samchain/econo-pairs-v1 huggingface dataset:
In other words, the variable cost is negligible today and the fixed cost is reasonable. Today, therefore, we can find powerful computers and the Internet at most workplaces and in many homes. The costs are so low that many have the financial scope to utilise computers and the Internet, at least in industrial nations. This spread also means that the time and cost involved in the telegraph boy’s running around is eliminated. In other words, it is this spread that means that today’s IT most probably has much greater significance than telegraphy had a hundred years ago. Speculation and technology So far during the ongoing technological revolution, we have seen both a powerful rise and a considerable decline in the value at the stock exchange. If we compare this with earlier periods when major technological changes had a breakthrough or became more widely used, we can conclude that the sequence of events has varied greatly. We have had several periods of extensive speculation in connection with breakthroughs for new technologies that have resulted in financial and real shocks. We have also had periods when these changes have occurred more gradually, without any major shocks. One example of the former is the speculation during the early 1920s that resulted in an economic decline. A further example is the international shock we had following the wave of speculation in the then ‘new economy share’ - the railways - in the 1870s. This led to a very weak international development over a period of almost 20 years.

This cooperation has fostered our relations with foreign supervisory authorities and international institutions. Staff capacity building and development in this area was another priority of the project. Our institution should take relevant measures to increase their skills for preventing or handling deficiencies or threats to financial system stability. In terms of statistics, this cooperation has led to a thorough review of the existing regulatory framework to completely fulfil ECB standards on compilation and dissemination of monetary and financial statistics. The review aimed to identify items of noncompliance with EU standards and to subsequently draft a solid agenda for comprehensively reviewing our  BIS central bankers’ speeches  1  methodology and infrastructure to compile the Balance of Payments in accordance with EU standards. Payment systems constitute another priority of our work under this project. In this area, our practices further improved, aiming at approximating them to the ESCB practices on payment systems. Also, pertinent legal acts and their compliance with the EU regulatory framework were reviewed. Cooperation on interbank money market consisted in analysing the experience of other central banks in handling market obstacles and difficulties in relation to the regulatory framework. Other useful aspects for adapting, including identification of necessary actions to be taken by our institution in the interbank money market were also addressed. Coordination of the EU integration process is another major area that was broadly addressed by this project.
Chances are, not really. I certainly do not, but then I’m just a lawyer. There may be a tendency to believe 4/7  BIS central bankers' speeches  that brilliant people built and tested the product. Surely they know better than you or I about how it works. We should therefore just trust the experts. I have seen this movie before. Similar assumptions existed a decade ago about CDOs and other complex securitizations and hedges. It has been said that the financial crisis occurred because of a failure of imagination—of not anticipating risk.13 There was also a more basic failure. Not enough people understood how complex financial products actually worked. It is critical that all three lines of defense—and, especially, the first line of defense—understand technology. I urge you to question your current technology, and to think ahead to further changes. For example, how will artificial intelligence challenge traditional methods of testing and assurance, which address static coding rather than dynamic learning? How will machine choices about access to financial services, or the cost of those services, avoid perpetuating or exacerbating historical disparities of race, gender, age, or zip code? These questions do not have easy answers, and they will likely lead to more questions. So don’t rest. Keep learning so that you can better anticipate risks. Professionalism and the first line of defense Finally, I encourage you to continue to develop a sense of your field as a profession. Now, I do not mean to imply that anyone in this room is unprofessional.

In that case, loyalty to a network of professional contacts was a powerful incentive to commit fraud. I am lucky to have had a very different experience at the New York Fed. I oversee a staff of legal, compliance, and law enforcement professionals who appreciate their paychecks but, in all candor, are not in it for the money—or, at least, not entirely in it for the money. What matters to them is the Federal Reserve’s public mission. A good way to encourage their best conduct is to acknowledge their contributions to that mission. But don’t take my word for it. A growing number of organizational experts and management consultants have concluded that job satisfaction and other intrinsic benefits matter as much if not more than extrinsic rewards, including pay. 7 This is not to say that incentive compensation is 3/7  BIS central bankers' speeches  weak tea. It is certainly a powerful motivator. My point is that, in your efforts to construct the most effective controls for your organization’s risks, consider both monetary and non-monetary incentives. Moral reasoning It is also important to promote moral reasoning. I know there’s a joke in there somewhere. After all, what is a lawyer doing talking about morality? And there is some tension in advocating moral judgment in a discussion about controls. Controls seek consistency and objectivity. Morality, by contrast, can be very personal or subjective. Controls often remove discretion. Moral reasoning is all about choice. But let’s be realistic.
Unlike inflation, where falling behind the curve would entail a degree of pain down the road when policy eventually needs to catch up, there is no catching up if we fall behind the curve on climate change. It is a one-shot game. And the consequences of getting it wrong would be catastrophic. Responding to climate change is not simply about taking into consideration the effects of the green transition on inflation, nor the possible repercussions of physical and transition risks on financial stability. But it is also about actively taking steps that helps influence the incentives and willingness of society to alter their behaviours in such a way that mitigates adverse climate change. The most impactful channel for central banks in this respect is through the financial system. Incentives, mindsets, and expertise in the financial sector must be geared so as to ensure that sufficient resources become available to finance the green transition. This requires a collaborative approach, both among agencies within a country, as well as internationally. Initiatives being pursued by bodies such as the Network of Central Banks and Supervisors for Greening the Financial System are therefore critical. Forging ahead amidst shifting grounds Mervyn King once said that central banking should be boring. There was a time when that was true. There may come a day when it is true again. But that is not today. The task at hand is far from straightforward. Maintaining economic and financial stability amidst the shifting fault lines will require a steady hand.

Sunil Mendis: A brief look at financial information technology Keynote address by Mr Sunil Mendis, Governor of the Central Bank of Sri Lanka, for the Financial Information Systems Seminar, Colombo, 8 September 2004. *  *  *  His Excellency Akio Suda, the Ambassador for Japan in Sri Lanka, Mr Yoshihisa Onishi, Executive Director, FISC, other officers from the FISC in Japan, Ladies and Gentlemen, The Central Bank of Sri Lanka is happy to co-sponsor this programme together with the FISC of Japan (Center for Financial Industry Information Systems), in view of the importance of financial information technology in the financial services industry. Sri Lanka is no exception to continuous changes in the technology used by its financial services industry. In a market driven financial system, for information to be effective, there should be two vital ingredients, that is system integrity and timeliness - both of which are crucial. The more dependable your information systems are, the more efficient and competitive banks can be as a player in the financial services industry. That is why we see banks investing heavily in IT. Globally too, with the interdependence of markets their integration is facilitated through information systems which link these markets which make the world a very small place indeed on a PC monitor where the whole world is virtually at your doorstep.
It is not easy to grasp the concept of operational risk, although the Basel Committee’s definition is a good start: “risk of losses resulting from inadequate or failed internal processes, people and systems, or external events”. Although public opinion associates operational risk with dire consequences for specific institutions, you and I know that it is present in all banks’ daily operations, and in all their areas, from the most traditional to the most complex. Given the relevance of operational risk, it is not surprising that both supervisors and the leading banks are making an increasing effort to measure its impact. Only if progress is made in such measurement will it be possible first, to conduct analyses of the impact that strategic decisions (expansion in new areas or regions, rationalisation of expenses, outsourcing, etc.) may have on the operational risk profile and, therefore, on the possibility of introducing corrective measures aimed at improving this risk profile. As things stand we are still far from achieving - in technical terms- a satisfactorily broad and deep measurement of operational risk. This is why the Basel Committee, by setting for the first time an explicit capital charge for operational risk at banks, has done so avoiding, in the most advanced alternatives, mechanistic formulas that may curb operational risk management developments in the coming years.

All these areas require strong political commitment and continuous efforts in order to achieve successful outcomes. 8. Lastly, I would like to highlight a key driver of sustained economic growth that is particularly important for Asia – infrastructure investment. Unfortunately, we still see big gaps for infrastructure financing today despite the large savings in the region, and infrastructure development has been slow and inefficient in many countries. One of the major reasons is the shortage of “bankable” projects. There are a host of factors behind involving legal and governance issues, and political risks. But whatsoever the reasons, it is a gap that can only be filled by bringing together capital and know-how from the public and private sectors. Indeed, the G20 has recently highlighted the importance of infrastructure investment as a growth driver, but many challenges remain in overcoming the obstacles to identifying “bankable” projects. 9. In the face of immense uncertainties and challenges ahead of us, IMF’s assessment of the prospects and risks, as well as advice on policy response for the region at this juncture is particularly important. We look forward to the presentation by IMF and the dialogue during the panel discussions. 10. 2  Thank you. BIS central bankers’ speeches
11  Services exports are 0.6% below their pre-crisis level in Spain, whereas in the euro area they exceed it by 1%. 12  Residential investment in Spain remains almost 20 pp below its pre-pandemic level, in contrast to the euro area, where it is already 2.1 pp higher. 13  In Spain private consumption was 6.3% below its pre-crisis level at end-2021, compared with 2.5% in the euro area. 4  Broadly speaking, these measures protected household income, employment relationships and non-financial corporations’ access to financing. Thus, the recovery of pre-pandemic employment levels suggests that furlough schemes have been effective in promoting the return to work.14 For example, we can conclude from the more detailed analyses in the Annual Report that furloughed workers have had a greater probability of returning to work than unemployed workers, although this difference decreases as the time on furlough lengthens. The ICO guarantee facilities15 met their goals effectively, insofar as they were able to cover around 30% of the non-financial corporations sector's liquidity needs. This percentage is higher in the case of firms in the sectors hardest hit by the crisis (39%) and, especially, among small and medium-sized enterprises (SMEs) (70%). However, firms with no bank debt before the pandemic only covered 18% of their liquidity needs through bank loans. The guarantee facilities also appear to have fostered the supply of credit to SMEs and firms in the sectors hardest hit by the crisis, particularly from financial institutions with lower capital ratios.

As central banks, we need to consider carefully to what extent instant transparency with regard to liquidity operations may end up being counterproductive. Let me add here that this is a very complex issue. I am not arguing that the evolution towards greater transparency in central banking should be reversed. Indeed, perhaps we need greater ex ante transparency such as clearly stated conditions and eligibility criteria associated with central bank liquidity provisions. Undoubtedly, ex post transparency about potential liquidity support measures must also be guaranteed. But in the midst of a crisis, it may well be beneficial and desirable for central banks to have some flexibility with regard to how they communicate regarding potential liquidity operations. 2.2. Implications of volatile risk premia for the conduct of monetary policy  My second tentative lesson directly relates to the conduct of monetary policy. The recent market strains are unusual because confidence or rather the lack of confidence plays such an important role. Clearly, there is a great deal of uncertainty regarding valuations of complex credit instruments. Moreover and arguably more importantly, banks realize that they are facing or could face large contingent liabilities. They are therefore doing everything they can to protect their balance sheets. In essence, banks are hoarding liquidity and are reluctant to lend money in the interbank market beyond the very short term. As a result, a substantial and highly unusual risk premium has emerged in the interbank market.
Lucas Papademos: What effects is EMU having on the euro area and its member countries (opening remarks) Opening remarks by Mr Lucas Papademos, Vice-President of the European Central Bank, at the ECB Workshop “What effects is EMU having on the euro area and its member countries?”, Frankfurt, 16 June 2005. *  *  *  Introduction When the ECB started organising this workshop a year ago, we thought that addressing the question of the workshop’s title would provide a necessary stocktaking and useful analysis of the effects of EMU on the euro area and its member countries, 6½ years after the introduction of the single currency. Recent developments and debates have shown that the impact of EMU on the euro area countries is a very topical issue indeed. Officials, economists and commentators have sought to analyse the pertinent issues and tried to answer the question of this conference. And some of them have come to conclusions which my colleagues in the Governing Council have called “absurd”, “nonsensical” or implying “economic suicide” – and rightly so. This debate has sometimes risked being fairly long on polemics and rather short on arguments. With this workshop, to which I would like to welcome you all, we can bring to this discussion some solid facts, sound arguments and a better understanding of the manifold issues involved. The debate on these issues has often been couched in terms of two key concepts, “convergence” and “heterogeneity” (which do, however, need clearer definitions), and the relationship between the two.

Consequently, the focus of the public debate should be how to speed up the reform process and its beneficial effects and thus strengthen consumer and business confidence. The role of the euro in fostering reforms in product, labour and financial markets Has the euro been of help in pushing the reform agenda? At the time of the launch of the single currency, some observers had seen the euro as a “reform whip” that, together with the completion of the single market, would push in the direction of increased competition, higher productivity growth and greater market flexibility, which are essential for the smooth functioning of monetary union. After all, in a single currency area, the adjustment of domestic imbalances cannot be corrected by exchange rate policy any longer, but rather has to take place via prices and costs. The paper by Romain Duval and Jørgen Elmeskov, which will be discussed tomorrow, will provide empirical evidence about the determinants of the pace of the reform process. Our own ECB research, presented in the paper by Lorenzo Cappiello, Philipp Hartmann, Peter Hördahl, Arjan Kadareja and Simone Manganelli, will dwell on the impact of the euro on the integration of European financial markets, notably the equity and bond markets. This stock-taking exercise and associated analysis should also assist in identifying where, precisely, structural changes are most urgently needed and how to make the necessary reforms a success.
Ladies and Gentlemen, Let me take a moment to say a few words on Islamic banking. Today, Islamic banking in Malaysia has firmed its position as a viable and vibrant component of the banking system. Bank Negara Malaysia has been in the forefront in providing the necessary and required infrastructure for the sector to grow further. From a market share of virtually nil a decade ago, Islamic banking has captured more than 8% of the assets of the banking system and is poised to reach 20% by 2010. We capitalized on the dual banking system which we believed is the right approach, and we will continue to embark in this direction. There are currently two Islamic banks and 33 conventional banks with Islamic windows offering the full range of Islamic financial services, and the industry has recorded commendable growth at an annual rate of 48% in terms of assets. At the end of March 2002, the assets mobilised by the Islamic banking sector amounted to RM 59 billion. Deposits and financing mobilized during the same period amounted to RM 48 billion and RM 30.1 billion respectively. Islamic banking in Malaysia is now at the threshold of entering its next stage of development, to expand on a global basis, to gain greater acceptance as an effective and efficient means of intermediation and to contribute to the overall wealth creation.

It also became clear that the current regulations for the banks did not sufficiently manage the risks to which the banking system was exposed. One conclusion drawn by the Basel Committee was that some banks had neither enough capital nor sufficiently good quality of capital to be able to manage the losses that arose. Another conclusion was that global regulation was needed regarding the banks’ liquidity risk management. A new reform work aimed at remedying these shortcomings and supplementing Basel II was begun by the Basel Committee. In 2010, a package of new reforms was presented in the form of what is usually termed the Basel III. The main aim was to strengthen the bank´s capital and to introduce new requirements regarding their liquidity management. The work on finalising Basel III is now being completed. When this work is done, what remains is for the Basel Committee members to incorporate the new regulations into their national legislation. This will probably be a time-consuming process. Sweden will be dependent on how this will be incorporated into EU regulations and directives and we will of course be involved in this work. I will now turn to some of the changes the coming bank regulation will entail. A leverage ratio requirement counteracts unhealthy build-up of debt One lesson from the financial crises we have experienced is that most of them have their origins in one or more actors having borrowed far too much money. The larger the debt, the more serious the problems will be in a crisis situation.
As you know, one of the origins of this crisis was the poor lending standards and lax risk controls that led to significant losses among many of the firms that dominate the financial industry. As the magnitude and widespread nature of these problems became evident in the early part of 2007, there was an abrupt loss of confidence and a sharp and sustained increase in risk aversion among investors. Liquidity in short-term funding markets seized up as concerns over the viability of many bank and non-bank financial institutions increased. Many of the Federal Reserve’s early efforts – including the Term Auction Facility, Term Securities Lending Facility and the Primary Dealer Credit Facility – were directly aimed at restoring the ability of financial firms to obtain access to liquidity. And while it is still too soon to declare victory on this front, there have been significant improvements in interbank financing markets. The next leg of policy intervention focused more directly on shoring up the strength of our financial institutions with programs such as the Treasury’s Capital Purchase Program and the FDIC’s Temporary Liquidity Guarantee Program, and here too there has been progress in a number of dimensions. Most notably, perhaps, is that in the wake of the release of the results of the recent stress test, the largest U.S. bank holding companies have shown an increased ability to raise capital and issue debt without government support. The major securities firms have deleveraged and have built up significant liquidity buffers.

One suggestion that has received significant attention is for banks to retain a portion of the securitization on their balance sheets. The notion is that with “some skin in the game,” those making the loans will show greater due diligence in terms of the underwriting standards applied to the underlying loan originations. In some ways, the TALF program is already facilitating this outcome, with the highly-rated AAA-rated securities sold to investors and the lower-rated tranches generally retained by the issuers. Second, I suspect that investors will become less reliant on the rating agencies – conducting more due diligence themselves. Third, I believe there will be a greater focus among investors on standardized, homogeneous, easy-to-evaluate products. This will improve the underlying liquidity of  BIS Review 69/2009  5  securitizations, which should result in lower lending costs and should make the assessment of the risk of the assets easier. Fourth, I think the overall securitization market will be smaller. The demise of parts of the shadow banking system such as the SIVs and the fact that banks are likely to have to consolidate some off-balance activities back onto their books at the end of this year should reduce the overall demand for and supply of securitized product. Developing and implementing the TALF has been challenging. As the program enters into a new phase with the financing of CMBS and legacy CMBS, we will encounter further hurdles that we will have to overcome, adjusting and modifying the program as needed in order to make it more effective.