samchain/econo-pairs-v1 huggingface dataset:
Issuers, though, transferred much of the risk and did so comprehensively, as they needed to demonstrate that they had transferred risk irrevocably before they could get capital relief. But in the absence of adequate monitoring, originators could chase volume at the expense of lending standards. 5  See for example, the Bank of England Financial Stability Report, October 2007. BIS Review 93/2008  7  27 Therefore, two elements at the heart of the benefits of financial innovation – the ability to pool and transfer risk – contributed to an endogenous increase in the level of underlying credit risk. 28 There is also a potential incentive problem arising from the separation of legal ownership from economic exposure – although this is at the moment a possible difficulty for the future. Credit default swaps transfer the risk of economic loss to the seller of protection but the right to trigger covenants or put a firm into administration remains with the underlying asset holder. A protected asset holder, therefore, has little incentive to monitor a company closely and trigger covenants or force it into administration at the first signs that its business may have become unsustainable. And the seller of protection lacks an alternative legal remedy. Companies may therefore continue to operate for longer than they did in the past once they get into trouble. So, the use of credit default swaps may reduce the probability of default but increase loss given eventual default.

Here, the theory of risk transfer was that risk would be reallocated to those most able to bear it. In practice, though, those most willing to take these risks have in some cases turned out to be those who understood the risks the least and thus were prepared to take it on at too low a price. This problem is extremely hard to guard against because of the difficulty in determining whether a counterparty who is insuring you against risk (or a chain of counterparties) fully understands what they have taken on and have the capacity to make good on their commitment in adverse states of the world. In recent months, banks have been forced to write down the value of contracts that they had bought from monoline insurers to guarantee the payments promised by their holdings of highly-rated CDOs linked to US sub prime mortgages. With the likelihood of such guarantees being called upon appearing very small, the monolines wrote a large volume of such guarantees. But more recently, this prospect has become a distinct possibility, and one that threatens the viability of some of the monoline insurers, and thus their perceived ability to pay. Incentives 24 These information problems are difficult enough when risk is treated as exogenous. And in a world of full information, “nature” can be the only source of uncertainty.
C J P Siriwardana: Financial sector consolidation – why and how? The Central Bank of Sri Lanka’s 64th Anniversary Oration delivered by Mr C J P Siriwardana, Assistant Governor of the Central Bank of Sri Lanka, Colombo, 24 September 2014. *  *  *  The Chief Guest, Honourable Senior Minister of International Monetary Cooperation and Deputy Minister of Finance, Dr. Sarath Amunugama; The Guest of Honour, Dr. P B Jayasundera;  Secretary  to  the  Ministry  of  Finance  and  Planning,  Governor of the Central Bank of Sri Lanka, Mr. Ajith Nivard Cabraal; Members of the Monetary Board; Former Governors; Deputy Governors; Former Deputy Governors; Members of the Consultative Committees of the Central Bank; Distinguished Guests; Ladies and Gentlemen, First of all, let me thank the Governor and the Organising Committee of the Central Bank Anniversary Oration for inviting me to deliver the oration on the 64th Anniversary of the Central Bank of Sri Lanka. I believe it is my great privilege to have this opportunity to speak to you today.

These are investments through which an investor participates with at least 10 percent in a company abroad or establishes a subsidiary or branch abroad. In 2002, the stock of Swiss direct investment abroad amounted to almost 100 percent of Switzerland’s GDP, as against only 29 percent in 1990. Compared with other industrialised nations, Switzerland is in the top league. In the financial sector, globalisation has manifested itself particularly clearly. In the past few years, Swiss banks have seriously boosted their investment abroad, mainly by taking over foreign financial institutions. At the same time, however, the Swiss banking sector has undergone an intensive process of concentration, which partly resulted from domestic problems, but also came as a reaction to fierce international competition. The total number of banks halved from roughly 600 institutions at the beginning of the nineties to less than 300 institutions today. Of the four big banks, only two remain. Apart from this restructuring process, a number of other challenges have arisen over the past few years. Notably the clean-up of the legacy from World War II, the participation in the combat of money laundering, and also the protection of our interests vis-à-vis the EU, particularly with regard to banking secrecy and the taxation of savings income. Lastly, the stock market slump in 2001/2002 put the earning power of the financial industry to the test. The Swiss financial sector proved it could tackle these challenges.
Barbro Wickman-Parak: The IMF’s role – new thinking in the wake of the financial crisis Speech by Ms Barbro Wickman-Parak, Deputy Governor of the Sveriges Riksbank, at a meeting at Global Challenge, Stockholm, 5 October 2012. *  *  *  I would like to thank Ms Maria Wallin Fredholm and Ms Emelie Mannefred, from the Riksbank’s Financial Stability Department, for their assistance in the writing of this speech. The 188 member countries of the International Monetary Fund (IMF) will gather in Tokyo for the Fund’s annual meeting next week. When I began working with IMF issues at the Riksbank in 2007, my impression was that the IMF was suffering from an identity crisis. The Fund’s lending to countries in crisis appeared to have played out its role and major staff cuts were underway. In short, the mood was rather subdued in the corridors of the IMF. The financial crisis led to an abrupt change. The IMF was forced to quickly provide action programmes and funding for crisis countries. Before the crisis, the IMF’s lending amounted to approximately USD 9 billion, the largest part of which went to Turkey. Today, the IMF’s lending amounts to around USD 112 billion, and the absolute largest part of this sum now goes to countries in Europe. The media spotlight often falls on the Fund when it rides to the rescue with crisis-management measures like this. But the every-day, important and tireless surveillance work of the IMF seldom attracts any headlines.

Second, regulation and crisis management were handled at the national level, despite the rapid internationalisation of the financial markets. Third, surveillance focused on individual institutions and if these were stable separately it was often concluded that the system as a whole was stable. An important reason for these shortcomings was that there was an unclear allocation of roles and no organisation with an explicit mandate to oversee, identify and analyse risks in the global financial system. The IMF was also criticised for its actions in the run-up to the financial crisis. The IMF’s own independent review body, the Independent Evaluation Office (IEO), has said that before the crisis the IMF, like many others, was convinced that the risk of serious crises was practically non-existent.2 This was apparent, for example, in the overconfidence in the health and resilience of the major financial institutions. Risks that are generally related to construction booms and financial innovations were toned down, as was the need for strong regulations to prevent such risks. It was not until the spring of 2008 that the IMF’s Global Financial Stability Report warned against emerging vulnerabilities among the major financial institutions, but by that time the crisis was already a fact. In response to the crisis, more distinct frameworks for the oversight and supervision of the financial system at the national and regional levels are now being developed.
Against this backdrop, the ACPR redesigned its questionnaire on business practices and consumer protection. It can now understand current market practices, as well as trends in products, services and practices. I will now talk about ACPR inspections. They are firstly intended to ensure compliance with the applicable rules and to make sure that errors are corrected before they have consequences for customers. In the worst cases, such errors lead to sanctions. This approach is necessary to punish violations and useful to increase awareness in the profession. ACPR inspections are not however limited to dealing with bad practices on a case-by-case basis. They also identify more general problems that call for changes in market practices or even in regulations. Several examples will be discussed this morning to illustrate the lessons learned from such inspections. For instance, ACPR staff examined distribution channels in which there are a number of intermediaries between the customer and the producer (bank or more often insurer). The questions that we are asking today are simple. But they are important for the sector as a whole. Do all intermediaries provide value added to the customer? How can we guarantee the customer a reliable and efficient chain, irrespective of its organisation? To enhance practices, the ACPR also has a flexible legal tool, the recommendation. I believe that this instrument is useful for prevention. Recommendations are intended to change or guide the behaviour of professionals. It helps them to identify and actually integrate what is expected of them in terms of consumer protection.

Rising real exchange rates in NMS in part reflect productivity growth in the traded sectors giving rise to Balassa-Samuelson effects, as well as a growing demand for non-traded goods and the effects of price deregulation. These factors would lead to relatively high inflation rates unless countered by nominal exchange rate appreciation, both of which could potentially hamper the process of nominal convergence necessary to adopt the euro. 5 The broad conclusion which emerges from a number of studies on this issue is that Balassa-Samuelson effects on the real exchange rate in NMS are estimated to be of the order of 1% to 2% per year. 6 With regard to capital inflows, these are usually perceived as a source of economic growth, especially when they take the shape of foreign direct investment (FDI). However, they can also usher in risks of volatility and speculative pressures on the exchange rate. This is indeed a factor that is currently affecting some NMS, as capital inflows appear to be shifting from FDI to portfolio flows of a more speculative nature, perhaps in part a by-product of the increased competition for productive investment from Asian countries. In the near future, capital outflows from NMS may also be occasioned by the creation of second pillar pension systems. Needless to say, net capital inflows are accompanied by current account deficits, reflecting expansions in aggregate demand driven by investment expenditure or lower savings prompted by an expected growth in income.
Another observation is that the Executive Board as a collective is now more involved in the forecasting process than it was a few years ago. This is largely because we have chosen to publish our forecast for the repo rate. I shall return to this shortly. A third observation concerns the logic of the process. We try to deal with that which is independent of our own monetary policy at an early stage. Sweden is a small, open economy, so the international forecasts can be settled without taking into account what may later crystallise into a well-balanced Swedish monetary policy. The current situation in the Swedish economy is also largely independent of what the Executive Board determines at the next meeting, in that it takes time before monetary policy has an effect on the economy and inflation. But please note that we have a relatively broad definition of the "current situation”. The National Accounts are published with a lag of almost one quarter. They are our most important source of statistics regarding the real economy. This means that we often do not know at the start what the outcome was for the economy during the previous quarter. This means that an assessment must be made for both the previous quarter and the current quarter. We use various indicators that are published on a monthly basis to make this assessment. So what is the actual process for making the forecasts? It usually starts around eight weeks before the monetary policy meeting (see Figure 1).

In total, around 20 persons are usually present at the meeting. What happens at a monetary policy meeting? There is an agenda which states the order in which we will discuss the different items. The meeting usually begins with a brief update on how the financial markets have developed, including market expectations of the repo rate with regard to our meeting, and other new, important information that has been received in the last few days. This is followed by a summary of the main elements in the Monetary Policy Report or the Monetary Policy Update. After these introductory words from the civil servants, I and my colleagues go on to discuss economic developments over the coming three years. First we deal with economic activity and inflation abroad and in Sweden. Each person puts forward his or her view of the current economic situation and how the interest rate needs to be adjusted to attain the inflation target. There is no predetermined order as to who will begin the discussion. The discussion is fairly free at this stage. During the course of the process each one of us has formed his or her own opinion, but of course the formal decision is not made until the actual meeting. The Chairman of the Executive Board usually concludes by summarising the discussions held  8  BIS Review 77/2008  and what proposals have been put forward regarding the current interest rate. After this we move on to the decision and vote.
Unit labour costs are expected to increase marginally in the present year, before returning to a more normal rate of increase at the end of the forecast period. Inflation expectations are important to follow for the Riksbank, particularly in the present situation when the difference between CPI inflation and various measures of underlying inflation is great. Inflation expectations five years ahead have so far been stable and close to 2 per cent. This indicates strong confidence in the Riksbank’s ability to meet its inflation target over the long term. On the other hand, inflation expectations one and two years ahead have increased significantly over the last 12 months. However, this is largely a consequence of an increase in the actual measured rate of inflation (see Figure 10). A matter of some concern ahead of the wage bargaining rounds may be that wage expectations also largely seem to be a consequence of the actual measured rate of inflation. I shall return to this shortly. In light of this economic development, monetary policy has been aimed at successively increasing the repo rate towards a more normal level after the extremely low level it reached during the crisis. In April, we raised the repo rate by 0.25 percentage points for the sixth time in a row, to 1.75 per cent.

To take this further and fully realise the benefits, cross-border coordination will be key to promote uniformity in how the standards are interpreted and operationalised. Promoting competition The fourth perspective for the regulatory agenda relates to the need to promote efficiency and innovation through greater competition. Given the importance of scale and network effects in delivering payment services, it is no surprise that the payments industry tends towards an oligopolistic structure. These market dynamics are amplified in the digital payments market. ‘Winner-takes-all’ dynamics are synonymous with digital platforms, which often aim to build as large of a network as possible. After all, this facilitates a virtuous cycle of more data, leading to better and cheaper services, which in turn leads to more customers – so on and so forth. To this end, regulators must ensure that these market dynamics do not result in perverse outcomes for the payments ecosystem as a whole. Such perverse outcomes could include the abuse of a dominant market position to erect undue barriers to entry, or to impose exorbitant prices on end-users. Encouragingly, regulatory authorities are increasingly playing an active role in mitigating such risks. Of significance are efforts to promote open access regimes to key payment infrastructures, regardless of whether the payment service provider is an incumbent bank or a non-bank player. In Hong Kong, the Faster Payments System (FPS) was launched in September 2018 with a total of 21 banks and 10 non-bank e-money issuers participating in the scheme.
The PTIS, which was announced in Budget 2023 and will go live on 1 January 2024, will allow qualifying donors in Singapore to claim 100% tax deduction, capped at 40% of the donor's statutory income, for overseas donations made through qualifying local intermediaries. 1 We hope the introduction of PTIS will encourage philanthropic giving to become a regular, professional feature of family offices here. HOW IS MAS SAFEGUARDING THE OFFICIAL FOREIGN RESERVES AGAINST CLIMATE RISKS? Let me say a few quick words about our 2023 Sustainability Report which we are releasing today alongside our Annual Report. The Report gives a good account of how sustainability is integrated across MAS' various functions: as a central bank safeguarding Singapore's OFR against climate risk; as a financial regulator ensuring a climate-resilient financial sector;  13/16  BIS - Central bankers' speeches  as a promoter of the financial sector developing a vibrant sustainable finance ecosystem; and as an organisation trying to reduce its own carbon footprint. Today, I will focus on an area we have not spoken about much - how MAS is safeguarding the OFR against climate risk. It is probably the least news-worthy of the issues I have covered today but likely to be the most critical for the future. In 2021, MAS developed and published a climate risk management strategy to enhance the climate resilience of our investment portfolio. We conducted a climate scenario analysis for the whole portfolio.

1 There are four types of qualifying local intermediaries: Selected Registered and  Exempt charities with a valid Fundraising for Foreign Charitable Purpose Permit; Charitable Institutions and Not-For Profit Organisations established by Financial Institutions in Singapore, as specified by MAS; Selected Grantmakers under the Ministry of Culture, Community & Youth's Grantmaker Scheme; and, Other selected entities, as approved by MAS. 16/16  BIS - Central bankers' speeches
BIS Review 156/2010  3  the Bank on price and wage setting in Malta shows that although just over half of respondents would cut prices if their competitors did so, 36% would not. Unsurprisingly, the most flexible firms were those in the manufacturing and tourism sectors, where foreign competition is strong. This suggests that there is still scope for increasing the degree of domestic market competition. Sometimes, the connection between market liberalisation and exports may be indirect. As the recent experience in the communications sector has shown, liberalisation drove down costs and prices. This opened up new export opportunities outside the communications sector itself, for example, in financial services and remote gaming. The importance of keeping costs under control cannot be overemphasized. Malta’s inflation performance over the last ten years illustrates this point. Whereas the euro area inflation rate averaged 2.1% between 2000 and 2009, domestic inflation averaged 2.5%. The record for inflation excluding energy prices shows a similar unfavourable trend. It is an established fact that in a currency union rates of inflation consistently above the average result in a loss of competitiveness. Apart from more competitive markets, containing domestic inflation implies a need for wage moderation. For many years employee compensation has grown faster than real labour productivity. Whereas the former increased by around 31% since 2000, productivity rose by only 2.5%. The resulting rapid growth in unit labour costs, more than 28%, compares with an average of 20% in the euro area.

We should also reassess the scope of  13  See National Audit Office (NAO), Annual Audit Report by the Auditor General: Public Accounts 2008, December 2009. Examples of inefficiencies and improper practices range from 28,810 cases of social security contributions worth EUR 4.5 million being in arrears, to the number of hospital meals charged in one hospital consistently exceeding the number of in-house patients, to cases of payments to government suppliers not supported by VAT receipts. 14  The welfare gap, i.e. the difference between all items of expenditure and contributions made in terms of the Social Security Act, 1987 has more than doubled in the last five years to EUR381.2million in 2010. The cost of pensions and related benefits is estimated at EUR 564 million and that of free hospitalisation and community care EUR 306.5 million. See, Ministry of Finance, the Economy and Investment Financial Estimates 2010, p. 294. 6  BIS Review 156/2010  social benefits, to distinguish between those that truly help to combat poverty and social ills and others that are not so effective in achieving the desired outcomes. Finally, I believe the time has also come to consider how to strengthen the budget process, drawing on models tested successfully abroad. These typically involve fiscal rules providing for limits on supplementary budgets, multi-annual expenditure ceilings and more transparency in fiscal policy making, as well as an independent monitoring agency. The pursuit of fiscal sustainability along such lines requires a broad political consensus.