samchain/econo-pairs-v1 huggingface dataset:
Our goal with regional banks is to ensure that managers at those firms recognize their vulnerabilities and develop appropriate mitigation strategies to enhance their resilience. 4. Structure and Culture: The final area, or challenge, I wanted to touch on is organizational structure and culture. Firms need to ensure that business strategy, organizational structure and desired culture are aligned to successfully operate in a fast-paced, ever-changing world. Whether you are a small community bank or a large global institution, you need to be agile enough to act quickly without risking the integrity of your structure and culture. I will touch on culture again a little later. In the short term, these are issues that we see as “top-of-mind” in terms of challenges and should continue to be areas of focus for firms. I thought I would close out today with thoughts on two areas. At times I have described these as being on my list of “things that keep me awake at night,” and I think it’s fair to say that these two issues continue to be near the top of that list. They are: information technology and culture. What keeps me awake at night 1. Information technology  My first issue is a topic that I had the opportunity to address with many of you earlier this year: the broad area of information technology, which has a few dimensions to it. The first dimension won’t surprise you or your boards: cybersecurity.

It is not possible for an outsider to take in the size of the holes in the banks' balance sheets as a result of bad credit; it is probably not possible for the Japanese authorities to see this either. However, all of this must eventually rise to the surface, just as it did in Sweden during the finance crisis. It remains to be seen whether the new administration will bring problems in the finance sector closer to a solution. In Sweden we can of course be pleased that the stock exchange has made a slight recovery during April, although it is too early to conclude that the lowest level has been reached. The stock exchange tends to jump the gun a few times before it really takes off. There is still great uncertainty on the financial markets. At the same time, many of the recent signals regarding economic activity have been distinctly negative. A fall in the inflow of orders and weaker production growth are reported in the telecommunications and motor vehicle industries, for instance. Exports and investment are declining. 2  BIS Review 34/2001  Household sector consumption and expectations for the future are also showing a downturn. The number of newly registered vacancies on the labour market is giving negative indications, although employment is still rising. The inflation figures turned out to be higher than expected, both with regard to the consumer price index and underlying inflation.
5  If deflations per se were costly you’d expect to see Charts 3 and 4 become shallower south of the origin. 4  BIS central bankers’ speeches  Chart 3 Those deflations no more costly than other disinflations…  Chart 4 …same was true for wage growth  Source: ONS and Hills,Thomas, Dimsdale (2010). Source: ONS and Hills,Thomas, Dimsdale (2010). Chart 5 Interest rate unconstrained by zero bound  But what must also have been important, it seems to me, is that the appropriate level of real interest rates was sufficiently high through the period that monetary policy never had to contend with the zero lower bound on the nominal rate 6. Chart 5 adds to Chart 2 the series for Bank Rate, in green. The real short-term interest rate – which we know, after the event, can’t have deviated that much from the level necessary to sustain stable growth and prices (since that’s what generally occurred) – averaged 4% between 1850 and 1914. If the neutral real rate is anything like that high, only a very severe deflation would drag the appropriate nominal rate close to zero. As it was, Bank Rate was unconstrained from responding to lower nominal growth 7, when that occurred, and never fell below 2%. Source: ONS and Hills,Thomas, Dimsdale (2010). 6  By “zero” I mean the effective lower bound on nominal interest rates; this may not be precisely zero.

In practice people may take time to react to real income shocks; it’s also possible they expect some of the recent declines in energy prices to be reversed 10. But, in the data, there’s no correlation between household saving rates and changes in real energy prices, either here or elsewhere in the OECD 11. This suggests their effects on income are in general matched by equivalent shifts in real spending. Note that the UK is not the only place where consumer confidence has risen in recent months (Chart 10). 9  This point was made in a recent speech by the Governor (Carney (2015)) and, in an article, by Kristin Forbes (2015). 10  Forward markets discount an oil price of $ at the end of next year, quite a bit higher than the current spot price though still well below where it was in mid-2014 $ and $ respectively). 11  In regressions of changes in saving rates on the contribution to real income growth of energy and food prices, the estimated coefficient is close to zero and statistically insignificant in all 17 OECD countries for which we have data. BIS central bankers’ speeches  7  Nor is it unusual to see stronger demand at a time when these survey measures of household inflation expectations are falling. Typically, these near-term expectations surveys track actual inflation 12.
Banks have more capital, they have more liquidity and are more resilient. The bigger concern is profitability, which was already low. European banks are solvent but I am aware that this crisis will have further impact on their profitability. In the medium term, banks will need to continue to take steps to eliminate excess capacity and consolidation could be a sensible way of dealing with profitability. From a solvency angle, this is 2/3  BIS central bankers' speeches  not a banking crisis. This time banks can be part of the solution, rather than the problem. If the recession is worse than expected, is there a risk that some banks will lose money on loans which they are currently granting? All governments, Portugal included, have approved State guarantees. When there is this level of uncertainty and a drop in GDP, these guarantees are very important and useful if a credit crunch is to be avoided. A number of economists have expressed the view that the euro area’s response to the crisis has been weak compared to the United States or the United Kingdom, where central banks will even finance the State directly. How would you respond to these criticisms? Looking at the whole package of ECB measures, it is impressive. Then we have fiscal policy, involving the various programmes of the national governments, and lastly there is the decision of the Eurogroup. Europe’s response is comparable to that of other world economies.

In recent weeks, the SNB has pursued a policy which has brought the repo rates close to zero. This does not mean, however, that our monetary policy will cease to transmit further expansionary impulses. In addition to the short-term repo rate, we use a whole range of other methods to pursue a more expansionary monetary policy. We can, for instance, extend the maturities of our money market transactions or intervene in markets other than the money market. Updates to monetary policy instruments The SNB’s monetary policy instruments have fared quite well since the onset of the crisis. However, a review has highlighted two areas in need of adjustment. First, a liquidityabsorbing instrument was found to be necessary, and second, the conditions of the liquidityshortage financing facility were no longer deemed appropriate. The liquidity-shortage financing facility serves to bridge unexpected, short-term liquidity bottlenecks. It can only be accessed if a bank has a corresponding limit and if that limit is fully covered by securities at all times. Let’s start with the liquidity-absorbing instrument: The crisis has made it clear that a central bank must be able to offer large quantities of liquidity at short notice and do so via a number of channels and with different maturities. Repo transactions and foreign exchange swaps meet these requirements very well. However, the SNB lacked a separate liquidity-absorbing instrument to handle large volumes. We therefore introduced our own debt certificates – SNB Bills – to our range of instruments in October.
Following this idea and backing it up in figures, please allow me to shortly through a glance back in the past. The soundness of the Albanian state in these last years, the economic growth and amelioration of the tax and customs entities performance, enabled the reduction of the budget deficit. This deficit fell from 11.4 percent of the GDP in 1998 to 6.9 percent in 2002. In 2003, it is expected to fall at the level of 5.8 percent of the GDP, whereas the draft-budget for 2004 has an even more ambitious objective: the reduction of the general budget deficit at the level of 4.8 percent of the GDP. This fiscal discipline has given its own results. It influenced the reduction of treasury bills interest rates, bringing about an overall reduction of interest rates in economy. The reduction of interest rates and the government’s demand for funds gave a greater respiration to economy crediting. It has extended more funds - at lower interest rates - to be used by the public sector. According to the data provided by the Bank of Albania, economy crediting increased at an average of 90 percent per year during 1999-2002. On the other side, the reduction of the Bank of Albania’s financing to state budget, gave positive impacts on the liquidity indicators in the system. Now the long-term monetary assets gave a straightforward contribution on keeping inflation at low levels. Inflation fell from 8.7 percent in 1998 to 2.1 percent in 2002.

A full and consistent implementation of the euro area’s existing fiscal and macroeconomic surveillance  2  BIS central bankers’ speeches  framework is key to bringing down high public debt ratios, to raising potential growth and to increasing the euro area’s resilience to shocks. We are now at your disposal for questions. BIS central bankers’ speeches  3
A ‘tilt’ strategy starts from the same investment universe as a standard market capitalisation-weighted index, but then adjusts the weights on individual securities or sectors in that index up or down to reflect various climate factors. A common tilt might be ‘low carbon’, in which portfolio weights are adjusted based on a measure of each issuer’s carbon footprint – or better still a forward-looking assessment of an issuer’s transition trajectory to net zero, such as that produced by the Transition Pathway Initiative.39 Tilt strategies avoid binary composition issues of the previous strategies, and can be dynamic in nature as the parameters used to construct the portfolios evolve. But they can be more reliant on those very consistent, decision useful and forward looking metrics I mentioned earlier, which are not yet universally available. 39  https://www.transitionpathwayinitiative.org/. 19  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  19  ‘Unconstrained’ investment – the final category in the chart – is a catch-all for the wide variety of active management strategies that investors can employ, either across an entire portfolio, or as an overlay. Such strategies may for example be driven by top-down or bottom-up research, or by quantitative statistical analysis of correlations between environmental factors and risk-adjusted returns. While such approaches have at least the potential to deliver stronger performance, by substituting judgment or modelling for current data gaps, they are clearly more costly to undertake and harder for end-investors to monitor.

From a business management perspective, this point is obvious: to be useful in shaping strategy, a metric has to be something with a direct influence on investment decisions. And from a financial markets perspective, it has to be relevant to understanding risk and return. A lack of meaningful, consistent metrics makes it hard, or impossible, for investors to construct viable portfolios by comparing climate performance across firms. And that, in turn, dampens the incentive of those firms to improve and disclose their climate performance in the first place. 23  https://www.fsb-tcfd.org/wp-content/uploads/2019/06/2019-TCFD-Status-Report-FINAL-053119.pdf 9  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  9  Chart 4: Correlations between environmental scores from different rating providers24  Key Each matrix displays correlation coefficients between Environmental ratings given by five rating providers (labelled P1 – P5 in the charts) on a sample of 924 firms (2017 data). Right: Correlation coefficients between aggregate Environmental ratings. Below: Correlation coefficients between ratings of a selection of more granular environmental categories.
Stefan Ingves: The development of a modern financial sector in Sweden Speech by Mr Stefan Ingves, Governor of the Sveriges Riksbank, at the Indira Gandhi Institute of Development Research, Mumbai, 16 November 2006. *  *  *  I am honoured and grateful that you have invited me to speak here today. This is an institute of development research so it is appropriate for me to talk about development in the financial sector. It has become gradually more acknowledged by academics as well as by practitioners and policymakers that a well developed financial sector is necessary to a country’s overall economic growth and stability. It also improves the services provided to the individual citizens. A well-functioning financial services industry facilitates the transformation of savings into productive investments. It assumes, transforms and distributes risks to those willing and prepared to hold them. It facilitates payments between people and companies. The financial sector is an instrument to promote the smooth functioning and sustainable development of the whole economy. Conversely, experience has clearly shown that a badly-managed or inadequate financial system is detrimental to the stability and development of society. It may provide inefficient and expensive services and it may run hidden or explicit losses, which in the end may have to be covered by private and public money. It may also distort competition. The conclusion is obvious: Arguments for social and economic development speak in favour of conducting reforms with the aim of creating a well-functioning financial system.

Our economies and our societies have suffered heavily – indeed, on all available forecasts, this year will see the biggest declines in GDP recorded in peacetime – and we will have to endure a period of painful reconstruction for which sound knowledge and also good judgment will be essential. 1/1  BIS central bankers' speeches
With mobile payments, the cost of travel to a financial service provider is reduced to pressing a button, the risks associated with carrying cash are managed by simply securing a pin number. Since the mobile telephone industry has seen tremendous growth in its coverage, mobile payments seems to be the inevitable retail payment method that reaches out to large segments of the population a way that the conventional ones do not. Chairperson, notwithstanding these advantages, mobile payment platforms are not without challenges. At the centre of these challenges is the need to protect the consumer or user of mobile payment platforms. Undoubtedly, the number of people with access to mobile payment services in Zambia has significantly increased since the early days of Celpay. However, for us at the Bank of Zambia, as regulators we have taken note of how growth has been accompanied by a change in the character of mobile payments. The line between a mobile payment product and a conventional banking product has now become a fine line. For this reason developing appropriate regulations that protect the consumer against fraud and such risks anti-competitive practices, is a critical and necessary response to the innovations brought about by the mobile telephone technology. But it is important to understand that by its nature technological innovation can achieve an overnight quantum leap by the sheer ingenuity of one person. Where this happens, there is a danger that the development of appropriate regulation can lag behind technological advancement.

Exchanges with colleagues from market operations, payment systems and economic analysis will help the supervisors to develop a different viewpoint on current market developments, the importance of a specific institution for payments and the economic environment. One area in which cooperation will be particularly intensive is macro-prudential supervision. Our aim here is to bring together insights from both the macro-prudential and the micro-prudential areas, and to address undesirable developments in a targeted way. Conclusion Ladies and gentlemen, the European supervisory landscape is facing a major change. With the SSM, we have created a strong, new supervisor at the European level. The SSM will be able, and have the responsibility, not to do everything differently, but to do some things better. With the conclusion of the comprehensive assessment, and the publication of the results in the second half of October, and the start of our supervisory activity on 4 November, we have a few stressful months ahead of us. But we must also remember to occasionally pause for a moment and to reflect beyond the immediate tasks at hand. The SSM may have been created as a consequence of, and as a solution to, certain problems in Europe. But it is  BIS central bankers’ speeches  3  destined to be able to achieve much more and – at least that is my hope – to have an effect over and beyond Europe. Thank you for your attention. I am now at your disposal for questions. 4  BIS central bankers’ speeches
It increases the import bill: widens the current account deficit: adversely impacts on the exchange rate stability; raises domestic fuel prices causing a serious supply side shock; and raises both headline and core inflation since domestic inflation becomes adverse with the demand pressure in the economy and supply side shocks. At a time when the entire world is strengthening its security capabilities to meet the threat against terrorism, Sri Lanka too would need to address the prevailing situation. At the same time, it is important that the business community continues with its investment plans in Sri Lanka because the very concerns regarding security provides a certain “discount” which could be of advantage in a highly competitive global business field. External and internal shocks and vulnerabilities may also thrust fresh challenges to financial system stability. Hence, it would be useful to consider a few such shocks and risks as well. The continuing high growth in private sector credit could also pose threats to price as well as financial system stability. First, it could deteriorate the quality of the assets of commercial banks and that situation could increase the risk of high non-performing loans in the future. Second, such expansion of credit could generate inflationary pressures in the economy through increased aggregate demand. With the rapid and intense integration of the Sri Lankan economy with global financial markets, money laundering, terrorist financing and pyramid schemes could threaten financial stability.

Some of the Primary Dealers who are dealing outside the Scripless Securities Settlement System could have caused potential threats to the system. This may have been particularly due to the fact that using SWIFT was considered to be an expensive method of transferring data. Therefore, the Central Bank has now introduced a low cost method of transferring data using the Wide Area Network connecting them with the Central Bank. Accordingly, all Primary Dealers are now urged to use this method to ensure retail transactions are not proceeded outside the system. Two new laws, namely the Prevention of Money Laundering Act No. 5 of 2006 and the Financial Transactions Reporting Act No. 6 of 2006 have been enacted last year to prevent money laundering and terrorist financing and to strengthen the reporting mechanism for financial transactions. Arising from such initiative, the Financial Intelligence Unit has already been established to investigate and take action to combat money laundering and terrorist financing. The work of the FIU will be further expanded during the year 2007. In line with the global trends, we will be taking steps to further promote corporate governance in the financial sector by implementing several measures. Mandatory corporate governance rules covering important areas of corporate governance principles will be introduced in place of the existing voluntary codes.
1.3 The necessary constraints on model risk that the package contains should not be gold plated in the European transposition 1/3  BIS central bankers' speeches  The Basel 3 Final Agreement constrains overly aggressive internal models thanks to the introduction of the output floor at the highest level of consolidation. The EU should beware of not adding unnecessary constraints that would increase the impact of the output floor in a superequivalent way. In addition, in Europe, Pillar 2 requirements also cover model risks – whereas it is not the case for US banks, which do not have a specific Pillar 2 add on in their capital requirements. We therefore have to find a way in Europe, in some form or another, to eliminate any overlapping capital charges. 1.4 The need for a stabilization of the regulatory framework after the implementation of Basel 3 finalization We are now coming to an end of this regulatory cycle with the implementation of the Basel 3 finalization. Back in November 2020, the GHoS clearly committed the BCBS to abstain from major regulatory changes in the Basel framework in the near future. We need that banks focus now on other challenges in particular those related to the sustainability of their business models and those related to the new risks such as climate related risks or cyber-risks. 2. The stress testing framework in Europe: past, present and future Now, let me turn to the topic of the stress test in this second part of my remarks.

Daily trading on the New York Stock Exchange (NYSE) went from two million shares a day in the early 1960s to twelve million by the end of the decade. Meanwhile, stock trades continued to be settled by the physical delivery of engraved stock certificates between brokerage firms. As trading volumes soared, the post-trading industry could not keep up with the paper blizzard. By 1968, the NYSE was forced to close every Wednesday for six months to catch up with the paperwork. It then reduced its official operating hours for a further six months to enable its 4 member brokerage firms to keep pace with the trading volumes. Technology subsequently caught up. A second example is “Black Monday” when, on 19 October 1987, stock markets crashed all over the world. That day, the Dow Jones Industrial Average dropped by over 22%. One factor that increased the severity of this market crash was the difficulty people faced in obtaining reliable information. The record trading volumes on Black Monday – three times the daily average – overwhelmed many systems. As the Brady Report put it: “On the NYSE, for example, trade executions were reported more than an hour late, which … caused confusion among traders. Investors did not know whether limit orders had been executed or whether 5 new limits needed to be set.” In the years since 1987, both trading and post-trade technology have come a long way. Today, trading algorithms buy and sell hundreds of thousands of times in a single second, leading to increased trading volumes.