samchain/econo-pairs-v1 huggingface dataset:
This last condition effectively represents the dividing line between lender-of-last-resort actions on one hand and capital injections or other forms of unsecured lending on the other hand, a critically important dividing line the Federal Reserve carefully respected in all its actions over the course of the crisis. One lesson that emerges from this and later phases of the crisis is that while the Federal Reserve’s authority and accountability for the 13(3) actions taken in March 2008 and throughout the crisis were well established under the Federal Reserve Act, what was crucially lacking was a public transparency regime that would allow the public to immediately track and understand the details of the extraordinary action taken. The complexity of creating a robust, responsible and safe transparency regime in the midst of rapid change and extreme market fragility notwithstanding, the fact that the public transparency of the central bank might lag the actions being taken by the central bank creates its own set of risks. In fact, the importance of transparency keeping pace with actions was actually the main theme of Greenspan’s 1996 speech, where, just as an aside, he had coined the phrase irrational exuberance. One paragraph in particular seems particularly prescient: “If we are to maintain the confidence of the American people, it is vitally important that, excepting the certain areas where the premature release of information could frustrate our legislated mission, the Fed must be as transparent as any agency of government.

In this context, it is worth noting that the United States had led the world with its Federal Deposit Insurance Corporation (FDIC) Improvement Act in 1991 in establishing a state-ofthe-art resolution regime for depository institutions to avoid the panics and runs associated with the risk of insolvency of a financial institution, while at the same time protecting the taxpayers. However, this regime did not address how to efficiently resolve holding companies  4  In the 1930s, Congress had passed legislation giving the Federal Reserve additional flexibility in its lender-oflast-resort powers but these were removed with the passage of the small business investment act in 1958. 5  Most of this information can be found at the Board of Governors of the Federal Reserve System’s Credit and Liquidity Programs and the Balance Sheet. 4  BIS Review 81/2010  that included a depository institution, investment banks or other financial institutions that were tightly and very intricately woven into the global financial system. Perhaps because many thought that March 2008 was the height of the crisis, the overwhelming importance of this lesson coming out of the Bear Stearns episode did not translate into this gap in our regulatory framework being addressed with sufficient urgency. As I will discuss momentarily, the gap re-emerged as a main accelerant of the crisis with the collapse of Lehman Brothers in September of that same year.
I think it reasonable, as successfully done in the past, to build it in three stages. In the first stage, Member States would be free to join, and the Convergence Fund would be allocated to financing common goods such as European infrastructure investment or refugee settlement. In a second stage that would represent a significant step up, this budget could become a stabilisation instrument, centralising a well-defined set of policy instruments, such as a European layer of unemployment insurance. The third and final stage of fiscal integration would only be achieved if agreement can be found both on financing (direct revenue-raising capacity and common debt issuance) and on the desirable level of business cycle synchronization. As access to this third stage would be linked to reduced risks, this perspective would be a powerful incentive for national discipline and commitment as shown during the march to the Euro. C.  How to set up a legitimate institution with a genuine administrative capacity? Further integration and democratic accountability should progress together, as discussed in my recent article with Jens Weidmann. We need to enable the European economic administration to be more efficient, while establishing strong enough political legitimacy to ensure balance between liability and control. A European Treasury headed by a euro area Finance Minister would have a chance of embodying such a delicate undertaking. These institutional changes obviously require a new Treaty, notwithstanding the “low hanging fruits” we can and must pick up in the coming year. First, we need a legitimacy-enhancing appointment process.

The inflation target is symmetrical – it is just as important to avoid an inflation rate that is too low as an inflation rate that is too high. The inflation target provides economic agents with an anchor for inflation expectations. Decisions concerning saving and investment can be based on the assumption that inflation in Norway will be around 2½ per cent over time. Norges Bank’s instrument to meet the inflation target is the key policy rate, which is the interest rate on banks’ deposits in Norges Bank. This interest rate forms the basis for banks’ lending and deposit rates. 2  BIS central bankers’ speeches  The Bank’ monetary policy assessments and decisions must be based on knowledge it can obtain on interactions within the Norwegian economy and how the interest rate interacts. But we need a methodical apparatus to structure this knowledge. Like other central banks, Norges Bank uses economic models as an aid in monetary policy analysis. Economic models can help us to interpret historical developments, make forecasts for the future and analyse the effect of the interest rate. For an economic model to be relevant, it must be fit for its intended purpose. A model that is to be used as an aid in making interest rate decisions requires different attributes and is based on different principles than models that for example seek to provide optimal near-term inflation and output forecasts. In this chart, the time axis has been divided into three: short term, medium term and long term.
On 9 March 2009 the Federal Reserve published the results of a comprehensive stress testing of US banks. In retrospect, it appears that a better overview reduced uncertainty in financial markets. International equity markets then rebounded for a period and premiums were reduced. Up to last autumn, there was little concern in the markets as to governments’ ability to finance fiscal deficits and service debt. In late autumn last year, the crisis entered its latest phase so far, and the situation in Greece was a subject of growing concern. The fiscal deficit was considerably larger than previously reported and announced. Reports also indicated errors in government debt figures. Ireland had already implemented tightening measures and was therefore in a better position. Recently, uncertainty concerning the economic situation in Greece has spread to other southern European countries. European money, bond and foreign exchange markets have also been affected. Equity markets have fallen sharply. On 2 May, Greece, the IMF and the euro area countries reached an agreement to provide a total of EUR 110 billion in loans to Greece. Greece has presented an economic programme to stabilise and then reduce government debt and to boost growth potential. However, the loan was not sufficient to quell market unrest. On the contrary, premiums rose. The governments of several other countries were in danger of not being able to pay their bills.

Expectations regarding the United States are that it will continue to recover at a slow pace, and that moderate adjustments to the fiscal policy will take place. The downgraded outlook for Japan needs mention, due to both its relation with the Eurozone and some fiscal adjustment measures foreseen for 2014. In the emerging world, incoming data from China suggest that the slowdown of most of 2012 may be reverting. Thus, again y-o-y growth rates around 8 percent are forecast for the Chinese economy for 2013 and 2014. Growth prospects for Latin America are revised downward for this and the next two years. In this scenario, commodity prices will not change much from forecasts a few months back. In the two-year period 2013–2014, the baseline scenario foresees average prices of $ per pound of copper and $ per Brent oil barrel. Accordingly, terms of trade estimates for Chile continue to be high, but lower than they were this year (table 2). External financial markets have shown some calm these months. However, as I noted at the beginning, there is still a long way ahead before the Eurozone crisis can be resolved. The commitment of various organizations to work out a solution seems to be bearing fruit in the market’s evaluation. Anyway, the baseline scenario again considers the possibility of new stress episodes in the world markets. Such greater calm has also reflected in stock markets and currency parities. In recent months, the U.S. dollar has depreciated slightly against the main currencies.
I recommend giving it a read: the report itself is a treasure trove of data, and the results do you credit. The average solvency capital requirement (SCR) coverage ratio on the French market climbed from 222% in 2016 to 238% in 2017. What’s more, in the first quarter of 2018, the French insurance market overtook Germany and the United Kingdom to become Europe’s number-one market, with over EUR 35 billion in direct premiums written in non-life insurance and over EUR 2.100 trillion in technical provisions. It also leads in investment capacity: commanding total assets of EUR 2.7 trillion in September 2018, France’s insurance sector is far and away the largest institutional investor in Europe, accounting for over one-third of the total assets of euro area insurers. In comparison, France makes up 21% of euro area GDP. Insurers, then, are a crucial asset for France, and their critical role in financing the economy can and indeed must grow further. Corporate equity is vital to innovation and hence to a vibrant economy, but in mid-2018 equity was equivalent to just 77% of GDP in the euro area and 76% in France, compared with 124% in the United States. II. Tapping into regulatory opportunities. I would like to start this section off by noting that France’s introduction of a flat tax on capital income on 1 January has not had the slightest detrimental effect on life insurance, despite fears on this score within your industry.

I am also delighted that the new Pacte Bill, which was recently adopted at the first reading by the National Assembly, seeks to promote equity investment as well as long-term investment. Our discussions in the lead-up helped to shape this legislation, with the result that the bill includes measures to reform “eurogrowth” (Eurocroissance) life insurance products at long last, setting an ambitious target – with which you are all familiar – of EUR 20 billion in outstandings, compared with EUR 2 billion at present. Accordingly, France’s lawmakers have expanded the tools put in place to achieve this goal. Now it is time to deliver. We are entitled to expect a fresh start, with a reset for eurogrowth products and innovative and energetic sales and marketing efforts by your industry, once the framework 1/3  BIS central bankers' speeches  has been simplified. Retirement savings, meanwhile, have been the subject of a lively annuity versus lump sum debate. Like you, I am glad that the ability to receive annuity payments – and above all the principle of an annuity product – has been maintained across the board, not to defend one industry against another, but because a lifetime income is closer to a retirement product and because this timeframe should support more equity investment. Here again, though, it is up to you to take the steps to enable retirement savings to finally take off in France and ensure that your approach to asset/liability management better takes into account the longer durations of these products.
But you can I think see a broad-brush correspondence between these high-level developments and the more specific trends in the UK’s clothing and textile sector. Until the early to mid-1970s import penetration was roughly stable and real clothes prices fell at the relatively gentle pace of 1% or so a year (Charts 3 and 4). We’ve seen the same broad stability, in both trade and prices, in the years since the financial crisis, during which global trade growth has also slowed. But the years in between saw a marked rise in import penetration and very rapid declines in real UK clothes prices, particularly over the second half of that period. 2  Tariffs began to fall in the 1950s, container ships, which materially reduced shipping costs, were first developed later that decade, and the first regional trade agreements (notably the EEC) were made in the 1960s. 4  All speeches are available online at www.bankofengland.co.uk/speeches  4  Chart 3: Import penetration started growing in  Chart 4: Real UK clothes prices fell steeply  1970s, rose strongly in 90s, stable post-crisis  between mid-1970s and the crisis  35  clothing and textile imports, % of consumption  30 25 20 15 10 1965 1970 1975 1980 1985 1990 1995 2000 Source: ONS and UN Comtrade Database  Source: ONS  Cumulatively, those declines were pretty spectacular. Even in nominal terms, clothes in the UK were on average cheaper in 2008 than they had been in 1975 (Chart 5).

So, although some trade is always better than none, there are settings in which – given the existence of trade – changes in relative productivity can worsen a country’s welfare. 8  All speeches are available online at www.bankofengland.co.uk/speeches  8  But you do see something in employment and participation. Relative to others, regions with larger-thanaverage clothing sectors in 1981 experienced slightly lower growth in employment, and slightly greater rises in economic inactivity, over the following ten years (Charts 8a and 8b). Even in the 2011 census (Charts 9a and 9b) there still seems to be something of an echo of the pattern of employment thirty years earlier. Chart 9a: Even after 30 years the negative  Chart 9b: Same goes for inactivity  correlation with employment still exists  Source: UK Census, Nomis  Source: UK Census, Nomis  From such bare-bones relationships any conclusion can only be tentative. They don’t control for any other differences that might have existed in 1981 and it’s possible the correlations are picking up something other than the size of the local clothing and textile industry. However, the results do happen to accord with other, 6  much more careful studies. In the United States, David Autor and co-authors have found that individuals working in industries and regions more exposed to trade with China have subsequently seen longer than average periods of non-employment. This is particularly true for those at the lower end of the distribution.
Macroprudential policy is also concerned with the emerging structural risks described previously. For example, the “platformisation” of financial activities driven by digitalisation is contributing to a profound transformation of financial intermediation – a trend also amplified by other factors: the search for yield in the current low interest rate environment; changes in financial intermediation business models in response to the macrofinancial environment and regulatory developments; the desire of firms to diversify their sources of financing to increase their resilience. With regard to financial stability and systemic risk, these developments mean that non-bank financial intermediation is playing an increasing role in financing the economy, while macroprudential policy has been designed with reference to a bank-centric financial system. The disruption in financial intermediation is also increasing the number and complexity of the interconnections between financial sector participants (banks, investment funds, insurers). In both cases, macroprudential authorities need to strengthen their analytical capabilities, in order to better understand the consequences of these interconnections, eventually conducting stress tests across the entire system rather than just in individual sectors, and adapt their macroprudential policy to the new challenges. The HCSF is fully committed to this goal. Its powers were adjusted by legislators in 2016 to allow it to intervene outside the banking industry. It has also begun carrying out coordinated stress tests across all sectors, and has facilitated the pooling and cross examination of data held by different authorities to provide a more holistic understanding of the system and its interconnections.

Therefore, legislative action in targeted areas is warranted. While bold action towards the completion of the single rulebook for capital markets will be beneficial, a gradual approach to harmonization could be envisaged in those areas where political sensitivities prevent action at EU level in the short term. 4. Sufficient attention should be devoted to safeguarding financial stability, such as in the area of shadow banking. 5. A single rulebook for EU capital markets needs to be complemented with strengthened supervisory convergence, delivering a common implementation and enforcement of rules. 6. Further reducing still existing fragmentation in financial market infrastructures should be at the core of CMU. It needs to be recognized that banks will continue to play an important role for the financing of the real economy and in providing access to capital markets. BIS central bankers’ speeches  1
17  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  17  the economy was given over to the war effort – and it ran a deficit of over 20% of GDP (versus an average of 5% from 1792-1815). Under pressure from this scale of spending inflation averaged 16% (versus 2%). As a result, the deflation required to return to gold, in 1925, was far larger and more economically painful than it had been a century earlier23. As such, it’s not clear that the prior belief in such a return was as firm as it had been the first time round24. Nonetheless, even a partial belief in such a policy would have limited the cost of government borrowing in the interim. Long-term bond yields were higher than the 3% average of the pre-war decade but again remained below 5%. It may also have prevented an even worse outcome for inflation itself (by ensuring newly printed money was willingly held). In the 1970s, with no nominal anchor either in place or expected to remain so, the restraining force on inflation expectations was largely absent. So after the end of the Bretton Woods regime, and even though government indebtedness was lower than it had been for decades, inflation itself became harder to control and yields on new borrowing rose precipitously. The series for long-term yields on government debt goes back almost as far as the founding of the Bank of England in 1694.

We know that central bank policies do affect financial conditions facing the private sector, not just the public sector. And we know that monetary policy makers can, and do, thereby affect inflation. Indeed, in the longer run, it’s all they can affect and – barring the sorts of restraints necessary for financial repression – the only enduring means by which they can have an impact on the real value of public-sector debt. We’ll now have a look at how that works. What higher inflation does to the public sector’s liabilities: a simple simulation As I said in the introduction, levels of government debt that are ultimately unaffordable – that the government cannot (or will not) finance through conventional fiscal measures – can in extremis present a threat to the stability of inflation. That’s because inflation – above all surprise inflation – can reduce the burden of that debt. What I want to do here is use a simple, stylised simulation to gauge the scale of this effect. I’m interested only in the pure effect of higher inflation. So the simulation assumes that all the real determinants of indebtedness – the path of real GDP, real (ex ante) bond yields and the government’s primary deficit (relative to GDP) – are all fixed. This is unrealistic. In the short term generating the higher inflation would probably require a period of lower real interest rates (if only a brief one, relative to the timescales involved).
The guideline issued by the Commissioner of Banking recommends that all institutions should appoint at least one senior officer to handle queries from staff and other matters relating to the code of conduct. Codes of conduct and the means to enforce them are important tools. But I would caution against too narrow a compliance-based approach towards ethics management. It appears from survey responses carried out in some US companies that the most important factor in controlling unethical conduct within companies is how staff perceive the value that senior management attaches to ethical behaviour. What matters in other words is the general culture of the organisation and the example that is set by those at the top. An important way in which behaviour of staff can be influenced is, for example, through remuneration policy, and senior management needs to be careful to ensure that rewards are not given to staff who uses dubious practices to gain business. This brings me round to the role of the board of directors in banks. As you will recall, we commented in our recent Policy Response to the Banking Sector Consultancy Study on the need for high standards of corporate governance within the banking system as the environment becomes more competitive. We had in mind particularly the need to enhance systems of risk management, and we noted that the primary responsibility for ensuring this rested with the board of directors. We could equally make the same point in relation to the promotion of high ethical standards within banks.

Tarisa Watanagase: Mitigating fraud risk in financial institutions Keynote address by Dr Tarisa Watanagase, Governor of the Bank of Thailand, at the seminar on “Mitigating Fraud Risk in Financial Institutions”, Bangkok, 29 April 2008. *  *  *  Khun Kaisri, Distinguished Guests, It is my great pleasure to join you at this seminar on “Mitigating Fraud Risk in Financial Institutions”, hosted by KPMG Thailand. I would also like to thank the host for giving me this important opportunity to share the views of the Bank of Thailand on this topic. The globalization of the financial services industry, the increased sophistication and complexity of financial institutions and their services, and the ongoing advancement of technology continue to introduce new risks and opportunities for fraud. The pace and complexity of these advances have vastly accelerated beyond the risk associated with traditional credit and market risk activities. One of those emerging risks in financial institutions is fraud risk, which needs to be effectively controlled through effective governance and sound operational risk management processes. Fraud risk in financial institutions has increased as perpetrators use advanced innovation and technology to identify and exploit weaknesses in banks’ IT systems, databases, and delivery channels, including ATMs and the Internet. Financial institutions must take care to ensure that system security measures are effective as a means to combat fraud.