samchain/econo-pairs-v1 huggingface dataset:
New risk management and insurance major As the industry seeks out profitable growth and new horizons, it is critical that the right talent and skills are available to support this. In the face of new and emerging risks, as insurance roles evolve and become more complex, different and deeper skillsets will be essential. Skillsets will also need to be widened as technology and financial services converge. To this end, I am glad to announce that the Nanyang Technological University will be launching the Risk Management and Insurance major next year. BIS central bankers’ speeches  5  Beginning in August 2016, this new Insurance major will be structured as a major specialisation under the NTU Business Degree. It is expected to produce 50 new graduates every year starting from 2018, providing a strong and sustainable talent pipeline to support industry growth. Alongside a robust curriculum, the students will get to build up their research, analytical and modelling capabilities, through working on research projects like the Nat Cat DAX and Cyber Risk Test-bed. Conclusion Insurance will continue to increase its relevance in an uncertain world. In these times of new risks, capital and technology, it is not sufficient to rely on a red ocean strategy. We need to open new horizons, and open them together. MAS will be a partner of the Singapore insurance industry as you forge a blue ocean strategy, manage risks and capitalise on the opportunities in the new reality.

The same applies to all types of foreign exchanges - for instance, when SIDA exchanges kronor for foreign currency to provide foreign aid, when the pension funds buy foreign shares, when we buy foreign insurance policies and when the mortgage institutes borrow abroad. I believe it is important to be aware of how the risk distribution between the banks functions. Transactions on the foreign exchange market do not need to be speculative at all, even if they do not have any direct link to payments for trade, investment or aid between countries. It is not possible to take the total of all crossborder payments for goods and services and say that all other foreign exchange deals are unnecessary. Finally, allow me to comment on the proposal of a Tobin tax. Taxes on financial transactions have already been tested in a number of countries, including Sweden. At the end of the 1980s, we had a  2  BIS Review 27/2001  securities transaction tax here. The result was that the turnover declined severely. Trade in securities fell by around 80 per cent. Part of this trade was moved abroad and some ceased altogether. Nor did the securities transaction tax manage to prevent the 1990s crisis. A Tobin tax would be difficult to apply, as it assumes that all countries support it. This is unlikely, as the countries that did not apply the tax would benefit, in that a large part of financial activity would move there.
The measure failed to deter capital inflows, which managed to find ways of circumventing the restriction. Despite higher required reserves, commercial banks’ foreigncurrency-denominated liabilities advanced EUR 4.8 billion in 2006, then EUR 7.8 billion in 2007 and a further EUR 5.8 billion in 2008. Nearly 75 percent of the increase in foreign banks’ liabilities during 2005–2008 occurred after required reserves had been raised to 40 percent. Chart 7 Required reserve ratio percent  percent  42 40 38 36 34 32 30 28 26 24 22 20 18 16 14  42 40 38 36 34 32 30 28 26 24 22 20 18 16 14  foreign currency  Dec.08  Aug.08  Apr.08  Dec.07  Aug.07  Apr.07  Dec.06  Aug.06  Apr.06  Dec.05  Aug.05  Apr.05  Dec.04  domestic currency  Source: National Bank of Romania  The constraint deriving from the large capital inflows was severe enough for the NBR to opt for maintaining a managed float regime of the domestic currency. This led to criticism by some analysts who claimed that the inflation targeting strategy adopted in 2005 involved the free float of the domestic currency in order to avoid potentially conflicting targets. The NBR explained that it would not target a particular exchange rate, but rather seek to deter its movements towards unsustainable levels.

The issue was not capital raising as in the SCAP, but instead how fast should they continue to build their capital. What’s prudent? This translated into an evaluation about the amount of capital that they could prudently pay out via dividends and/or share buybacks. Fourth, with respect to the distribution requests, we were not calculating the amount of capital that the banks can distribute. Instead, we were making an “up” or “down” decision per their requests. Either we “objected” or we “did not object.” We want banks to have good capital planning processes and make intelligent decisions with respect to capital. We don’t want to determine their capital actions or what their distributions should be. They need to be able to do this. Fifth, with respect to disclosure, this decision was left to individual firms. In some cases, banks disclosed whether we objected or not to their plans for distributions, while in other cases they simply announced their intention with regard to future capital distributions. So what have been the lessons from our stress test exercises? One key issue during the financial crisis was the unwillingness of banks to proactively raise capital so they would be better prepared to withstand a “bad state of the world” scenario should that transpire. Banks didn’t want to do this for two reasons. First, capital raises might signal that they were, in fact, weak. Second, the capital raises would be dilutive.
At its meeting in June, the MPC voted to increase the stock of asset purchases by a further £ billion, to £ billion, with the programme expected to be completed around the turn of the year. 19  IMF (2020). 18  All speeches are available online at www.bankofengland.co.uk/speeches  18  Through these policies, the Bank of England’s balance sheet has so far expanded by close to £ billion, with a further £ billion expected during the remainder of this year due to additional asset purchases and TFSME drawings.20 This would take the Bank’s balance sheet to around 45% of (2019) UK GDP by the year-end, more than double its previous high-water mark (Chart 16). It would take the Bank’s balance sheet to almost double its highest-ever previous level relative to the Government’s net debt stock (Chart 17). Chart 16: Bank of England balance sheet relative to GDP Per cent 50 Banknote convertibility to gold reinstated Banknote convertibility to gold suspended  South Sea bubble  Amalgamation of Treasury and Bank note issues  Covid-19 crisis Failure of Lehman Brothers  45 40 35 30 25  WW1  WW2  20 15 10 5 0  1700  1750  1800  1850  1900  1950  2000  Sources: Bank of England (available here), ONS and Bank calculations. Notes: Chart from Hauser (2020) but updated to reflect most recent MPC announcement of further asset purchases and TFSME.

GDP over 2020 held fixed at end-2019 level to prevent fall in output leading to denominator effect. Dotted line extends series to mid-2020, assuming completion of current asset purchase programme and further TFSME drawings. These figures reflect the June MPC minutes, which noted that lending under TFSME “was likely to exceed £ billion over the coming year.” For simplicity we assume the TFSME reaches £ at end-2020. 20  19  All speeches are available online at www.bankofengland.co.uk/speeches  19  Chart 17: Bank of England balance sheet relative to government net debt Per cent 60 Banknote convertibility to gold reinstated Banknote convertibility to gold suspended  South Sea bubble  Amalgamation of Treasury and Bank note issues  Covid-19 crisis  50 Failure of Lehman Brothers  40 WW1  WW2  30  20  10  0 1700  1750  1800  1850  1900  1950  2000  Sources: Bank of England (available here), OBR, ONS and Bank calculations. Note: Debt figures calculated on a fiscal year end basis. Red diamond shows end-2020 Bank of England balance sheet (consistent with Chart 14), relative to OBR projection for government net debt (excluding public sector banks) for FY 2020/21. These balance sheet actions by central banks globally have had their intended effect, improving financial and credit conditions to support households and businesses (Chart 18). Despite being tighter than at the start of the year, financial conditions have loosened significantly since mid-March.
The concept of macro-prudential supervision is new and is often interpreted very differently by different people, depending on their background. An important task for the ESRB will therefore be to make this concept more precise. What should a macro-prudential mandate look like? How should we define macro-prudential tools? What institutions should use the different tools, and how should these be held responsible for using (or not using) them? These are important questions that are being discussed in many countries, not only in Europe. One important instrument that has been discussed widely in the Basel framework is  6  BIS central bankers’ speeches  the countercyclical capital buffer. This instrument has clear cross-border effects and we should, in the ESRB, be able to discuss the principles for setting these buffers. – to gain credibility As the ESRB does not have any binding powers, it needs to earn credibility if the principle of “comply or explain” is to work in practice. As I see it, this can be done in three ways. Firstly, the ESRB’s risk assessments and recommendations to act upon them need to be of high quality and to be presented in a timely manner. In doing this, the ESRB should take advantage of its unique composition of representatives from the EU institutions, as well as national central banks and financial supervisory authorities. This institutional set-up gives the ESRB a great opportunity to gather relevant information from all key players in the EU financial system.

This gives the central banks a strong role. Figure 7 Voting rights of the General Board  4  BIS central bankers’ speeches  Obviously, this requires efficient preparations for meetings. A Steering Committee with 14 members has therefore been established with the purpose of guiding the work to be presented to the General Board. The majority of the Steering Committee members represent the EU institutions and in addition there are four elected members from the national central banks. Two advisory committees have also been set up – the Advisory Technical Committee, chaired by Stefan Ingves of the Riksbank and the Advisory Scientific Committee chaired by Professor Martin Hellwig of the Max Planck Institute. The Advisory Technical Committee (ATC) mirrors the composition of the General Board with 62 members. The Advisory Scientific Committee (ASC) is smaller, consisting of only 15 academics and the chair of the ATC. I have been a member of the ESRB and the ATC at its first meetings Box 1 Steering Committee Members  ESRB Chair (ECB President) and first Vice-Chair  ECB Vice-President  Governors of 4 Central Banks  European Commission representative  Chairpersons of the three ESAs  President of the EFC  ATC Chair  ASC Chair The ESRB General Board held its inaugural meeting in January and has since met three times. It will meet again in December. The meetings were prepared by the Secretariat, the Steering Committee and the Advisory Technical Committee.
Another aspect that needs to be mentioned is being paranoid about the worst that could happen. This is sometimes referred to as productive paranoia. Central bankers need to excel as risk managers – knowing what could go wrong and prepare for the worst that is yet to come. In part it involves building the buffers to prepare for the unexpected events before they happen. When I am asked the question about how we are going to manage ‘the lift off’ – the normalisation of interest rate by the Federal Reserve in the United States – my response is that it is not what we will do now but what we have done before it happens that will see us through this period. It is not only the buffers that have been built but also the capability that has been developed that will better allow us to intermediate and thus absorb the shock. This will enable us to withstand the volatile financial flows that are already occurring in anticipation of this eventuality. Sometimes there are also Black Swan events. These are defined as those developments that have a low probability of happening and that is difficult to predict and anticipate. Being paranoid and building the resilience against such shocks will contain its damaging effects. Therefore continuous rigour needs to be applied all the time, during the good times and the challenging times. Vigilance, detecting developments that could signal danger, early recognition of risks are all important.

Ásgeir Jónsson: Address – 60th Annual Meeting of the Central Bank of Iceland Address by Mr Ásgeir Jónsson, Governor of the Central Bank of Iceland, at the 60th Annual Meeting of the Central Bank of Iceland, Reykjavík, 7 April 2021. * * * Madame Prime Minister, Chair of the Supervisory Board, honoured guests: This year, 2021, can be called the Triple Crown of anniversary years for the Central Bank of Iceland. In 2021 we commemorate three earlier milestones in the Bank’s history – 1961, 1981, and 2001. The Central Bank became an independent institution in 1961 – and on this day, in fact: 7 April. So we are celebrating the Bank’s 60th anniversary today. Until 1961, central banking activities in Iceland had been in the hands of two commercial banks: first Íslandsbanki and then Landsbanki Íslands. The establishment of the Central Bank was an element in the broad economic reforms introduced in the early years of the so-called Viðreisn government coalition – reforms that released Iceland from capital controls, goods rationing, and repeated currency exchange rate adjustments. But 60 years is not an advanced age if we consider that Iceland became a sovereign country 103 years ago. With the grant of sovereignty in 1918, the Icelandic króna became an independent currency. It was not until 43 years later that a separate central bank was tasked with the conduct of monetary policy. It should come as a surprise to no one that economic policy was fairly unsuccessful over that time.
So gilt price movements necessarily all wash out once the public accounts are compiled on a consistent basis, at least so long as the assets are retained within the public sector 3 . We do not, however, expect to retain all the purchased assets in the Asset Purchase Facility to maturity. At some stage, as the recovery proceeds, the Monetary Policy Committee will need gradually to remove the large monetary stimulus that we have imparted to the economy, otherwise we will be in danger of overshooting our 2% inflation target. That monetary tightening will take the form of some combination of a higher level of Bank Rate and asset sales from the Asset Purchase Facility to the private sector. The process of selling off the gilts can then be expected to push gilt yields back up towards where they would have been in the absence of the Quantitative Easing programme. When the Asset Purchase Facility is finally run down, won’t the closing accounts tell us about the benefits or costs of the programme? The answer to this is: No. The first point to make is that the aim of Quantitative Easing and the Asset Purchase Facility is to help the Monetary Policy Committee achieve its macroeconomic objective, namely hitting the Government’s inflation target without generating undue volatility in output. The accounts of the Asset Purchase Facility are not designed to address these overall macroeconomic costs or benefits, which instead requires an assessment of the impact of Quantitative Easing on demand and inflation.

Lastly, it must be borne in mind that the short and medium-term challenges posed by the recent period of extraordinary crises do not make tackling the banking sector’s structural challenges – such as those linked to the management of climate-related risks, digitalisation and growing competition from technology firms – any less urgent. Thank you. 10
That still leaves us with quite enough to worry about - and who ever met a central banker - or a sailor - who didn’t worry about what was coming next - it would be a contradiction in terms. The immediate challenge is to cope with the imbalances within and between the industrial countries, and we have more work to do to improve our defences against volatile international capital flows more generally. But for the time being, the rate of world output growth, which had fallen to only about 2% in 1998, about half its long-term trend rate, and which was widely expected to fall further, is now expected to bounce back to around trend over the next couple of years. And whereas, a year ago, many industrial countries were still in the process of easing monetary policy, to offset the impact on world demand of the interruption of the flow of credit and investment to emerging market countries and transition economies, we have recently seen a quite widespread increase in interest rates, designed to moderate the pace of domestic demand growth. And rising interest rates - I need not remind you - are a reflection of a strengthening economy. Against this backdrop of strong economic growth and official tightening, it is not surprising that bond markets in most developed economies have responded with higher yields over the last 12 months.

Mr George paints a broadbrush picture of challenges and change for the markets as the year unfolds  Speech by the Rt Hon Eddie George, Governor of the Bank of England, to the Euromoney International Bond Congress at the QEII Conference Centre in London on 16 February 2000. *  *  *  It’s a pleasure, as always, to have been invited to bring proceedings at this great annual event to a close. You seem to go from strength to strength - from what I hear your sixth Congress has been as lively and interesting as its predecessors. Lively and interesting are pretty good words to describe the last twelve months in the markets too. When we were together here last year there were still plenty of clouds around. The emerging markets in Asia were still only in the early stages of patchy recovery. Russia was still fragile and there were real fears of another round of financial upset in Latin America, particularly Brazil. In the industrial countries, too, the prospects were for slow growth - some were even still forecasting recession. I concluded that we’d all need strong nerves in the year ahead. Well, by and large we kept our nerve, and the skies have brightened over the past year as the clouds of financial instability and global economic slowdown dispersed. The focus now is not on how we keep the ship afloat but how we keep her on a steadier course - which, if you’re a sailor is a comparative luxury.
Moreover, although nominal interest rates may be at very low levels, if inflation continues falling, real interest rates will trend upwards, contributing to reducing consumption and investment. Secondly, in economies posting a high level of public or private debt, or both, very high or rising real interest rates may exacerbate the difficulties of bringing about a reduction in household, corporate and public-sector debt, the reason being that the stock of debt, though it holds constant in nominal terms, will rise in real terms. The macro adjustment of a highly indebted economy in an environment of very low inflation or, indeed, deflation, thus becomes difficult and complex. And, thirdly, in relation to financial stability, the events we have seen in recent years indicate that asset price bubbles and the misallocation of financial resources may coexist alongside low inflation. If the situation of low inflation extends over time and draws close to deflation, we will arrive at very low or even negative interest rates, and that will entail additional risks for institutional investors, for the allocation of resources and for the sound functioning of the financial system. This was what we experienced in the euro area in the second half of last year. What role can monetary policy play in such a scenario? In September 2014, the ECB decided to expand the tools available to monetary policy by adding a private asset purchase programme followed, in January this year, by public-sector and public debt purchases.

Also, as supervisors, we should move to develop models that envisage macroeconomic effects in the face of different ecological transition scenarios. The aim hereby is to become familiar with the potential impacts of climate change on specific economic sectors, industries and even firms, and on more aggregate variables, such as growth and inflation. Naturally, the implementation of many of these initiatives requires considerable international coordination. Hence the importance of our active participation in the NGFS, the supervisors’ and central bank network I mentioned earlier, set up in early 2018. In the short time since its creation, the NGFS has managed to bring together more than 30 central banks and supervisory authorities. The aims of this network include analysis of supervisory practices, of macroeconomic and financial risks, and the means for smoothing financing for the transition to a sustainable economy. Undeniably, the implementation of all these aspects with some degree of harmonisation will be a difficult task. But you will agree with me that we are all facing a fundamental challenge and that, as such, we must spare no effort. Allow me to refer briefly also to the role financial markets can play in this process of ecological transition. In capital markets we have seen some positive discrimination in the valuation of firms with a lower degree of exposure to climate change, albeit limitedly so. Logically, and as in the case of banks, the markets should act as a catalyst for change  4/5  towards certain sustainable activities, while discouraging investment in particularly polluting industries.