samchain/econo-pairs-v1 huggingface dataset:
But these are good arguments only for those in receipt of the tax rebates or the state subsidies. As a policy matter, they are distortions to risk-taking. Using them to support lower capital ratios is to argue that three wrongs make a right. Even without further regulatory reform, a case could be made for reconsidering risk-taking distortions directly, such as the tax advantage of debt. The effects of removing that tax subsidy could be potent. Basel III will lower banks’ required debt-to-asset ratio by around 3 percentage points. Given estimated tax elasticities, a similar change could be achieved by lowering the tax shield on debt by as little as 5 percentage points. There are two ways in which the playing field between debt and equity could be levelled: removing the tax deductibility of debt interest – for example, through a system of comprehensive business taxation; or allowing firms to deduct from profits an allowance for corporate equity – for example, as recently proposed in the Mirrlees Report (2011). The latter approach already operates in Belgium, Brazil and Latvia. There is of course a third way – do both. That would tilt the financing playing field through its axis, favouring equity over debt. In public finance theory, a non-neutral tax system can be justified when externalities are at play. Bank leverage has negative externality-like properties because of the deadweight costs of default and the growth-sapping effects of debt overhang. Both these externalities have been evident recently.

Equity prices called the crisis early and differentiated the sick from the sound. Market discipline worked. Had CoCos with market-based triggers been in place, the crisis may just have played out differently. Pre-emptive recapitalisation of failing institutions would have occurred, either due to automatic CoCo conversion or remedial action by managers under pressure from (potentially converting) debt- and (potentially diluting) shareholders. CoCos could have operated as a contractual prompt corrective action mechanism. This market-based contractual approach has the advantage of turning poacher into gamekeeper. It uses the risk-taking incentives embedded in equities to sharpen market discipline. A market problem is turned into a market solution. With less discretion and bankruptcy, these contracts would stand a greater chance of proving time-consistent in a crisis. Historically, that has been the hardest nut to crack. (c) Control rights A third set of potential structural solutions would be to address governance and control problems at source. Post-crisis, a number of proposals have already been put forward to strengthen bank governance. These include increasing board expertise and performance and upping the power of bank risk committees (Walker (2009), Basel (2010b), OECD (2010)). These are steps in the right direction. But looking down the star-studded cast of nonexecutive directors on the boards of failed financial institutions during the crisis, to wish for better is to wish upon a star. So what else might be done? In banking, the two prevailing ownership and control models are the public limited company and the mutually-owned co-operative.
It is important that its implementation takes place as swiftly as possible, within a broader international effort, building on the highlevel recommendations developed by the FSB, and that it is expanded in due time to cover in particular the specificities of the DEFI ecosystem. Third, confidence requires maintaining central banks money as the anchor of the financial system. This implies that central banks revisit the central bank money services they provide with the objective of adapting them to the digital age. This is necessary for the services provided in the wholesale sphere, for the settlement of transactions between financial intermediaries, which are the most important from a systemic risk perspective. Today, central bank money is the very dominant settlement asset in that space because it is the safest and most liquid settlement asset on supply. It is essential that tomorrow it remains so, in particular if tokenized finance takes off. These attributes of central bank money cannot be matched by stablecoins or commercial bank money. 2/3  BIS - Central bankers' speeches  Hence our strong and early involvement at the Banque de France in a large-scale experimentation program on wholesale CBDC with a number of market participants; and the announcement by the ECB a few days ago that the Eurosystem will explore potential solutions for central bank money settlement of wholesale financial transactions recorded on DLT platforms. Adapting our central bank money services might also be necessary in the retail space.

Yves Mersch: Swedbank Economic Outlook Seminar Speech by Mr Yves Mersch, Member of the Executive Board of the European Central Bank, at the Swedbank Economic Outlook Seminar, Stockholm, 18 May 2015. *  *  *  Ladies and gentlemen, There is an old saying that “with money, Latin and a good horse, you can get through all Europe”. These days a good command of Latin does not help you much outside of the Vatican City. Most of us prefer to travel by plane or train. But at least in the 19 countries of the euro area, the money a citizen holds in his or her pocket crosses all national borders. This only remains the case, however, if that money keeps its value – which is our responsibility at the ECB. So I would like this morning to talk about the measures we have taken to meet that responsibility over the last year, and to give you my view on how we should address the risks they can entail. Responding to low inflation From December 2011 onwards inflation in the euro area began a sustained downward drift, reaching its trough in January 2015. Responding to this situation would be challenging for monetary policy in any circumstances, but was made especially difficult because nominal interest rates were already very low. In this context we have taken what, at face value, may appear to be a series of very unconventional measures – negative deposit rates, ABS purchases, sovereign bond purchases, to name but a few.
Michael C Bonello: The Maltese lira Interview with Mr Michael C Bonello, Governor of the Central Bank of Malta, by The Malta Business Weekly, 9 December 2004. *  *  *  I must first of all point out that decisions regarding the external value of the Maltese lira can only be taken by the Minister of Finance on the recommendation of the Central Bank of Malta and with the consent of the Prime Minister. Decisions on such a complex, technical issue can have far-reaching economic and social implications and are understandably not taken lightly. They must, for that same reason, be made on the basis of facts not supposition. Having said that, I must make it equally clear that at this point in time the Bank cannot responsibly make a recommendation in this sense for the simple reason that it has no conclusive evidence that such a change is warranted, still less that it would deliver the expected benefits. Nor is the Bank aware that anybody else has made a credible case for changing the value of the currency. The conclusions of the Bank’s study on the equilibrium exchange rate have been shared with several local and foreign experts, including the IMF mission that was in Malta last May.

Changes in the exchange rate should only be resorted to when everything else has failed. They should be a measure of last resort. Besides, they only produce the desired results if they are accompanied by a comprehensive set of complementary policies implemented in a controlled environment. Speculating about the exchange rate without producing conclusive proof that it is the root cause of the economy’s difficulties is, therefore, inappropriate and can have serious repercussions. The national interest requires all of us to concentrate rather on the more immediate, and well documented, reasons for the economy’s slow growth. I have elaborated on this aspect in a recent interview carried by another local newspaper. 1/1
Then there was a monobank, the most important financial institution, which performed both functions, of a commercial bank and of the central bank [however skewed that could have been in the centrally planned economy]. We should also understand that commercial banking was not about evaluating loan applications and looking at projects’ fundamentals or clients’ credentials. In the former socialist countries, there was a State Planning Commission that decided how much of certain production would get produced and by whom. The role of the banks was limited only to finding funds for financing the planned production. It is important to acknowledge the situation at the outset of economic and political reforms. This would also help us to understand some of the problems that the transition economies went through later on. Thirteen years ago there were basically no real banks, no capital markets, no experienced staff and no experienced management. In addition to that, there was no capital in the banks. The ratio of capital to banks’ assets was on average well below 1%. At the same time, there was a boom in entrepreneurial activities, with tens of thousands of new companies sprouting up. Their common characteristic was that they had no history, no experience, no capital, but great need for debt financing. On top of this, all the laws were changing, institutions [such as prudential banking supervision] were built only gradually, and the state as decisive owner in the banking sector was not up to its duties as good manager.

Pavel Racocha: Joining the EU - Impact on the financial sector of new member states Speech by Mr Pavel Racocha, member of the Board of the Czech National Bank, delivered at the conference entitled "The Single Market for Financial Services in the EU and Its Impact on Globalization", Sydney, 3 November 2003. *  *  *  On May 1st, 2004, ten countries will join the European Union. Will the transition proceed smoothly? The main concern related to new countries joining the EU, from the point of view of the financial sector, is what impact the enlargement will have on the functioning of financial markets in new member states. Will competition in financial services increase and place a strain on institutions in accession countries or in the EU as well? Will there be visible impact at all? The new member states consist of eight former transition economies and of Malta and Cyprus. I will focus on developments in the transition countries, and especially in the Czech Republic, which I know best. I will also try to make reference to other accession countries to show that the results of developments over the last thirteen years, at least in the financial sector, are not so different. This brief presentation cannot do more than deliver only a basic description of the past development of financial markets in the transition countries and of their current standing. Hopefully the data from this presentation can serve as background information for those interested in further studies.
More than 20 global FIs have set up innovation centres here. You would have seen during the Innovation Lab Crawl earlier this week some of the exciting things they are experimenting with: digital health solutions tapping on wearable devices; telematics for motor insurance; blockchains to streamline payments; big data to produce customised service offerings. MAS itself has set up an innovation lab – called Looking Glass. It aims to: spur collaboration among MAS, FIs, start-ups, and technologists; and facilitate consultations for start-ups by industry experts on legal, regulatory, and businessrelated matters. Infrastructure for Electronic Payments: UPOS, CAS We have a world-class infrastructure for electronic payments. It is a 24/7, real-time inter-bank fund transfer system. We call it FAST; short for Fast and Secure Transfers. But FAST is grossly under-utilised and Singapore is still heavily dependent on cash and cheques as means of payments. The Association of Banks in Singapore is working on two key initiatives to make electronic payments seamless and convenient for everyone. First, a Central Addressing Scheme (CAS) that will allow you to pay anyone using that person’s mobile number, national ID number, email address, or any other social media address, without the need to know the recipient’s bank or bank account number. Second, a Unified Point-of-Sale (UPOS) terminal that will allow a merchant to accept all major card brands, including those that are contactless or embedded in smartphones. A National KYC Utility Knowing the identity of a customer – or KYC – is one of the biggest pain points in the financial industry.

We want to create a Smart Financial Centre: because we want to increase efficiency – to do things cheaper, better, faster; because we want to manage our risks better – to keep our system safe and sound; because we want to create new opportunities – to generate growth and good jobs; and most of all, because we want to improve people’s lives – to provide them better services, to help them realise their goals. Innovative finance must be purposeful finance. Thank you and I wish you all the best. 9/9  BIS central bankers' speeches
5  We must ensure here that the objectives behind all the regulations that introduce a degree of size-based business discrimination are compatible with competition and do not pose obstacles to business growth. Deeper-seated improvements to the regulatory framework must be sought so as to converge on the best practices our peer economies boast. The indicators available show there is room for improvement as regards business start-up formalities, the regulations governing some sectors (such as the retail trade and certain transport and professional services segments) and the functioning of the legal system. In a country as decentralised as Spain, regional and local governments should bring their different practices onto a common footing to reduce the current barriers to the singleness of the market. Improving human capital Raising productivity further requires improving human capital. Here considerable challenges remain, such as those stemming from average educational levels for employees and employers lower than those for the EU, from early school leaving and from the negative gap in educational quality indicators. These shortcomings, along with the need to address the challenges posed by globalisation, technological progress and the automation of tasks, point to the advisability of reconsidering the institutional design of the educational system, along with curriculum content and the very system of learning.

The Banco de España projections include a third scenario, in which the materialisation of some of these risks might give rise to a decline in GDP for this year of 15%. 3. Economic policy in the second phase of the crisis The key magnitudes of these forecasts illustrate the challenges we face and the need to formulate a forceful economic policy response. I shall now turn to detailing the main elements which, in my view, this response should include. As earlier stated, in this second phase of the crisis economic policy should combine two objectives: to support the recovery and provide for the structural adjustment of the economy. First, I shall broach the policies relating to the monetary and financial areas. As part of the European Central Bank (ECB), the Banco de España contributes to such policy decisions at the European level. Here the priority should continue to be to support the recovery and maintain financial stability. As mentioned in my previous testimony to the Economic Committee, I believe we should all share the goal of preventing the current crisis from being  3  accompanied by a generalised tightening of financing conditions or from seriously harming our financial system. In this connection, and in relation to monetary policy, we have on the ECB Governing Council reiterated our commitment to doing everything needed to support euro area citizens in these extremely difficult times.
Something that no doubt helped to question the explanatory power of the efficient-market hypothesis was the stock market crash in 1987, when the Dow Jones index plummeted 22.6 per cent - the largest-ever one-day fall in the United States. This dramatic event demonstrated that share prices can fall even though nothing more fundamental appears to have happened; a thorough search failed to detect any specific or unexpected development that might account for the crash. It also seems to be the case more generally that many price movements are not occasioned by new information; a study of the fifty largest one-day share 2 price movements in the United States in the post-war period confirms this. Moreover, a number of studies have shown that price movements have occurred solely because the company in question has been included in or excluded from Standard & Poor’s 500 index, without any new information about fundamentals. Various explanations for such overreactions have been found. For instance, research has shown that risk management systems and the use of strategies such as stop-loss limits and VaR limits, theoretically could cause financial markets to overreact. Other research has shown that different forms of psychological factors can also cause those developments. Experimental psychology has found that people often perceive a wider pattern in the light of just a few observations that are actually entirely random.

At the same time, individual investors, immersed in chat rooms and message boards, are exchanging questionable and often misleading tips. Yet, despite all this available information, investors find it increasingly difficult to profit. … Stock prices skyrocket with little reason, then plummet just as quickly, and people who have turned to investing for their children’s education and their own retirement become frightened. There appears to be no rhyme or reason to the market, only folly.” This is a quote from the preface to a recently published biography about the well-known and long term 1 value oriented investor Warren Buffet. Buffet began his career forty-five years ago with only 100 U.S. dollars and has over the years built himself a multibillion-dollar fortune. I quote the passage to illustrate a view held by some of what was going on in the stock market during the end of the 20th century and the beginning of the 21st. Learn from new theories From experience we know that investors may temporarily pull financial prices away from their trend level. Over-reactions can occur so that excessive euphoria drives prices unduly high, just as undue pessimism can push them down too far. New theoretical and empirical arguments have been put forward against the notion that financial markets are efficient. According to the efficient market hypothesis, it is only changes in fundamental factors, such as profits or dividends, that ought to affect share prices.
In practice, situations where pure liquidity problems arise seem to be rare. In most cases where banks face liquidity problems, there is some uncertainty about the solvency of the institutions involved. Typically, it takes time to make an assessment of the solvency of an institution. In the Swedish banking crisis, it took many months to fully assess the financial situation of the troubled institutions. Not even the institutions themselves had a good picture of how large their problems were. Recent developments in the financial system, such as consolidation, the emergence of geographically dispersed financial conglomerates with activity in many product lines and a greater complexity of financial products, make this task even harder. It is unlikely that central banks or supervisory authorities will be able to make a valid assessment of the solvency of troubled institutions quickly enough. As mentioned above, requests for liquidity support may arise very rapidly. The conclusion of this is that it will in practice be very difficult to draw the dividing line between the central bank’s responsibilities and those of other authorities by distinguishing between institutions with solvency problems and those with pure liquidity problems, at least during a sudden crisis. Another conclusion is that it is crucial to establish rules for information sharing between authorities, especially between the financial supervisory authority and the central bank in advance so that the central bank can quickly make an assessment.

The possible need for speedy assistance necessitates that a central bank must have internal procedures for managing requests for liquidity support and doing so very rapidly. To accomplish this, central banks need to have a detailed crisis plan that can be put in place within very short notice. The crisis plan should include the following types of information: Organisational structure •  A division of responsibilities for analysis, information, decision-making, etc. •  Staffing requirements for different tasks, with substitutes. Analysis plan •  A description of the information necessary to make a decision about whether or not a systemic crisis may occur. •  Necessary information about systemically important individual banks. Information strategy •  A plan for informing and coordinating information and decisions with the other domestic agencies involved in the crisis. •  A plan for informing authorities in other countries about the situation. •  A plan for communicating with the financial markets. •  A plan for spreading information to the public and media (ex ante and ex post transparency). Plan for implementing ELA •  A clear description of the routines which must be followed and the legal requirements which must be met for ELA. Legal procedures, for example contracts, for lending against other collateral than what is normally eligible •  An inventory of the instruments available for implementing ELA. •  Guidelines for acceptable collateral and appropriate haircuts.