samchain/econo-pairs-v1 huggingface dataset:
I have emphasised that banks must and can prepare for facing and responding to these challenges, underscoring the fact that the industry, following the progress achieved in terms of solvency and cleaning up balance sheets in recent years, is today better placed and has greater resilience with which to tackle these challenges. Among the possible courses of action, I have advocated, inter alia, moving for greater efficiency gains and continuing with the orderly correction of excess capacity, and giving priority to bank customer care. And it is precisely the relationship with bank customers on which I wish to focus my speech today. I believe this focus sits well with the title of this Meeting, namely “Competitive Banking in a New Society”. I consider that, amid the major changes in which banking is immersed, the relationship with customers will be key. It is always key, since customers are a bank’s most important and most fragile asset. But in the future I believe it will be even more relevant. And a fundamental factor in defining what the relationship with bank customers in the future will be is technology. Mindful of this, the Banco de España is stepping up the efforts it devotes both to monitoring technological innovation and to anticipating its potential consequences. Through a crossdepartmental working structure, various matters are being addressed in order to contribute to constructing an informed opinion and helping define the central bank’s strategic positioning.

The Banco de España has dedicated notable efforts to promoting financial education for many years. Along with the CNMV (National Securities Market Commission), it has since 2008 promoted the Financial Education Plan, to which numerous institutions and public and private associations covering a wide spectrum of social sensibilities have adhered. The objective of the Plan is to enhance citizens’ capacity to take well-founded financial decisions and, in this respect, it aims to reach out to the entire population and have a durable presence over time. As part of this Plan, and with the focus on the young, the Financial Education Programme for Schools – an initiative supported by the Ministry of Education, Culture and Sport within the framework of the collaboration agreement signed in 2009 with the Banco de España and the CNMV – has recently been launched for another year. This Programme, currently in its sixth edition, seeks to bring basic knowledge of personal finances to the classroom so as to prepare pupils to meet the basic challenges in the financial area that they will face throughout their lives. Key concepts such as saving, income, personal budgeting, what things cost, quality of life and responsible consumption are all developed in the Programme. In the past five years around 300,000 pupils have benefited from it. More generally and in order to reach out to all citizens, another notable component of the Financial Education Plan is the website finanzasparatodos, which has been open to the 7/8  public since May 2010.
Although unemployment has been stubborn, the key challenge expressed by many Europeans is to make labor markets more flexible, and indeed, some change is evident. This past year, unemployment in the euro area finally seems to have started to trend down, falling to 9.6% in January, a seven-year low and almost 1 percentage point below its level a year earlier. Further, output growth has begun to revive from the falloff in 1998, and the outlook is for solid growth in the 11 euro countries to continue into 2000. Core inflation throughout the euro area has also been subdued, although with rising energy prices, it may edge up a bit. Producer prices for finished goods show no signs of inflation pressure. Growth elsewhere in the industrial world - the United Kingdom and Canada - also appears to be strong, with no signs of accelerating inflation. In both countries, strong private consumption - and in Canada an unemployment rate that is the lowest since 1981 - continues to keep GDP growth on a reasonably steady path. More broadly, there is active debate within Europe today about what kinds of labor and financial market changes will accelerate technological change. Countries have taken different approaches in addressing these issues. The diversity of experiences among the European countries allows each to assess the impact of the various approaches others have taken and to draw lessons from which it may benefit.

As a result of both productivity growth and the favorable world inflation environment, core consumer price inflation (CPI) - excluding the more volatile food and energy sectors - has been running about 2% recently, down from 3% in 1995. As measured by the personal consumption expenditures deflator (PCE), core inflation is even more subdued, rising by only 1½% a year over the past few years. As a central banker, however, I cannot help but register concerns about some recent developments. As the expansion has progressed, signs of imbalance or strain have begun to appear in the US economy, especially in relation to the world economy. Commodity prices, for example - and not just oil prices - have increased rapidly in recent months, as world growth has bounced back sharply in 1999. For example, on a year-over-year basis, prices for crude materials, excluding food and energy, were up 15% as of February. In addition, strong consumption growth in the United States has been fueled in part by an inexorable decline in the personal saving rate. As I have noted, however, these declines in personal saving rates may to some extent be due to technical measurement issues. Moreover, the US current account deficit has also widened markedly over the past several years, with corresponding large surpluses in Asia and Europe. The outlook is for continued worsening in the deficit that had already reached a record last year, at about 4% of GDP.
It is at its heart about a few regulators getting together with the top management of the firms and saying this is what we would plan to do to you if the only alternative was liquidation, and working out how to operationalise that strategy. That is something the key countries, the key governments, have every reason in the world to co-operate on. In the FSB, we are putting in place a process where the most senior officials will talk to each other to reassure themselves on the resolvability of globally significant firms. From that will follow detailed operational planning, and requirements to remove impediments to executing resolution strategies. And flipping from my global hat to my domestic hat, at the Bank of England we have been working closely with the FDIC on how we would operationalise resolution strategies in a cross-border setting. You shouldn’t doubt that this will happen. Don’t listen to siren voices who question our capability or will. Financial protectionism and the FSB agenda Which brings me, in conclusion, to a broader point. The international authorities are committed to maintaining global finance – global capital markets, the free flow of capital across borders. We are not trying to create a new order that incorporates financial protectionism. On the contrary: the balkanisation of finance would cut against the extraordinary historical changes towards a much more globalised real economy. But allowing a fragile financial system to persist would also be a threat to globalisation.

We need to walk the talk and address the question of “how”. 4. Let me begin with the concrete actions we at the HKMA are taking. Our action plan is guided by the green and sustainable banking initiative unveiled in May 2019. We have been making significant progress since then. 5. As one of the largest reserves managers globally, we embrace responsible investing. ESG principles are now an integral part of our investment criteria, processes, and asset allocation. 6. As a banking regulator, we are working together with banks to manage climate risk. Being a good corporate citizen is important, but for banks there is the added dimension of managing the climate-related physical risk and transition risk associated with the projects and businesses they are funding. We have already developed a common assessment framework to help banks to assess their individual “greenness baseline”. In June this year, we issued a white paper that sets out our initial thoughts on the supervisory approach to addressing climate-related and sustainability issues. This will pave the way for setting our supervisory expectations for banks’ implementation. 7. Managing climate risk brings new opportunities in green finance. The IFC estimates $ trillion in climate investment opportunities in emerging markets over the next decade. Today Hong Kong is already a green finance centre with a vibrant and efficient ecosystem that matches the demand and supply of green financing. But more needs to be done in this fast-growing space. 8.
One reason why equilibrium interest rates are low at the moment is because the distribution of economic outcomes has become more skewed to the downside. In this regard, low rates are a consequence of riskier environment, not the cause of higher risk premia. 26 For example, see Ihrig, J, Klee, E, Li, C, Wei, M, and Kachovec, J (2018), ‘Expectations about the Federal Reserve’s balance sheet and the term structure of interest rates’, International Journal of Central Banking, vol. 14(2), pp. 341-390. 21  All speeches are available online at www.bankofengland.co.uk/news/speeches  21  V. Winter – Monetary policy in a persistently low r* world Looking ahead, deep structural changes in economies are creating disinflationary pressures at a time when conventional monetary policy space is already limited. Inflation targeting frameworks will be tested in new ways. It feels like winter is coming. In all likelihood, equilibrium interest rates will remain low for a prolonged period as many of the structural forces that have pushed them down are set to persist for years. Moreover, these could likely to be reinforced by flaws inherent in the international monetary and financial system27 and the disinflationary effects of advances in technology and the changing nature of commerce.28 The principle structural force leaning in the other direction on inflation is that the shift towards deglobalisation with the potential fracturing of the global trading system.

This agreement has reaffirmed the commitment to monetary union, patent both in the supportive efforts of its members and in the observance of the common stability rules governing the functioning of the Monetary Union. The negotiations for the Third Bailout Programme for Greece unfolded as scheduled, and there is every indication the Programme will be launched immediately and that the day after tomorrow, on 20 August, the Greek authorities will be able to meet their ECB payments, thereby avoiding a default with dire consequences. This third bailout is, perhaps, the most complex and demanding of those so far agreed between Greece and the European authorities and the IMF. This is so, among other things, because it will include measures to reinforce the Greek banking system, which has been greatly affected by events in recent months. Evidently, it is in the interest of all euro area members that the new Programme should be properly adhered to, and follow schedule, so that assessments of its implementation before year-end may be positive and provide for its full effectiveness and continuity. Needless to say, the fulfilment of this third programme will boost the growth of the Greek economy – the central and fundamental objective of this third assistance programme – and will strengthen the euro area and its stability as a whole. Recent developments on the international economic front are positive in terms of growth.
The Fund’s own history includes a period that illustrates the importance of not changing strategy during a downswing. After the dotcom bubble burst in 2000, the value of the Fund’s equity holdings fell sharply for a period. At the same time, the Fund’s fixed-income investments partly offset the losses on the equity side. Norges Bank is the operational manager of the Government Pension Fund – Global. Since the Fund’s establishment, we have built up an organisation that is capable of implementing the strategy laid down by the Ministry of Finance. Pursuant to the mandate assigned to Norges Bank, we seek to generate value added in excess of the return that follows from the strategic allocation. The Fund has achieved an average annual real return of 4.25 per cent since 1997. The contribution to the return from active management has averaged 0.39 per cent annually in the same period. Active management has thus made a contribution of about 9 per cent of the Fund’s total return. This result has been achieved without changes in the Fund’s return variability or risk exposure. Norges Bank’s investment management has thus improved the risk to return trade-off. In the long run, even a small percentage increase in the average annual rate of return will have a substantial impact on the Fund’s size. A stated goal of operational management is that a large number of investment decisions are to be taken independently of each other both at a given point in time and over time.

The investment strategy should be robust both under normal market conditions and in periods of abnormal, turbulent market conditions. Twelve years have now elapsed since the initial capital transfer to the Government Pension Fund – Global, which was then called the Government Petroleum Fund, and the Fund has grown and developed faster than envisaged. The Fund’s future is still substantially longer than its short history. A large and growing fund such as the Government Pension Fund – Global cannot adapt its asset positions to the momentary picture, but rather the contrary. It is important that the strategy remains firmly in place through turbulent periods. Moreover, we must expect that the shocks to which financial markets will be exposed over the next decades will be different from those we know from history and our own experience of recent decades. History will nevertheless be our most important strategy assessment tool. We know the past better than the future. If the Fund’s strategy is viewed from a historical perspective, for example the Great Depression of the 1930s and the oil crisis and stagflation of the early 1970s, analyses show that in the short run the Fund can survive large losses, but that that the value is recouped in the course of three to five years. Part of the Pension Fund’s strategy is to rebalance the portfolio by shifting into assets that show the strongest fall in value, that is the assets where the crisis is most severe, but that historically have featured the highest long-term return potential.
To achieve this, risk sensitive capital requirements need to be both sufficiently backward looking and sufficiently forward looking: backward-looking in the sense that they should be based on long runs of data that incorporate experience of both peaks and troughs; and forward-looking in the sense that risk measures hold good through the business cycle, taking account of possible future downturns even as banks are extending credit in benign conditions. (b)  Overall capital  The issue of how the new Basel framework will affect the overall amount of capital in the international banking system is also a hot potato at the moment. Again, this is a question which is crucial to the right balance between financial stability and financial efficiency. Erring on the low side in the minimum capital standard could result in unacceptable risk, while erring on the high side with too much capital is likely to result once again in wasteful and costly regulatory arbitrage. The importance of the question is, however, mirrored by its difficulty. Deciding the relative riskiness of different types of banking business is technically challenging enough, but the issue of where absolutely our tolerance of banking fragility lies is not only a problematic technical question but is also of course a normative one. And like all normative questions, different people will have different answers.

Turning to the technical aspects of this issue, I would note that even if we can agree on, and then measure, the minimum solvency standard which we should be targeting for our international banks, perhaps the really hard step is making a robust connection between individual banks' solvency and the solvency of the system. The latter is the primary focus of central banks though the former is obviously a necessary condition. I am encouraged to see that a number of the papers to be presented here have a go at making this connection. This is an issue which merits substantially more attention and research. It is far from just a statistical exercise: whilst we might just possibly be able to calculate statistically the joint probability of failure for a group of banks from their existing individual probabilities of failure, this does not of course reflect realities. Those realities are that the risk of collective bank failures depends on hard-to-measure and fluctuating factors such as correlations in risk profiles, and the mood and behaviour of the market once fragility at one institution becomes apparent. (c)  Consolidation  The changing financial landscape complicates the task, and this brings me to the third point I wanted to highlight, namely consolidation. Consolidation of financial institutions is a trend that is relevant to several different facets of systemic risk. First, does consolidation make banks more or less likely to fail?
But the point that really should be emphasized is that external surplus and reserves accumulation, for the most part, are a reflection of the dynamic of the adjustment in global investment and saving that has taken place since the Asian financial crisis. This dynamic has been instigated by the configuration of policies pursued by the major economies and by emerging markets, as well as by the development of financial institutions and markets around the world that has sped up and influenced the direction of global capital flows. But why the Asian financial crisis as a starting point? To me, the Asian financial crisis marks a number of important watersheds in the global financial relationship. BIS Review 134/2007  1  First, the crisis reaffirms the dominant roles of market and globalized capital. Second, the severity of the crisis led many emerging economies to rethink their policies of relying on external help for crisis prevention and resolution. And this has led to consideration to selfinsure against risk of crisis, with reserves accumulation becoming an important aspect of this consideration. And third, sharp adjustments in relative prices, especially real exchange rate and real interest rates after the crisis, brought into play the major forces that led to the adjustment in global investment and savings, as well as reserves accumulation. Today, I want to identify three factors as the major forces contributing to external surplus and reserves accumulation. The first is the process of global investment-savings adjustment that I have noted.

the net borrowings, lie almost entirely with the US, the surpluses or the net lenders are identified with Japan, China, East Asia, the oil exporting economies, and other emerging markets including Latin America. And the third is the financing of the deficits, as well as the reinvestment of official reserves, which are now a major component of global capital lows. The key issues therefore are whether this process can go on? Is it a permanent or a temporary phenomenon? And what would be the implications for the global economy and financial markets. Today, I want to comment on these issues. Specifically, I will discuss the major forces underlying external surplus and reserves accumulation from an Asian perspective. Next, I will comment on policies that are needed globally to address this problem. To begin, reserves accumulation is essentially the mirror image of the evolution of the US external deficits. Two popular views explaining this phenomenon have been put forward. The first is the export-led development model, i.e. the new Bretton Woods, which sees reserves accumulation as a consequence of an attempt to maintain export-led development, especially in Asia. The second explanation is the global-saving glut hypothesis, of which the glut is driven by the transformation of emerging markets from net borrowers to net lenders in the international capital market. Both interpretations I think have merits, and reserves accumulation is probably a reflection of both.
Mr. Lamfalussy looks at the progress achieved by the Hungarian economy in recent years Address by the President of the European Monetary Institute, Mr. Alexandre Lamfalussy, at a conference organised by the Hungarian Banking Association on the occasion of the 10th anniversary of the establishment of the new Hungarian banking system and held in Budapest on 7/2/97. For at least three reasons, I have accepted with pleasure the invitation to share some thoughts with you on the occasion of these tenth anniversary celebrations. First, for obvious personal reasons, I enjoy spending some time in Hungary - even if it is only for less than a day. Second, I am absolutely convinced that an efficient financial system in general, and an efficient banking system in particular, together comprise an indispensable precondition for the proper functioning of a market economy and, indeed, for economic growth. Not a sufficient condition, but a necessary one. Third, I note that Hungary has made substantial progress in this direction in four key areas. The larger part of the Hungarian banking system is now in genuinely private hands; the financial health of most banks (which, not so long ago, was - to put it mildly - precarious) has improved; the legal, accounting and regulatory framework has been consolidated, and, last but not least, there is now an interbank payment system in place which can no longer be qualified as prehistoric.

Example: SGX’s Marketnode seeks to enhance the efficiency of fund raising through international debt capital markets, shifting from a largely analogue process today, to a digital, automated environment supported by distributed ledgers and smart contracts. We anticipate that in the near future, the ability of real-time validation through a distributed ledger will shorten settlement cycles, which in turn allows for more cost-effective margin requirements. Third, a growing bond market that serves the needs of global and regional issuers. The size of Singapore’s bond market has expanded by 50% over the last 5 years, reaching almost half a trillion Singapore dollars as at the end of 2020. SGX is the largest bond listing exchange in Asia with over 3000 bonds from 45 countries in 19 currencies. More than two-thirds of the bonds issued in Singapore are in foreign currencies including the G-3 and Asian currencies. Over 60 international and regional banks have debt origination teams and capabilities here to support international bond issuance out of Singapore. More than half of the bonds issued in Singapore come from foreign issuers. Example: China’s Three Gorges issued a dual-tranche jumbo issue of $ billion in 2/4  BIS central bankers' speeches  2020, and the Philippines’ Jollibee issued two tranches totalling $ billion. Singapore also has a vibrant green and sustainable bond market to support the region’s transition to a low carbon future. The green bond market started only in 2017 but issuances are expected to cross $ billion by the end of this year.