samchain/econo-pairs-v1 huggingface dataset:
But even if a crisis is inevitable, being warned in advance will enable you to limit the detrimental effects of a crisis by starting remedial action early and taking action fast. And that is vital, because for banks, sunshine turns to rain quickly. Banks typically operate with so much leverage on their balance sheets that even a relatively small loss can wipe out much or all of their capital in almost an instant. This means that a bank that has a high and very satisfactory level of capital in one quarter can become insolvent in the next! We have a recent Nordic example of this – Capinordic. This Danish bank – with a branch in Sweden – stood at 33 percent capital adequacy in the third quarter of 2009. The next quarter, that capital had vanished. Credit losses consumed it all. When a situation like this emerges, confidence tends to deteriorate fast. And when confidence leaves, funding follows. Capinordic was a minor bank and its problems had few repercussions in the financial system. But when a larger bank is in trouble, confidence in the entire system may evaporate. When that happens, contagion is already at work. Liquidity  4  BIS Review 50/2010  dries up. Banks and investors will be forced to sell, depressing asset prices, which triggers further sales. A systemic crisis is in full swing. So, when the first alarming signs appear that something is wrong, markets will be watching.

When the interest rate is zero the exchange rate becomes an interesting indicator of expectations of the future price level. According to the interest rate parity condition, the current exchange rate is determined by the expected future exchange rate, current and expected future interest rate differentials between domestic and foreign interest rates and expected future currency risk premia. The future exchange rate depends on future price level, the future real exchange rate and future foreign price level. For exchange rates and price levels expressed in logarithms we can specify the following relation: Current exchange rate = Expected future (exchange rate – interest rate differential + foreign exchange risk premium) = Expected future (price level + real exchange rate – foreign price level – interest rate differential + foreign exchange risk premium)  With an expected future domestic interest rate that is zero or low, future interest rate differentials and foreign exchange risk premia for a small open economy are largely exogenous and given. At a reasonably long horizon, the expected future real exchange rate is given by a neutral real equilibrium rate and is largely exogenous for a small economy. The expected future foreign price level is also exogenous for a small open economy. Consequently, under these conditions, the expected future price level is practically the only endogenous variable that affects the current exchange rate. With this reasoning, the current exchange rate, all other things being equal, becomes a direct indicator of the expected future price level.
Denis Beau: From open banking to open finance Speech by Mr Denis Beau, First Deputy Governor of the Bank of France, at the France Payments Forum “The Europe of banking and financial services” – Paris Europlace – France Innovation, Paris, 24 March 2022. * * * Technological innovations, changes in demand, the arrival of new players: the changes underway in the financial sector are providing a strong impetus to relax the conditions of access to the market, in order to foster competition and thus encourage the development of new, more efficient and less costly services. In Europe, in the field of payments, this relaxation has already occurred. The EMD, the PSD1 and finally the PSD2 directives have all resulted in the emergence of more agile players, particularly in terms of data exploitation. The pressure to open up data now extends to insurance and savings: after open banking, we now speak of open finance. This pressure calls for further adapting the regulatory framework. But what should our guiding principles be? In the payments sector, the main objective of the directives I mentioned was to reconcile openness and security. While this challenge remains relevant for the transition from open banking to open finance, with digitalisation and the development of the platform economy, we have seen two other challenges emerge: reconciling innovation and integration on the one hand and competition and sovereignty on the other.

1 The Market Advisory Group (MAG) in the framework of the ESY € project 2 4/5  BIS central bankers' speeches  2 European Payments Initiative  5/5  BIS central bankers' speeches
That matters – because our responsibilities for the stability of the financial system mean that we must be satisfied that the new framework can deliver levels of resilience at least as high as those we have become accustomed to, whilst also enabling improved innovation and competition, before it can go live. Working together, I am confident that we can achieve that. 4  All speeches are available online at www.bankofengland.co.uk/publications/Pages/speeches/default.aspx  4

BIS central bankers’ speeches  1  To apply – or even try to apply – a federal or pan-European approach to such a diversified financial system requires, in my eyes, a key precondition: to have a functioning European federation in the first place. If that is not possible then we should not try to create half-baked pan-European solutions here in the area of banking – an area which is arguably more sensitive in many aspects than that of fiscal policy and fiscal transfers. If we are not careful enough, we risk repeating the difficulties of the single currency project. The euro is a currency without a state. This means nobody knows who should pay what to whom in bad times. It is for good times only. And we now all know very well that this is the biggest shortcoming of the whole project. Some believe that cross-border integration is good per se, without any conditions. I tend to believe – not least because of the current crisis – that cross-border integration of national financial systems is welcome only if EACH of the national systems alone is and can be sufficiently sound and stable. That’s why we at the Czech National Bank are so nervous about this tendency to continue separating the powers of supervisory and regulatory authorities from their responsibilities in the area of financial regulation. These powers are gradually shifting in small steps towards those who have no direct responsibility and no pots of money to pay should things go wrong in the future.
In addition, it needs to be concerned with whether vulnerable groups face increased risks of financial exclusion. This is particularly important in a rapidly changing financial and social landscape. Sophisticated risk-profiling methods employed by financial institutions can make it more difficult for deserving individuals and small businesses to qualify for financial services. Aggressive marketing practices by financial institutions and more complex financial products can also lead to poor financial decisions. The way in which financial services is delivered to consumers is also moving towards more cost-efficient channels that reduce the need for face-to-face contact, except for high net worth customers. Enquiries and complaints are handled largely by phone or e-mail, and usually in a fragmented manner by different parts of a financial institution. This can mean less effective advisory support for vulnerable groups of financial consumers. While the wider adoption of electronic channels has enormous potential to increase financial inclusion, also needed is to ensure access to the relevant technology, in order to avoid being disadvantaged from using alternative channels that will become relatively more costly. A delicate balance therefore needs to be achieved in developing solutions that will allow the financial system to grow and innovate in support of the economy, but without widening the divide in our economy. The role of non-bank financial institutions In many of our countries, non-bank financial institutions are being envisaged for a greater role in increasing financial inclusion and thus to contribute to sustainable economic and social development.

In previous conferences (2018 and 2019), the former Executive Director for Insurance Supervision, David Rule, talked to you in his speeches ‘An Annuity is a very serious business’ Parts 1 and 2 1 about:   The key risks facing annuity writers and the treatment of unrated, direct investments under the Matching Adjustment in 2018, with a focus on equity release mortgages; and    How Solvency II works to address risks to annuity providers, serves protection of policyholders and allows insurers to invest for the long term in ways that support the UK economy in 2019  There is continuity in that I will be looking at aspects of the Matching Adjustment (MA), but today I will be focussing on three areas of our supervisory risk analysis. 1. I will take stock of market developments since 2019. 2. I will talk about the implications of those developments for our supervision, in particular the Matching Adjustment – putting it in context, setting out the rationale behind it, and discussing asset eligibility matters; and 3. Finally, I will share some thoughts from our supervisory analysis on the size of the MA, how the current fundamental spread (FS) approach has been implemented, and looking at the risk sensitivity of the FS. You will hear more on developments in regulation following HM Treasury’s Call for Evidence 2 in due course; but today I would like to explore what we have learnt through our supervision of annuity writers since the inception of Solvency II.
I have always stressed that the phasing-out would be timely and gradual. It must be timely, because one should exit neither too early, nor too late – any ex ante bias is not justified. The phasing-out must be gradual, because the situation is improving only gradually and downside risks remain. Last Thursday we took a decision to initiate the gradual phasing-out of some of the extraordinary liquidity measures, as they will not be needed to the same extent as in the past. This will avoid distortions associated with maintaining non-standard measures for too long. It is important to avoid a situation in which banks are heavily dependent on exceptional central bank financing. In the context of a stabilisation in the money markets, incentives have to be strengthened for banks to restructure their balance sheets through recapitalisation. In addition, a timely and gradual phasing-out should help activity in the money market and strengthen peer monitoring among banks. It was against this background that the Governing Council decided to adjust the design of some of our refinancing operations. We will continue to fully accommodate banks’ liquidity needs at fixed interest rates in all our main refinancing operations for as long as is needed – and at least until mid-April next year. We thereby continue to provide liquidity support to the euro area banking system so as to facilitate credit provision to the euro area economy. But as regards our one-year operations, we decided to not engage in further one-year operations beyond the December operation that was already announced.

In France, the ACPR contributes actively to the discussions of the Haut Conseil de Stabilité Financière (High Council for Financial Stability – HCSF) chaired by the Minister for the Economy and Finance. In the face of rapid and excessive growth in the debt of several large corporations, the HCSF has adopted a measure which comes into force on 1 July; it imposes on French systemic banks a limit to their exposures to the most leveraged large non-financial resident corporations. The HCSF nevertheless remains vigilant in the face of the rapid increase in bank lending to the private sector, which stood at +5.5% in the first quarter of 2018. French private debt reached 130% of GDP at end-2017, the highest of the large countries in the euro area. Since 2014, it has risen by more than 9% of GDP, while it has declined by 5.4% of GDP on average for the euro area. The HCSF stated on 29 March that it stands ready to act. In particular, if we have to decide, at our next meeting, on a countercyclical capital buffer, that would evidently not be in order to stop the lending today: it would be – as the name suggests – to avoid a credit crunch tomorrow when there is a cyclical downturn in the economy, particularly for small and medium-sized enterprises. Should banks lack sufficient capital, they could manage the heightened risks thus materialising in their balance sheets by restricting new lending.
The Rt Hon Sir Edward George GBE: Britain and Europe  Speech by The Rt Hon Sir Edward George GBE, Governor of the Bank of England, at The British Swiss Chamber of Commerce Lunch, held in Zürich, on 12 September 2000. *  *  *  I agreed to talk briefly about Britain and Europe - and then respond to questions. I will in fact talk more specifically about Britain and the euro from my perspective at the Bank of England. But let me make clear, from the outset, that monetary union is fundamentally a political rather than an economic issue. It necessarily involves the deliberate pooling of national sovereignty over important aspects of public policy, in the interest not just of collective economic advantage, but of a perceived wider political harmony within Europe. As a central banker, I have nothing to say about the politics of monetary union - that’s for elected politicians and clearly political opinion is divided - not just in the UK - about how far and certainly how fast to go in the sensitive matter of pooling national sovereignty. But monetary union is also an economic issue and that is my concern. So what are the economic pros and cons? The arguments on either side are in fact now reasonably well defined in the UK where there has already been an intense and protracted debate - though different opinions inevitably attach different weights to them.

Exchange rate certainty within Europe - even though only within Europe, and even though it is nominal exchange rate certainty rather than real exchange rate certainty, which is what matters in terms of competitiveness - would potentially enhance the benefits to be derived from the European Single Market. The euro’s second very powerful advantage is the possibility it opens up for much broader and more liquid financial markets. It will mean a progressive narrowing of spreads between borrowers and lenders, which is good news for the users of those markets - and that will be good news too for financial intermediaries as a group, because it will lead to higher volumes of financial activity. Not every individual intermediary will benefit, of course, in the more competitive environment, but those who survive will thrive! The City of London is already making an important contribution to this process of euro financial market integration. It is in fact the greatest contribution that the UK can make to the success of the 1  BIS Review 71/2000  euro while we remain outside. (It runs alongside the conceptually distinct, but closely related, pressure for broader international integration of financial markets, currently reflected in a spate of initiatives to unify trading platforms, and both clearing mechanisms and settlement systems, in which London, of course, is also very much involved.) These then - nominal exchange rate certainty throughout the Eurozone and integrated euro financial markets - are potentially powerful economic arguments in favour of UK membership.
The difficulty in harmonizing the regulatory treatment of cross-border OTCD activity is a good example of this. Parenthetically, I’d add that I am very pleased to see the breakthrough achieved between Europe and the U.S. this summer. Regardless of the cause, because of the slower pace, we are not yet close to a harmonized, robust OTCD system. Thus, we can’t ascertain whether we have achieved what we set out to achieve – that is, reducing the amount of risk in the system, making the infrastructure more secure, and increasing the flow of information so that regulators and others can develop a more coherent view of what is happening in the global financial system. I’m also worried that even when we have finished revamping the architecture and regulation of OTC derivatives activities, reform may not go far enough in a number of respects. First, I am concerned that trades may not be standardized to the fullest degree possible. A preliminary analysis undertaken by the Financial Stability Board that compares the costs of clearing and margin requirements of standardized trades versus bespoke trades suggests that the economics with respect to costs favors standardizing OTCD trades whenever possible. However, the wider spreads that might be earned on bespoke trades, because of their greater opacity, could swing the needle the other way, with the higher profits on bespoke trades more than offsetting their higher costs.

The launch of the ABF Malaysian Bond Index Fund today marks another important milestone resulting from EMEAP Central Bank cooperation in the region. It represents the successful implementation of the Asian Bond Fund project to accelerate the development of the domestic bond market and to promote greater integration among the regional bond markets. The listing of the ABF Malaysian Bond Index Fund is thus another major step forward in the development of the Malaysian bond market, and to enhance further its potential to contribute to sustained and balanced growth of our economy. The bond Exchange Traded Fund is an investment instrument with a low entry cost. It is a highly efficient, transparent and convenient investment tool designed to appeal not only to institutional but also retail investors. With an affordable standard lot size, the bond Exchange Trade Fund provides an avenue for retail investors to have access to the bond market. It thus offers investors an additional investment alternative as well as an opportunity to diversify their investment into more asset classes. The ABF Malaysian Bond Index Fund comprises investments in Government and Quasi Government securities and tracks an index, which by design is replicable and transparent. The listing of the ABF Malaysian Bond Index Fund today will not only add to the diversity of listings on Bursa Malaysia but would also pave the way for the increased introduction of other more innovative products in the future.
It could thus acquire very significant external debt before reaching debt levels of many other developed countries with strong credit ratings. These CDS spreads have also come down significantly from their peak. Despite the very high CDS spreads on the Icelandic banks, they have funds at levels that are below their CDS spreads. Nevertheless, the access of the banks to external financing has been limited. Their liquidity cushion means that they can stay out of the market for quite some time. The prevailing circumstances in international capital markets and the limited prospects of improvement in the foreseeable future have, however, led the banks to embark upon a process of reducing costs and streamlining their operations, including liquidating assets, and on attracting deposits. This is a process that evidently will have to continue. It does not detract from the fact that the banks had solid capital and liquidity positions at the end of last year as reflected in their 2007 accounts. They had a solid performance in 2007. They all returned a profit in the last quarter of the year despite the significantly more hostile operating environment. It was also notable that the profitability of their core operations was strong in that quarter. Taken together, the banks had insignificant exposure in sub-prime related instruments and where they existed, they have been significantly reduced. Thus, there have been small write-downs of sub-prime related debt as there has been little to write down.

11  In the literature on determinants of foreign direct investment it has been emphasized that an investing firm needs to have some advantage over a potential local investor in order to overcome the disadvantage of doing business in a foreign environment (see e.g. Dunning 1977). 12  The standard theory of so-called horizontal foreign direct investment is based on the idea that firms selling in foreign markets face a trade-off between the benefits of concentrating production in one place (because of economies of scale) and the benefits of avoiding costs associated with exporting the good (see e.g. Horstmann and Markusen, 1992, Markusen and Venables, 1998, 2000; for an overview of this literature, see Barba Navaretti and Venables, 2004, Chapter 3). BIS Review 82/2010  17  the expansion of Western European banks in Central and Eastern Europe during their transition to market economies. Western European banks had expertise and know-how that local banks lacked, and by establishing themselves in Central and Eastern Europe – in many cases through the acquisition of local banks – they were able to quickly gain market shares. Another motive, perhaps more specific to the wholesale operations of banks is to follow the cross-border expansion of clients, sometimes referred to as “the defensive expansion approach”. 13 The rationale for this would be to preserve existing banking relationships in the home country. Indeed, many of the European banks entering the US initially did so to provide services for their home-country clients that were starting US operations.
Recent studies attempting to assess the effectiveness of compliance programs have developed a measure called the “PEI”, or Program Effectiveness Index. Early work with the PEI shows that companies combining their ethics and compliance programs tend to have better PEI scores. The reason for the higher effectiveness measure seems to be something that I find perfectly rational. Ethics programs, consisting of measures taken to inculcate organizational values, help to create a culture that is not only conducive to following rules that are embedded in law and regulation, but also conducive to compliance with company mores. A strong ethical culture breeds a more compliant culture. The symbiotic relationship between ethics and compliance arises because of the close connection between values and rules. Ethics is about values and compliance is about rules. You obtain the beneficial symbiotic effect when the values and the rules live in harmony. A different result is obtained when you have organizational values that conflict with the rules. One of the very exciting areas in compliance today relates to how a company’s strong ethical culture can impact corporate behavior. One aspect of this behavioral change relates to the greater tendency of corporate constituents to follow the applicable rules when the culture is right. Looking to the future, I envision we will see much more empirical research that shows the benefits of merging ethics with compliance, and placing both in the hands of a trusted corporate officer with a catchy new name – the chief ethics and compliance officer.

Many of them need to use instruments to manage or hedge their RMB exposures. All these RMB related financial services and products can only be developed by the markets and financial institutions because they are closest to their customers and understand their needs best. That is why it is so important for the HKMA to collaborate with our official sector counterparts in Australia to create this private-sector led Dialogue. The first Dialogue was held in Sydney in April last year, which was highly successful. I am very pleased that it is Hong Kong’s turn to host the second Dialogue and I am confident that it will be equally if not more successful. I note that today’s Dialogue has a very rich agenda and I look forward to hearing useful and practical ideas and suggestions on what the private sector can do on its own or in collaboration with the official sector to further develop the offshore RMB markets in Australia and Hong Kong. 8. Thank you very much. 2  BIS central bankers’ speeches