samchain/econo-pairs-v1 huggingface dataset:
Chart 9 Corporate debt, % of GDP  Chart 10 Corporate debt growth versus nominal GDP growth  Non CRE Corporate debt  CRE  Corporate debt growth  % of GDP 80  growth rate  GDP growth  20%  70 15%  60 50  10%  40 5% 30 0%  20 90  95  00  05  10  15  10  -5%  0 1998 00 02 04 06 08 10 12 14 16 18  -10%  Sources: Association of British Insurers, Bank of England, Cass Commercial Real Estate Lending survey, Datastream from Refinitiv, Deals Business Intelligence from Refinitiv, Deloitte, LCD, an offering of S&P Global Market Intelligence, London Stock Exchange, ONS, Preqin and Bank calculations. Adding it all up  The challenge for us is to put developments across the heatmap into a common currency; to prioritise them; ask whether one outweighs another; and consider what they mean all together for how damaging any future economic earthquake could be. In this we are drawing on cutting edge research in the Bank.6 That work, sometimes referred to as calculating ‘GDP at risk’, seeks to translate developments in each metric into its typical effect on the depth of recessions.7  Without unusual developments in debt, the distribution of GDP growth over the next three years is shown by the blue distribution in Chart 11.

This isn’t an issue about a single fund or even about funds invested in a single asset class. Any incentive for investors to be at the front of the queue might be detrimental to the resilience of finance for the real economy. The emerging evidence is that companies whose existing liabilities are subject to selling pressure from funds tend to cut back new issuance and – presumably to protect their cash flow position – cut both investment and employment.17  If these new forms of finance are to give maximum support to long-term economic growth and investment, we need them to be consistent. So, after highlighting this issue in late 2015, the FPC supported the work of the Financial Stability Board (FSB) of the G20, culminating in the FSB’s January 2017 recommendation that market regulators should ensure funds’ redemption terms are consistent with their assets and investment strategy.18 Since then, global market regulators, who are at the coal face of these issues, have been turning this recommendation into new rules. Here in the UK, the FCA is finalising its own rules for funds investing in illiquid assets to strengthen liquidity management. 19  These are global issues. So macroprudential authorities across the world will need to review new global asset management rules. An assessment is needed of whether they will be effective in dampening any restriction to the supply of finance during economic downturns.
Jacqueline Loh: Managing risks in an uncertain world Keynote address by Ms Jacqueline Loh, Deputy Managing Director of the Monetary Authority of Singapore, at the 13th Singapore International Reinsurance Conference, Singapore, 3 November 2015. *  *  *  Opening Distinguished guests, ladies and gentlemen, good morning. It is my pleasure to join you today at the 13th Singapore International Reinsurance Conference. I believe the theme of this year’s conference, “Managing Risks in an Uncertain World”, is one which will resonate with many of you, as insurers, reinsurers and brokers alike navigate the crosscurrents in the reinsurance industry, in search of profitable growth and better returns. In keeping with the conference theme, I would like to share a few observations on how the Singapore insurance industry can capitalise on the opportunities created by new risks, new client segments, and new markets in Asia. Too much capital finding too little risks Those of you who attended the recent Monte Carlo Rendezvous would have discussed extensively the challenging conditions in the current reinsurance market, which some have warned would be the “new reality”, or the “new normal”. We have seen how structural responses – winning market share from competitors, and bulking up through acquisition of rivals – are largely built on a zero sum game. This becomes a problem when the pie is not growing, as could be the case if the industry does not innovate and create uncontested space.

The story was the same with Europe’s cannon, electric lighting, printing, small firearms, and innumerable other innovations: each was first neglected or opposed in some parts of Europe for idiosyncratic reasons, but once adopted in one area, it eventually spread to the rest of Europe.” Europe rose to dominance over the centuries to the extent that the positive effects of competition prevailed over the negative effects associated with the recurrent conflicts between states that stemmed from the inability to resolve the tensions generated by competition. The European Union was created precisely in order to ensure that the spirit of emulation and competition could operate within a framework of peace. There is no doubt that there are currently substantial differences within Europe, with some countries demonstrating a strong capacity to adapt to the new global conditions, while others are finding it hard to implement the changes that are necessary to maintain their level of prosperity and continue to grow. These differences are not confined to Europe. Contrary to what some observers say, I think that the anti-Europe movements that have emerged in some countries are a symptom of a more general dissatisfaction linked to the structural factors of the crisis. In the United States too, society is deeply divided on how to face the challenges of globalisation. Although European institutions provide an easy scapegoat, they represent an element of extraordinary strength in the current circumstances, not only for Europe, but also for the Member States, giving them – I believe – a great advantage.
10  All speeches are available online at www.bankofengland.co.uk/speeches  10  Chart 6: Cartogram of UK pay  Sources: ONS Annual Survey of Hours and Earnings (ASHE). Notes: UK NUTS 1 regions re-sized and coloured by median gross weekly earnings £ in 2018. 11  All speeches are available online at www.bankofengland.co.uk/speeches  11  Chart 7: Cartogram of UK life expectancy  Sources: ONS and Bank calculations. Notes: Life expectancy at birth by local area in the UK (years) for UK NUTS 1 regions, re-sized and coloured by mean life expectancy in 2010-12. If we turn to an alternative measure of health – psychological health – the picture changes dramatically. Chart 8 plots a subjective measure of well-being on a regional basis. 15 This is the mirror image of the income and wealth maps. Well-being is lowest in the richest region (London) and highest in a region where incomes are low (Northern Ireland). Income may buy you many things, but happiness is not one of them.16  This is based on answers to the question: “Overall, how satisfied are you with your life nowadays?” Other questions regarding wellbeing yield very similar conclusions. 16 Easterlin (1974) and Easterlin (2013), for example, point out that while wealthier people tend on average to be happier, happiness does not increase in line with GDP per head. Unemployment and debt arrears also have a large adverse psychological impact on individuals, above-and-beyond their direct impact on income and wealth (Wildman (2003) and Taylor et al (2007)).

Importantly, it improves the decisions they make, nationally and locally, governments and citizens. Weather is by no means a unique example. Micro-level data, digital twins and massive-scale simulations are being used to better understand all manner of other systems at all manner of resolutions – from the sub-atomic scale when seeking the Higgs-Boson, to the global scale when modelling flows across oceans, the world wide web and galaxies. All have benefitted from drawing on mass micro-level data, crowd-  sourced, centrally-stitched, micro-to-macro. Until recently, fewer such high-resolution data existed when it came to tracking flows of goods and services, people and money through our economy. That is changing. These data increasingly exist in companies, whose management systems capture activity in close to real time. They exist through now-ubiquitous  sensor, camera and satellite technology. And they exist in governments, local and central, in the form of administrative data on people, goods and money flows. Increasingly, these data are being put to use to understand the economy.40 In the UK, the Office for National Statistics recently started publishing a range of high frequency economic indicators, based on such sources as administrative data on VAT returns and geospatial data on traffic flows. The Bank has made increasing use of these sorts of data in its own real-time assessment of the economy. Let me give a couple of examples. One topic attracting attention recently has been the economic consequences of a disruptive Brexit.
The bank proved incredibly successful, leveraging its brand affinity and customer loyalty to acquire over 300,000 customers within their first 24 hours, one million within five days, and reaching six million customers within a year. 14 Thus, within a year of opening, Kakao Bank had a third of the number of customers of Shinhan Bank, the largest bank in South Korea. This was despite the fact that Central Bank of Kuwait - Public ‫ عام‬- ‫بنك الكويت المركزي‬  - 10 -  financial inclusion in South Korea was already at 95% at the time. You can imagine how long will it take for Kakao Bank to become the largest bank in the country. This example demonstrates that banks cannot take customer loyalty for granted. They need to ensure that customers engage with them not because they have to, but because they want to. And the only way to ensure that is by not only understanding customers, but also becoming central to their evolving needs. ii. Battle for Value To win the battle for customer loyalty, banks must provide value, which is the second battle. Winning this battle requires banks to adopt a more proactive approach when positioning themselves with respects to their customers. It is not enough to be on the sidelines as, say, a purely auto financing or mortgage provider. Banks need to position themselves at the center of the ecosystem, providing their customers with the best products, services and advice as and when customers require.

Banks must decide whether they aim to be central to their customers’ needs or they are content to be merely balance sheet providers, where someone else owns the relationship with the customer. In the second scenario, banks would have no brand affinity or loyalty from their customers and would be easily replaceable. As things stand, the banking industry is surely struggling on this front. Today, no bank is placed among the top twenty global brands in terms of value. Even banks which were there a decade ago have since slipped off the list. Banks must work hard to ensure that they remain the first choice for their customers, and that means taking a much broader view of their relationship with customers. Banks need to consider how they can help solve their customers’ problems and improve their lives, while being cognizant of their broader social purpose to promote inclusive, sustainable prosperity. After all, banks can no longer take customer loyalty as a given. A recent banking consumer study conducted by Accenture found that 40% of customers expressed decreased dependence on their bank as their primary financial services provider and 42% said they had used non-bank providers for financial services in the past year. A good example of non-banking providers displacing traditional banks is Kakao Bank in South Korea. Kakao Bank was launched in 2017 as a digital bank by Korean Internet company Kakao, which also owns the popular free mobile messaging service KakaoTalk.
P M W Tucker: “Where are the risks?” Speech by Mr P M W Tucker, Executive Director and Member of the Monetary Policy Committee of the Bank of England, at the Euromoney Global Borrowers and Investors Forum - remarks to the session “Where are the risks?” 1, London, 23 June 2005. * * * Central bankers are fond of discussing myriad uncertainties in the global macroeconomic and financial environment. Yet judging by the level of implied volatility, derived from option prices, on a wide range of asset classes, the market perceives uncertainty as fairly low. And, even after the recent adjustment, credit spreads across a wide range of instruments suggest that the premium charged for risk has fallen over recent years. This, all in an environment where long-maturity risk-free forward rates – real and nominal – are unusually low. It is hard to know quite what to make of this, but it forms an important backdrop to the few remarks I want to make today. For this audience, I think the interesting question is not whether or not risk will crystallise, as in one form or another risks crystallise every day. Rather, the important question is whether, in the event of nasty shocks, our capital markets can absorb them or whether they have developed characteristics which may, as some suggest, leave them vulnerable. Or, more constructively, what risk managers – and the authorities – might usefully monitor to help contain any such risks. It’s hardly a new question.

Marzunisham Omar: Financial advisers, trusted advisers Keynote address by Mr Marzunisham Omar, Assistant Governor of the Central Bank of Malaysia (Bank Negara Malaysia), at the 6th Annual Conference of the Association of Financial Advisers 2017 "Financial Advisers, Trusted Advisers", Kuala Lumpur, 9 October 2017. * * * It is indeed a great pleasure to be here this morning. I would like to thank the Association of Financial Advisers for inviting me to speak, and allow me first to congratulate the team on the successful organisation of this year’s conference. The future is as promising as it is unpredictable. As I reflect on the theme of the Conference, I am reminded of a quote from Confucius, the ancient Chinese philosopher – “I used to take on trust a man’s deeds, after having listened to his words. Now, having listened to a man’s words, I go on to observe his deeds.” This morning I would like to talk about trust – financial advisers as trusted advisers. Indeed, trust is at the heart of the financial advisory industry. While customer service and technology are increasingly the key differentiators, the most essential element has been, and will always be, trust. In an industry where the very foundations are dependent on the strength of personal relationships, trust is not only a necessary feature – it is its strongest advantage, its defining value proposition.
We will give particular priority to the highest-emitting companies and companies that have not published climate plans or have inadequate climate reporting. We will also step up our ownership activities aimed at the financial sector, which is exposed indirectly to climate risk through loans and investments. We tailor our dialogue to the sector and the situation. Steel and cement are good examples. These companies currently have high emissions, but their products will still be needed in the lowcarbon economy. Much of our dialogue on transition plans is therefore about the technological advances and investments needed. We also raise the need for industry standards and the issue of lobbying, which is a major challenge. Chart: Companies’ climate reporting is improving We are seeing signs that our efforts are paying off. For example, when we analysed the reporting of 1,500 companies, we found that those we have actively engaged with have made more progress in their reporting on climate strategy than the other companies. Of course, we cannot claim all the credit for this progress. But progress it is. In future, we will provide more information on our dialogue with companies – what we talk about and the changes we see. Drawing attention to it is a tool in itself. Reporting and voting Our dialogue with companies will not have the desired result in every case. We can then hold boards to account for their decisions through our voting.

The Bank is already doing a great deal to address climate risk, and we outline even more ambitious plans for the future. As a long-term and global investor with holdings in thousands of companies, we have a financial interest in companies adapting well to the risks and opportunities presented by climate change. Norges Bank intends to be a driver for change, pushing companies to make the transition to net zero emissions. The companies we invest in reflect the transition that the whole world needs to undergo. The fund as an investor Our characteristics as an investor The climate risk in the fund reflects who we are as an investor and our overall investment strategy. In a nutshell: the fund is large, broadly diversified, long-term and index-based. Chart: Large, broadly diversified, long-term and index-based 70 percent of the more than 12 trillion kroner in the fund is invested in equities, making us one of the world’s largest shareholders. We have holdings in 9,000 companies in 70 countries. And we are a long-term investor. Since only the real return can be spent by the government, the fund could, in principle, last forever. 1/6  BIS central bankers' speeches  Put simply, the strategy for the fund is to strike the best balance between expected return and risk by spreading our investments far and wide and owning a little of everything in the market. There is a solid body of research to support such an approach.
Dimitar Bogov: Addressing structural rigidities in view of monetary policy transmission effectiveness Address by Mr Dimitar Bogov, Governor of the National Bank of the Republic of Macedonia, at the 4th Research Conference “Addressing structural rigidities in view of monetary policy transmission effectiveness”, Skopje, 23 April 2015. *  *  *  Dear Governors, Your Excellences, Ladies and Gentlemen, Dear guests, It is my pleasure to welcome you all, on our fourth Research Conference, entitled Addressing Structural Rigidities in View of Monetary Policy Transmission Effectiveness. Just like the previous years, we hope that the topic of this conference is both interesting and challenging to provide an interactive framework for discussion and research-based policy advices for the central bankers. Structural rigidities, indeed, are related to a wide range of economic segments. Therefore, today we will try to tackle different economic issues, enlightening their importance for the monetary policy transmission effectiveness. Transition economies have undergone many structural changes in the ongoing reshaping of the economies, which to some extent have influenced the monetary policy decision making or monetary policy transmission channels. Globalization is yet another factor that tends to produce changes in the economic structure and at the same time, affects the markets functioning or economic agents’ behavior.

The labor market rigidities, wage and price settings, financial market imperfection, impact of foreign direct investments and many other issues must be appropriately taken into consideration in the monetary policy implementation and probably we have all put in a great deal of effort to accommodate our models to capture these specifics. The last global crisis, with its overall severity, time length and countries coverage reactivated the importance of structural issues for the advanced economies too, pointing to the fact that not always same measure fits any situation, not always same risk affects in a same way and not always same threshold is valid for everyone. Nowadays, we speak about flexible and innovative monetary policy, designed on a broadly based information platform, incorporating structural features of the economies and all specifics of the monetary policy transmission mechanism. Since the onset of the crisis, we have tried to better incorporate financial stability aspects into monetary policy decision making. In addition, we learnt that zero lower bound rate in the advanced economies or historically lowest interest rates in emerging economies were not able to revive credit growth, until we moved towards renovating our toolkit. Nonstandard monetary policy measures in different modalities have been widely used by the central banks around the globe during the crisis period, with the ultimate goal to capture countries’ specific structural features. These tailor made measures proved to have ability for more effective monetary signals transmission, considering the additional impairments of the traditional transmission channels during the crisis.
The MA and the risk margin between them are key determinants of the balance sheet valuation of most life insurance liabilities. Both play an important role, and there are independent cases for the reform of both. We have set out our main concerns with the existing MA framework, including in the recent discussion paper (DP) we published alongside HM Treasury’s Consultation Document [7]. These can be broadly summarised as  Page 5  1. the fundamental spread (FS) does not capture all retained risks and is generally low, 2. the FS is not sensitive to differences in risks between assets and 3. the FS does not adjust to shifts in the credit environment unless a default or downgrade has occurred. We have also expressed concern regarding the size of the risk margin, and its sensitivity to low interest rates. However, given the interaction between the MA and the risk margin on balance sheets, we cannot look at potential reforms in isolation. In order to maintain transfer values in line with observed prices, the calibration of changes have to be considered as a package. Undertaken in isolation, a large cut to the risk margin would fail this simple test, and would increase the risk that an insurer’s liabilities could not be transferred to a third party if it were to fail. This would expose policyholders to an unacceptable risk and would be incompatible with the fundamental principles behind the Solvency II regime.

In the UK, we have a strong flow of defined benefit pension liabilities to insurers, which provides a further incentive to ensure the regulatory regime can facilitate productive investments within the bounds of appropriate risk management of those funds. But what is ‘productive investment’? If we completed a survey here today, I expect we could easily receive a different answer from each attendee in the room, and I won’t claim to have the best. However, here’s one prepared earlier: ‘investment(s)… that have the potential to expand the productive capacity of the economy, while also generating marginal returns to society that exceed  Page 4  the marginal cost of that investment to society’[6]. This was the definition used in the terms of reference of the Productive Finance Working Group, which comprised representatives of industry, HM Treasury, the Bank of England, and the Financial Conduct Authority (FCA). Examples given in those terms of reference include: plant and equipment; research and development; technologies and infrastructure. That working group’s report focussed on the role that Defined Contribution pension funds could play. But long-term and illiquid productive investments could be a natural match to life insurers’ long term, predictable liabilities - in particular pension annuities, which commonly reside in matching adjustment (MA) portfolios. Given the long-term guaranteed nature of these liabilities, and the cost of shareholder capital to support this business, it is natural that insurers’ investment risk appetite will be reasonably low in these portfolios – and this indeed has long been the case for annuity books.