesses and households are facing rising costs and more uncertain conditions which can adversely affect discretionary spending on insurance. At the same time, the exposures of households and businesses which insurance is designed to protect, have actually increased as evidenced by more frequent and severe incidents of natural and man-made disasters. All of these developments raise critical questions for insurance agents. One question that comes up time and again is: Will insurance agents continue to be relevant? If you are in this room today, then I assume you will agree with me that the answer is clearly ‘yes’. But I believe you are also here because there is a recognition that agents will have to evolve. Even if some of you were not completely convinced of this before, that reality surely can no longer be ignored or dismissed. So the more important question then is how agents can be a meaningful part of this change in order to advance the important benefits of insurance for the economy and the wider society? Today in Malaysia, the general insurance penetration level measured in terms of premiums as a share of GDP stands at less than 2% (1.68% as at end 2015).

Over the years, Bank Negara Malaysia working together with the insurance associations has invested significantly in informing the public about insurance through our financial literacy initiatives. We have come a long way in this process. Today, schoolchildren as young as 10 years of age will already be introduced to insurance through subjects taught in the formal school curriculum. By 2021, we expect to complete the process of integrating financial education content in the formal school curriculum at all levels of primary and secondary education. We have also continued to expand the ways in which we reach consumers, through different mediums and leveraging in particular on social media. We have adopted a life cycle approach to guide education initiatives, so that education content is more targeted and delivered when consumers are most responsive to receiving information. And we continue to adapt our education content so that it remains relevant and current to the issues and experiences that consumers face. In parallel with these efforts, agents will have a more important role going forward. With greater proliferation of online avenues for consumers to obtain information, contacts between agents and consumers are likely to be more targeted and specific in nature. Consumer needs and appetite for advice will also be greater in a more diverse insurance landscape.
In the case of the Eurosystem, the ECB balance sheet accounted for 12% of euro area GDP before the crisis and now stands at approximately 40%, around € trillion. Supervisory policy, for its part, has had to face the challenge of macrofinancial instability in a context of highly interconnected markets at the global level. In this area, the response has been three-pronged. First, the strengthening of microprudential regulation, with the new Basel III Accord, which includes greater capital requirements and a stricter framework for systemically important financial institutions. Second, the development of a new instrument, macroprudential policy, which addresses systemic risk and the procyclical behaviour of the financial system as a whole. And, third, the greater international coordination of regulation, which is necessary given the reality of globalised financial markets. Notable in terms of coordination has been the creation of the Financial Stability Board and, in the case of the European Union, the activation of the Banking Union, beginning with the SSM and the Single Resolution Mechanism. The new monetary policy I shall now turn to the challenges central banks face. The first is, evidently, identifying what is understood by the “new normal”. One question on which economic policy discussions are focusing is whether the advanced economies are in a new situation of secular stagnation, a “new normal” characterised by low growth, low inflation and low interest rates. We are seeing how, despite lower unemployment rates and the closing of the gap between potential and real output, inflation rates remain persistently low.

Traditional banks are taking the new technologies on board, occasionally through strategic alliances with new technology firms. New companies are also being incorporated into the sector, ranging from small start-ups to large firms. The new firms must, however, win the confidence of consumers and investors,  6/7  something that traditional financial institutions have secured over a long period of time, anchored by strong regulation and financial supervision. From the standpoint of the regulators, the fintech challenge affects both prudential and consumer protection policies. From the prudential perspective, regulators must strike a balance between catalysing innovation and the efficiency that new technologies can provide, and maintaining a sound regulatory framework. The guiding principle should be to apply the same regulation for the same type of financial services. In this respect, as the presence of fintech increases, it might be useful to put greater emphasis on the regulation of services, instead of placing it on the institutions that provide these services. Turning to consumer protection policies, it is vital that investors and consumers should understand how the new services function and the attendant risks, including, for example, credit, cyber-security and privacy-protection risks. Here we should strengthen our information and financial education policies. We are mindful at the Banco de España of the need to step up our efforts in this area.