samchain/econo-pairs-v1 huggingface dataset:
John Gieve: Stability and change Speech by Sir John Gieve, Deputy Governor of the Bank of England, to the Engineering Employers’ Federation North West, Warrington, 20 July 2006. *  *  *  I am delighted to be here today. The Bank of England has long connections with this region. We first set up offices in Manchester and Liverpool back in 1820s. That was a time when North West of England was a key hub in an emerging international economy, with the Port of Liverpool providing the gateway for industry in Lancashire and Cheshire to trade with the rest of the world, particularly textiles. The structure of the economy in the North West has of course changed markedly since those days and the region is now more associated with the aerospace, defence and pharmaceuticals industries than with textiles. Here as elsewhere, recent years have been a time of rapid change in the structure of industry and the economy. We may have been talking about globalisation for years but that doesn’t mean it is complete; in fact it is still gathering momentum. Macroeconomic stability: a platform for change In the face of that rate of change, it may seem paradoxical that among central banks the last 10 years have been known as the “Great Stability”. The UK is an example of that. Since 1992, when an explicit target for inflation was first introduced here, inflation has been stable and very close to its target.

But stability at the macroeconomic level does not mean stability for individual firms or industries. Indeed one of the virtues of macro stability is that it allows – indeed forces – firms to focus on the real long term business challenges and opportunities they face rather than how to survive or profit from the short-term cycle. It is not a paradox therefore that the Great Stability has also been a time of great change in industry in ownership, structure and technology. The Engineering Employers’ Federation has itself stated that ‘manufacturing prospers best in a stable macroeconomic environment with low inflation, low interest rates and stable exchange rates’. 3 That is not because they are a recipe for a quiet life but because they allow businesses to focus on what really matters – their products, their technology, their customers and their competition. In the last few years, macroeconomic stability has provided business with a platform for rapid changes in ownership, location and product mix, and for the transformation by IT of all business processes in the factory, the warehouse and the office. 1  Bean, C (1998), ‘The New U.K. Monetary Arrangements: a view from the literature’, Economic Journal, November. 2  ‘The Inflation Target Five Years On’, Quarterly Bulletin  3  ‘Manufacturing in the UK’, Engineering Employers Federation, May 2005.
I would also like to congratulate the organizers, specially the Sasin Graduate School and the Faculty of Commerce and Accounting of Chulalongkorn University for successfully organizing a high profile international conference. Our thanks also go to Professor Carl Chiarella, the current President of APFA for his untiring efforts in guiding the APFA activities and a warm welcome the newly elected APFA President, Dean Professor K.C. Chan. I wish you a successful and enjoyable term. Thank you for your attention. 6  BIS Review 70/2001

I’m pleased to report that, as outlined in our Consultation Response Document9 published a week ago, we received wide and consistent support for our proposals. We will be going forward with implementing ISO 20022, via the introduction of the Common Credit Message or CCM – which is central to message harmonization across the UK’s main interbank payment systems, as well as providing compatibility with the emerging international consensus. The Bank’s direct responsibility is for the UK’s high value payment system, CHAPS10, so we will be working closely with Pay.UK as we develop the CCM. But success will also require ongoing input from across the whole payment chain. It is important we implement this change effectively. Both to mitigate the risks that migration brings, but also to ensure we capture this opportunity. I want to emphasise that we must not think of the ISO 20022 implementation as one-off change, to be left untouched in the UK’s payment systems for years and allowed to become outdated. Furthermore, we must work hard to ensure that our implementation of ISO 20022 is not just inwardly focussed but internationally harmonised; international co-ordination will be key to unlocking the potential benefits for users of payment systems globally. Beyond the migration, there will need to be an ongoing evolution, development and enhancement of ISO 20022 and payments data in the UK. We must keep this in mind as we implement the standard; and indeed  9  The Consultation Paper is available at https://www.bankofengland.co.uk/-/media/boe/files/payments/rtgs-renewal-programme/iso20022/iso-20022-consultation-paper.pdf. The Consultation Response Document is at https://www.bankofengland.co.uk//media/boe/files/payments/rtgs-renewal-programme/iso-20022/iso-20022-consultation-response.pdf.
Monzo has opened 1.6 million accounts, adding 30,000 each week. Monzo’s customers can connect their accounts to 600 different apps and services, and create rules to integrate banking into their daily lives. For example, users can create a rule that automatically logs calories to the health app on their mobile phone whenever they purchase coffee. But banks can also play the same game, and more of them are doing it. DBS Bank from Singapore launched a “digi-bank” in India two years ago and has already garnered 2.5 million customers. Digibank is using artificial intelligence to learn customers’ spending habits and will prompt them if they are overspending, or provide relevant marketing offers such as coffee vouchers for a caffeine-lover. Maybe we should combine the DBS Bank app and the Monzo app to achieve a more balanced intake of coffee! United Overseas Bank from Singapore has just launched in Thailand a digital-only bank TMRW (pronounced “tomorrow”) aimed at millennials. It comes complete with an “engagement lab” using behavioural insights to study customer’s banking habits and needs. TMRW’s mobile app features a game designed to encourage their customers to save more. In Hong Kong, the regulator has given out licenses to 8 virtual banks to acquire and deliver banking services through the Internet. 6 / 10  BIS central bankers' speeches  The take-up numbers are interesting; they indicate the competition emerging in the space of digital banking. Out of the 8 virtual banks, 5 are non-banks but 3 are backed by banks.

Technology is akin to Porthos, the fearless musketeer who is eager to try new ways for a better future. In a similar vein, Technology presents us opportunities to revitalise Finance: the opportunity to enhance customer experience; the opportunity to strengthen risk management; and the opportunity to improve cost efficiency. Let me elaborate on each of these opportunities. First, enhancing customer experience. This has become a critical success factor in many industries, including finance. Why? Basically, technology firms have reshaped the way businesses interact with customers. They have empowered customers and set higher bars for customer satisfaction. Whether they are established Big Tech firms or small FinTech start-ups, they pose a competitive challenge to financial institutions. If I have to name one thing these technology firms do very well, much better than financial institutions, it would be that they are obsessively customer-centric. Tech firms embed themselves in the customer journey and use data analytics to deeply understand customer needs. They then provide end-to-end solutions, often customised to individual circumstances. They have agile IT systems, efficient processes, and a culture that emphasises speed. Essentially, tech firms think of themselves not as being in a particular industry, but as platforms, upon which they provide access to the services their customers need. Traditional banks tend to be largely product-centric. The credit card division tries to sell you unsecured credit, the wealth management division tries to sell you mutual funds, the lending division tries to sell you a mortgage.
Figure 4 Immigration  Chile's population (*)  (thousands of persons)  (millions of persons)  240  240  20.5  20.5  200  200  20.0  160  160  19.5  120  120  19.0  80  80  18.5  18.5  40  40  18.0  18.0  0  0  17.5  2017  19.5 2002  19.0  17.5 15  92 96 00 04 08 12 16  20.0  17  19  21  23  25  (*) Population estimates and forecasts using each Census. For 2002 the updated figures published in 2014 are used. Source: National Statistics Institute (INE). 10  Figure 5 Annual GDP growth  Domestic demand  (contribution, percentage points)  (real annual change, percent)  6  6  16  16 Durable consumption  Total Nonmining  3  3  8 Habitual  8  consumption  0  0  0  0 FBCF  Mining -3  -3 14  15  16  17  -8  18  -8 14  15  16  17  18  Source: Central Bank of Chile.

Similarly, the development of the domestic financial system particularly the domestic financial markets, the strengthening of the surveillance system and the legal, regulatory and supervisory frameworks, have increased the capacity and capability to manage consequences on access to cross border financing, and from quantitative easing, deleveraging activities, and financial sector resolution in the major economies. In addition,  2  BIS central bankers’ speeches  this has been reinforced by the building of buffers during the good times. Financial intermediaries remain well capitalised with strong buffers, while the international reserves remain sufficient to deal with surges and reversals in capital flows. A more recent development in this decade is greater regional collaboration and cooperation. Asia is well ahead in the areas of surveillance arrangements, financial safety nets, and crisis management. These frameworks and arrangements have been built up during the good times. Information sharing and the establishment of regional arrangements and platforms, including the building of regional financial infrastructures and markets, are not only to facilitate the efficient intermediation of financial resources, but also to safeguard financial stability in the region. This trend paves the way for coordinated policy actions to manage and mitigate the risks and vulnerabilities to the region. Conclusion The global economic and financial environment remains highly dynamic and uncertain. While emerging Asia is unmistakably contributing to reshaping the configuration of the global economy and the international financial system, the fundamental underlying factors driving this global transformation needs to be continually reinforced. It will require our own continuous economic and financial transformation.
One exception was the Bank of England’s Corporate Bond Secondary Market Scheme, introduced in 2009, and from 2010 offering daily two-way prices on a wide range of high-quality sterling corporate bonds issued by non-financial companies, to aid secondary market liquidity. These prices were determined as a spread around the market price (so moved up and down with the market), and set at levels that incentivised market participants to sell to the Bank when market functioning was poor, and buy when market functioning returned to normal. The implications for the public sector balance sheet were modest: even at its peak, the scheme only owned about 1% of eligible bonds. But the existence of live two-way backstop prices helped liquidity to return to the market – and delivered a natural unwind in the facility, with bonds being sold back to market participants as functioning normalized (Chart 3). 11  See for instance https://voxeu.org/article/subprime-crisis-what-central-bankers-should-do-and-why and https://maverecon.blogspot.com/2007/08/central-banks-in-time-of-crisis.html. 12 In practice, effecting full risk transfer through central bank repo requires it to be done on a ‘non-recourse’ basis (ie relying solely on the collateral provided for risk mitigation in the event of default). The principles of such operations are discussed in https://www.imf.org/en/Publications/WP/Issues/2017/07/10/Central-Bank-Emergency-Support-to-Securities-Markets-45012, and were put into practice by the Federal Reserve in its Money Market Fund facilities provided during the GFC and the Covid crisis.

Over time, and the experience of successive banking crises, LOLR has been supplemented by an extensive prudential regulatory regime, requiring banks to take greater ownership of managing their own risks, and setting quantitative minima for liquidity buffers. In short, a banking version of Chart 2.7  But while LOLR may have been primarily focused on banks, there are also historical precedents for central banks stepping in to restore broader market functioning at critical moments. In July 1914, for example, the Bank of England made large-scale purchases of bills of exchange after the uncertainty caused by the onset of World War 1 brought the market to a halt, threatening widespread contagion (the bill market was at that time the engine of global trade finance).8 The Federal Reserve took similar actions in the US Treasury bond market in 1939 (at the start of World War 2), 1958 (following a regime change in government funding arrangements) and 1970 (amidst unrest over the Vietnam war).9  By degrees, these and other actions show a gradual broadening in focus by central banks from backstopping the funding liquidity of banks to backstopping market liquidity,10 when severe dysfunction threatens financial stability. ‘Currency and Credit’ (1919) and ‘The Art of Central Banking’ (1932), by Ralph George Hawtrey. ‘Lombard Street: A Description of the Money Market’ (1875), by Walter Bagehot. 7 These tools have been further supplemented by deposit insurance, macroprudential and resolution frameworks, though these are typically more focused on solvency than liquidity considerations.
The banking system currently comprises 16 operating institutions, with total assets of around 53 per cent of the country’s GDP. The system is well capitalized and liquid. Its intermediation role is increasing. The lending activity although small (accounting for around 23 percent of total banking assets and around 12 percent of GDP), is strongly picking up. Other financial institutions are trying hard to increase and modernize their activity. However, many problems primarily legal and property rights related which are outside financial sector are making it difficult for them to increase their credit lines. Microfinance has proved to be a more effective way to deal with these problems. With its inventive formulas it makes financial resources become accessible to small and medium businesses that account for most of aggregate production during these development stages. These resources are often used to finance small projects in areas like agriculture, livestock or services like handicraft, small food stores etc. The first microfinance institutions in Albania, were set up in 1994 as development projects co-financed by the Albanian Government and the World Bank. 13 donors cooperate with the Albanian government in supporting the development of SME-s in Albania. From 1992 a large share of funds has been allocated in Albania as donation, but only a portion has been spent. Most of these funds has been  BIS Review 88/2005  1  given as soft loans for Albanian government. Aid represents around 30 % and only 5 % are direct commercial loans to co-finance the private investment.

Peter Pang: Hong Kong’s retail bond issues Opening remarks by Mr Peter Pang, Deputy Chief Executive of the Hong Kong Monetary Authority, at the signing ceremony for the retail bond issue under HKMC’s retail bond issuance programme, Hong Kong, 18 July 2005. *  *  *  Good afternoon ladies and gentlemen, On behalf of the Hong Kong Mortgage Corporation, I welcome you all to this signing ceremony for the retail bond to be offered to the public tomorrow. I am pleased to note that since the introduction of the current offering mechanism through placing banks in October 2001, HKMC retail bonds have been warmly welcomed by retail investors. So far, we have issued seven retail bonds for a total amount of $ billion. The success of the Mortgage Corporation’s debt issues has been attributed to its high credit ratings (which are the same as those of the Hong Kong SAR Government) and to the wide range of notes, which can meet the different investment needs of retail investors. The upcoming issue has both Hong Kong Dollar and US Dollar denominated notes. This is the first time that the HKMC issues US Dollar notes. Apart from diversifying its funding sources, the HKMC’s issuance of USD retail bonds also serves to provide an additional investment channel for retail investors in Hong Kong. The minimum subscription amount for our USD bonds is only $ setting a reasonable threshold to make our debt accessible to a large segment of retail investors.
BIS central bankers’ speeches  3  interdealer and dealer-to-client – into a market with much broader access. Moreover, as new trading platforms have come online, the profile of FX market participants, and thus the way FX is traded, has changed. New participants, such as retail and smaller institutions – that are often engaged in high-frequency or high-speed trading – could begin executing on their home or office computers, or could connect their trading algorithms directly to the platforms. The expansion of both the universe of market participants and the infrastructure to support execution has brought many positive benefits to the market and global economy, but we should also be mindful of potential costs that might arise. In particular, it is important to consider the implications for the overall integrity of the market, which, as I noted earlier, relies on the ability of market participants to confidently and effectively transact at prices that reflect available market information. Technology has helped ease entry to the market, but the capital investments needed to keep up have also increased. Indeed, operating in fractions of milliseconds has become an important component toward achieving faster execution. Will this hinder the entrance of new participants in the future, particularly those who may not have the extensive resources required to keep up? In addition, while many market participants note the positive influence that technological changes have had on market functioning, including narrower bid-ask spreads. 7 it is unclear how these changes may affect the broader price discovery process or liquidity of markets overall.

They would state that that the ultimate responsibility for the crisis rests with monetary policy. Specifically, according to this view, by keeping interest rates too low for too long a time, central banks have tolerated – or even condoned – the build-up in risk and financial imbalances. They “created”, so to speak, the credit bubble which burst in 2007. Let me state clearly that I don’t share this view. It is very apparent that some features of recent financial innovation – including securitisation – have contributed to excessive risk taking and increased financial fragility. They explain why the crisis has been so severe. It is also striking that real – not only nominal – interest rates have stayed at low levels for an extended period of time. Over the medium run, long term real interest rates are beyond the control of monetary authorities. They have been driven by the continuous increase in saving rates which occurred over the last decade, especially in emerging economies. This created a demand for safe and liquid assets which could not be met by equivalent supply in those countries. Because of this “asset shortage”, saving flows were directed towards industrialized countries, first of all the USA. At the same time the financial system in those industrialized countries worked to produce “complex” assets which looked safe and liquid – and were rated as such. Apparently, supply matched demand. But we know now that this was an illusion. Complex assets were neither safe nor liquid.
Chart 2  Chart 3  Advanced economy corporate bond spreads(a)  Implied volatilities in selected markets(a)(b)  Basis Points 1000 Non-investment grade 900 corporates (RHS) 800 Investment grade 700 corporates (LHS) 600  Basis Points 2500  2000  1500  500 400  1000  300 200  500  100 0 2005 2006 2007 2008 2009 2010 2011  0  Sources: Bank of America/Merrill Lynch. (a) Option-adjusted spreads over government bond yields. Sources: Bloomberg, British Bankers’ Association, Chicago Mercantile Exchange, Euronext.liffe, JPMorgan Chase & Co. and Bank calculations. (a) Three-month option-implied volatilities. (b) Data to close of business on 14 June 2011. (c) WTI crude oil. (d) Average of FTSE 100, S&P 500 and Euro Stoxx 50. (e) Average of five-year on-the-run iTraxx Europe main and CDX North America investment-grade. (f) Average USD/GBP. of  USD/EUR,  EUR/GBP  and  (g) Average of three-month short sterling, eurodollar and Euribor. BIS central bankers’ speeches  3  Chart 4  Chart 5  Bid-ask spreads on selected assets(a)(b)(c)  International equity prices(a)  Corporate bonds  Indices: 2 January 2007 = 100 120  Indices: January 2005 = 100 1400  Government bonds Equities (d)  110  1200  100  1000  90  Commodities Currencies Interest rate swaps  80  800  70  600  Euro Stoxx 60  FTSE All-share  400  S&P 500  0 2005 2006 2007 2008 2009 2010 2011  Sources: Bloomberg, calculations.

I do not intend today to discuss the merits of the various ongoing regulatory initiatives. Rather I want to briefly comment objectively on their impact on the state of financial markets. It is clear that many individual regulatory initiatives are not yet parameterised or sufficiently detailed for market participants to anticipate their effects fully. And the extent to which regulations might eventually differ across geographical and legal jurisdictions is also still unclear. There is no implied criticism here – re-designing the regulatory frameworks for, among others, banks, insurance companies and rating agencies, takes time, and a lasting, well-planned robust set of regulations that will stand for many years to come is surely preferable to a hastily-agreed but inadequate framework. The authorities nationally and internationally are pushing the agenda hard to come up with the right decisions as quickly as possible. The progress of the regulatory agenda has, however, created additional uncertainty in financial markets which is reflected in investor behaviour and in some market prices. For example, market intelligence suggests that it is one of the factors contributing to the continued elevated funding costs for many banks. In due course, the various regulatory initiatives will produce detailed rules. As that happens one can expect a variety of reactions. On one level, there is likely to be some shift of activity between markets and business models as participants evaluate where the new rules establish new incentives.