samchain/econo-pairs-v1 huggingface dataset:
In particular, the Legislative Council passed a motion by a wide margin urging the Government “expeditiously to implement a DIS, which is cost effective and easy for depositors to understand, for effectively protecting small depositors, and to formulate appropriate complementary measures aimed at reducing the risk of moral hazard.” The HKMA has studied the responses received during the consultation and has submitted a report to the Government on the outcome. We are seeking a decision in principle on whether we should proceed with the deregulation, subject to further work on the technical arrangements during the rest of this year. I cannot anticipate what the decision of the Government will be nor can I provide details of what the final shape of any scheme would be. I will however comment on two key issues. The first is that even the supporters of deposit insurance, including Legco, are keenly aware of the need to minimise moral hazard. Moral hazard refers to the incentive for increased risk-taking that may be created by deposit insurance. The problem is that both banks and their depositors may exercise less self-responsibility if they know that deposits are protected. This is a risk in any form of insurance, but it has received particular attention in relation to deposit insurance because of its alleged role in the Savings and Loan crisis in the United States in the 1980s. BIS Review 29/2001  3  Moral hazard is a real issue, but it is one that can be addressed.

Moreover, latest developments in banking and financial markets might foster additional risk factors related to asymmetric exposure, issues of home host supervision and financial safety net with foreign banks dominance. These challenges and the expected financial developments in the region will outline the scope and the structure of reforms in the future. So, please allow me to briefly present my view on the future trends of regional financial markets. Financial markets in the region are becoming part of broader global developments which fuels financial integration, liberalization, and financial innovation. The lucrative regional market and the consolidation process have imposed a vertical financial integration in the region. Less than ten European banks with headquarters in Vienna, Athens or Milan dominate the regional banking markets. The process of financial integration will continue, making the region more and more integrated to the European Countries. Financial systems are leading the road to financial integration and the positive spillovers of such process will spread over. Financial markets are and will continue to be bank dominated. Non banking financial sector will grow very rapidly, but banks will continue to be the major players. They will help to further build the needed  BIS Review 121/2006  1  financial infrastructure for nonbanking financial activities, and support growth in our economies. Not long ago I asked a friend of mine who had recently returned from migration after 15 years: “Why did you come back”?
Even marginal improvements to productivity among the long tail of low-productivity companies – or, equivalently, a speeding up of rates of technological diffusion to these companies – could make significant inroads into the productivity puzzle. I will discuss possible policies to do so at the end. Explaining the Productivity Puzzle  Before diving into the data, it is helpful to set out some of the candidate explanations that have been used to explain the productivity puzzle, in the UK and internationally. These hypotheses include:  (a) Mismeasurement  There is a fairly widespread perception that the productivity puzzle may, at least in part, be no more than a statistical mirage. It certainly seems likely that official statistics underestimate economic activity to some, 8  perhaps significant, degree and with it potential productivity gains. For example, a recent review concluded that productivity growth in the UK might be under-estimated by around 0.5 percentage points per year, as a result of the failure fully to capture elements of the digital economy. 9  That said, most studies have also found that mismeasurement alone is unlikely to account for the majority of the productivity puzzle, whether in the UK or internationally. 10  Many of the mismeasurement problems  already existed long before productivity started slowing. These problems would need to have increased dramatically – and probably unrealistically – to explain fully the productivity slowdown. Consistent with that, the slowdown in productivity appears to be largely unrelated to the penetration of information technologies across sectors and countries.

Notes: Scenario 1 assumes that half of firms with interest cover ratios of less than 1 exit the market. In scenario 2, only the lowproductivity half of firms with interest cover ratios of less than 1 exit the market. Chart 25: The estimated relationship between leverage and labour productivity  Source: Bahaj, Foulis, Gal and Pinter (2016). Notes: The figure plots the results from local regressions. The red line shows the results from local weighted scatter smoothing (LOWESS), the blue line shows the results from a third degree kernel weighted local polynomial smoothing where the gray area depicts the associated 95% bootstrapped confidence bands. Labour productivity is defined as the log of gross value-added per number of employees. During the local regression estimations, we trim the data by deleting the top and bottom 1% of estimated productivity and leverage values in order to mitigate problems of outliers. 35  All speeches are available online at www.bankofengland.co.uk/speeches  35  Chart 26: Distribution of average pay across companies  Source: ONS Research Database and Bank calculations. Notes: Series show wage deciles/percentiles. Chart 27: Distribution of firm level labour productivity, wages and profits in 2014  Sources: ONS Research Database and Bank calculations.
Commodity prices remain high by historic standards, consistently with the strength of emerging economies, some specific supply-side elements and the depreciation of the dollar. Worth noting are the recent sharp increases in the international prices of some foodstuffs and the copper price peaking at $ per pound (figure 4). The baseline scenario in the IPoM we are presenting today assumes that some of these factors will persist over the projection scenario. In the case of copper, even if it will not be as high as today, it will exceed September’s projections, at $ and $ per pound in 2011 and 2012, respectively. The price outlook for WTI oil is also revised up from September, to $ per barrel in the two years. The baseline scenario for the international economy is good, albeit with important associated risks. We expect an average growth rate of 4.2% for the world economy over the next two years, fairly high by historic standards, but around 0.3 percentage points below the market consensus forecast. This differential is based on the effects of the financial turbulences in Europe, tighter fiscal adjustment plans in the region and the absence of a vigorous recovery of demand in developed economies. In addition, because of the inflationary pressures present in some emerging economies, it is obvious they cannot continue to grow at the same pace they did this year (table 1).

Banks, meanwhile, show low and stable exchange rate mismatches, and have managed to extend the tenor of their external debt. At the same time, our reported stress tests show that the banks’ level of capital allows them to absorb a risk episode like the one just described. On the other hand, the main financial prices have generally proceeded in line with short-term fundamentals. For the stock exchange, the IEF reports results showing some degree of optimism in stock prices with respect to fundamentals. It is necessary to point out that, in the case of Chile, the risks of financial instability from potential price corrections in the stock exchange are low, because the level of debt associated to higher stock prices is small. However, it is important not to become too indulgent because of the resilience of the financial system. Credit users and financial intermediaries must internalize the risks I have just mentioned in their consumption, investment and financing decisions. On its part, the Central Bank permanently monitors these variables and, through instances such as the Capital Market Committee and the Board of Superintendents, coordinates with other institutions to watch over the health of the national financial system within the framework of its legal authorities. In this context, the Central Bank will not hesitate to perform – or request the relevant institutions – regulatory amendments whenever it detects risks threatening the financial system. To finish, let me share with you some thoughts.
Of the many recommendations in this report, three are of particular importance to us at the Bank:  -  First, the consolidation of FPS, Bacs and the Cheque and Clearing Company into a new integrated retail payments scheme should ensure a strong systemic risk manager, governance body and procurer of a new generation of retail payments infrastructure for the UK as a whole. A Delivery Group, set up under the auspices of the UK authorities and with strong cross-industry membership, has already begun this important work. -  Second, moving the UK onto a common messaging standard for interbank payments – ISO 20022 – will make it much easier for the different systems to speak to one another and, where necessary, exchange payments or allow them to flow through seamlessly – so-called ‘interoperability’. -  Third, the proposal to develop a new Simplified Payments Platform for retail payments, if successfully translated into a workable design, offers the prospect of providing an integrated, agile infrastructure from which a wide variety of Payments Service Providers can launch innovative and secure products. But it is not only the retail payments architecture that is changing. At the start of this year, the Bank of England launched a strategic review of its own settlement platform, RTGS. RTGS provides the payments infrastructure that underpins CHAPS and CREST, and ensures that the major retail schemes can also settle in central bank money – processing some half a trillion pounds every day.

This Conference on Islamic Banking could not have come at a more opportune time than now, when the financial sector in the country is called upon to widen financial inclusiveness. Banks and Non-Bank Financial Institutions are being encouraged to increase availability of, and access to financial services to the population through the design of new and affordable products. It is through conferences and fora of this nature, among other events, that Bank of Zambia endeavours to disseminate information and share experiences with stakeholders about the importance of developing the financial sector. Ladies and Gentlemen, The last few decades have witnessed a rapid growth in Islamic banking both in terms of size and the number of players. Islamic banking is currently practiced in more than 50 countries worldwide. In some countries only Islamic banking is allowed while in others Islamic banking coexists with conventional banking. Islamic banking is not limited to Islamic countries. In August 2004, for instance, the Islamic Bank of Britain became the first bank licensed by a non-Muslim country to engage in Islamic banking. According to recent industry estimates, Islamic banking is set to grow at an annual rate of 15%. The increased trade between the sub-Saharan region and Islamic nations in the Middle East only reinforces our view that partnerships among the corporate players between the two regions will foster more development.
Box 8 of the Review discusses recent market initiatives for improving the functioning of the credit derivatives market. As shown by the chart on the right, the structure of market participants on the two sides of the credit derivatives market has changed over the past three years. Among the buyers of credit protection, the share of banks has declined in favour of hedge funds and other investors, such as private equity firms. Among the sellers of protection, insurance companies have increased their share at the expense of banks. It is worth noting, however, that hedge funds have been active also on the issuing side of the credit derivatives markets which is a business typically characterised by lucrative fees. 5.2. Euro area banking sector  With regard to the financial situation of large euro area banks, the financial results, overall, paint a picture of a very profitable banking sector with rather comfortable solvency ratios. In most euro area countries, bank profits were driven by continuing cost control and volume growth in mortgage lending that more than compensated for the narrowing of interest rate margins. Moreover, banks have also benefited from a recovery in lending to the non-financial corporate sector, as well as from the buoyant growth in fees and commissions. It should also be kept in mind, however, that the introduction of new international accounting standards might have had an impact on banks’ profitability.

The price-earnings ratio of the euro area stock market (shown on the left of slide 8) indicates that despite the rather elevated level, this valuation measure remains well below its peaks reached in 2000. However, should corporate earnings growth unexpectedly slow down, the consequent rise in price-earnings ratios could make stocks look relatively expensive to other assets. The chart on the right plots the implied volatility of euro area stock prices and corporate bond spreads which both gradually declined throughout the first five months of the current year, despite rising longterm bond yields. The rather sharp jump in these indicators during the last two weeks, suggests that there was room for adjustment to a higher pricing of risk in the context of changing views regarding the future macro-financial environment. Before discussing the developments in euro area financial institutions, let me first highlight an important dimension of the market-based intermediation process: the rapid development of structured finance products. Although the risk-transfer that this market has facilitated has very likely led to efficiency gains and a better management of risks within the financial systems, there are several concerns which mostly arise from the fact that relatively little is known about how this market has effectively spread risk and how it would function in a situation of extreme stress. Since June 2002, the size of the global credit default swaps market has increased nearly exponentially (see chart on the right on slide 9).
Let me elaborate on where these challenges may come from. It is a well-known fact that the size of the banking sector in most post-communist acceding countries still remains far below the EU average. In the acceding countries, bank credit to the domestic private sector typically has a ratio of 30 to 40 percent of GDP, while the EU average is around 100 percent of GDP. This difference is to a large extent natural, reflecting the lower GDP levels of the acceding countries, their history, and the recent weaknesses in their legal and institutional environments. Nevertheless, it is quite likely that this legacy of the past will be overcome in the foreseeable future. The driving force might be the real convergence process. And perhaps more importantly, the acceding countries can capitalise on their reform achievements of recent years. Despite differences in their reform strategies and numerous transitional difficulties, most acceding countries have achieved great progress in building their financial systems. Their banking sectors are now mostly stabilised, privatised, and typically dominated by foreign ownership. Moreover, the acceding countries have also achieved considerable improvements in the functioning of their general legal and institutional frameworks. BIS Review 8/2004  1  Recent empirical studies by the IMF have shown that there might be scope for substantial convergence in bank credit in the acceding countries with EU levels. In some cases and in some periods, the real credit growth might reach as much as 30 percent a year, or even more.

Thus, besides the introduction of new financial instruments, it would be also necessary to activate the utilisation of the existing instruments. These improvements would be for the benefit of the economy in general, that is for the benefit of individuals, companies and banks themselves, but also of the central bank and government. Thus, individuals will have more opportunities to invest their savings, companies would have to make better use of new business activities, banks would have to gain higher benefits and the central bank with government would become more efficient in implementing their policies. Allow me now to concentrate myself a little bit on the honoured businessmen guests, who, in spite of the modest financial support offered in the beginning of transition period, have showed a really impressive performance. In my position as Governor of one of the most important institutions in the decision-making of economic policies, I would like to present you, using the opportunity of this event, some suggestions that I sincerely hope you will welcome and well-understand. First of all, I would require more professional performance in the relations between businesses and banks. Without exaggerating, I would say that we are still far away from the best practices and standards, and as a consequence all the economic, political, financial, social segments still leave to be desired. The relations to be established between you and banks should be reciprocal, open and legal cooperative relations.
This can arise from simply not knowing what we don’t know as the world rapidly changes around us; from changing paths of risk due to more complex multidimensional networks; or from developments (such as social media) that amplify the probability and impact of risk events. This in turn calls for new ways of managing and thinking about risk. For many organisations, this represents a fundamental shift in current approaches to risk management. Reflecting on our own work in the financial sector and within the Bank’s own organisation, risk management practices would appear to be at an inflection point. More traditional approaches to risk management have come under increasing pressure for their tendency to overcompensate for risk-taking, resulting in missed opportunities that are likely to cost businesses, and society at large, much more today than before. On the other hand, managing risks by instinct or intuition can produce massive payoffs. But I suspect none of us in this room would advocate abandoning the principles, disciplines and methods of risk management that help leaders make sound decisions, particularly when those decisions can have significant negative externalities. So, where to from here? Clearly, risk and insurance management must innovate and adapt ahead of growing, new and evolving business risks. Five years ago, Steve Culp, a Senior Managing Director at Accenture, told Forbes that innovation and risk management are partners, not adversaries – “When properly fused, the two disciplines can help organisations pursue opportunities that a risk-averse culture might leave on the cutting room floor”.

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I’ve considerable sympathy for this argument: the high and variable rates of inflation seen in recent years have affected the ability of both households and companies to plan their spending and investment decisions with any degree of certainty. But the remit of the MPC recognises that trying to keep inflation at target in the face of large shocks and disturbances “may cause undesirable volatility in output.”3 I fear that to some this might sound like I’m resorting to technical loop-holes to bolster my defence. But that is not the case. This element of the remit has been central to the operation of monetary policy in recent years. The foremost task of monetary policy over the past few years has been to ensure that the financial crisis did not lead to a prolonged depression. To have offset these price level shocks would have meant presiding over an even deeper recession. I’m not saying that if I had had perfect foresight, I wouldn’t have changed my policy stance at all. But the hurdle for wanting to have had materially tighter policy in the face of the most severe downturn in the post-war period is pretty high. But this argument is hypothetical. As many of you may know, the MPC did not have perfect foresight. Indeed, far from it! Which leads to the second charge against the MPC: why has inflation been so much higher than we expected? Why has inflation been so much higher than we expected?

Spencer Dale: MPC in the dock Speech by Mr Spencer Dale, Executive Director, Monetary Policy, and Chief Economist of the Bank of England, at the National Asset-Liability Management Global Conference, London, 24 March 2011. *  *  *  I would like to thank Alina Barnett, Rohan Churm and Michael Hume for their considerable help in preparing this speech. The views expressed are my own and do not necessarily reflect those of other members of the Monetary Policy Committee. The remit of the Monetary Policy Committee is clear: to hit the 2% inflation target. But inflation in February was 4.4% – well above the target. It has been above target for much of the past 5 years. And it is likely to remain so for the next year or so. At the same time, monetary policy remains at extraordinary loose levels. This month marks the second anniversary of Bank Rate being reduced to 0.5%; it’s lowest ever level. And the stock of asset purchases financed by central bank reserves – QE – remains at £ billion. There is an onus on the Committee to explain how its actions are consistent with its remit. There is a good case for the defence. But we need to continue to make it. It needs to be made if international investors, such as many of you here this morning, are going to continue to have the confidence to invest in the UK. More generally, it needs to be made to preserve the accountability and credibility of the Committee.