samchain/econo-pairs-v1 huggingface dataset:
As you might suspect, Principle 17 on last look likely consumed the most time and energy of any of the principles in the Code. In many areas within the last look principle there was broad consensus as to what constitutes good practice. What was clear from this process was that market participants seemed to define last look in different ways and apply it in different ways as well. Last look is described in the Code as a practice in which a market participant receives a trade request and has the opportunity to accept or reject that trade request against its quoted price. The Code notes that if utilized, last look should be used as a risk mechanism to verify validity and/or price. The principle focuses on the importance of transparency and fairness. Market participants should be clear about whether and, if so, how last look might apply to their client trade requests to allow clients to make an informed choice regarding their execution. In one particular area—that of trading during the last look “window”—there was a definite diversity of views. On the one hand, some market participants argued that such trading activity would always be detrimental to the client as it could move the market in a direction that is not to the client’s advantage. On the other hand, some market participants felt that such trading activity could increase their ability and willingness to conduct client trades presented by clients without necessarily placing the clients at a disadvantage.

These concepts are echoed in the various principles that follow, which highlight more specific recommendations based upon the roles market participants take on and the types of transactions in which they engage. Labels aside, the fundamental recommendations regarding roles recognize the importance of clear communication of roles, the importance of fairness and the strong expectation that discretion not be used in a manner designed to disadvantage a client. Clarity of terminology was again important during the development of Principle 11 on prehedging. The Code is very specific in how it describes pre-hedging. It is defined as “the management of the risk associated with one or more anticipated client orders, designed to benefit the client in connection with such orders and any resulting transactions.” The principle then lays out circumstances in which such pre-hedging may or may not be appropriate. 2/6  BIS central bankers' speeches  The principles on information sharing cover topics where there had seemed to be a lack of clarity within the market. The principles emphasize the importance of appropriately identifying and managing confidential information. They describe what may constitute confidential information and when such information should or should not be shared and with whom. They also provide guidance as to how market participants might communicate market color appropriately and, critically, without compromising confidential information. It is important to recognize that the FX market is not entirely about trading and execution—risk management, compliance, and confirmation and settlement are central to FX transactions, and they comprise the final two sections of the Code.
Lastly, I will re-call the importance of continuing with structural reforms as an indispensable instrument for growing the potential of the economy, enhancing its resilience against adverse shocks, and increasing the welfare of society. Thank you for your attention! 8/8  BIS - Central bankers' speeches

2  2  All speeches are available online at www.bankofengland.co.uk/speeches  2  To explore these issues, we start by discussing briefly recent empirical evidence on market power and its potential macro-economic explanations and implications. We then explore its effects on monetary policy, using counter-factual policy simulations and adaptations of a simple New Keynesian model. Taken together, this evidence suggests that an increase in market power and mark-ups could have potentially important consequences for the economy and policy. These are summarised, in stylised terms, in Figure 1. To the extent a secular rise in mark-ups reflects a set of trade-off inducing shocks, that would shift outwards the output/inflation variability (policy possibility) frontier (from A to B). It may steepen the Phillips curve, causing the policy possibility frontier to rotate clockwise (B to C). And it may also potentially alter the optimal weights placed on output and inflation stabilisation by the policymaker, shifting the point of tangency between the policy possibility frontier and policymakers’ loss function (C to D). Taken together, the net effect of increased market power could be a potentially significant rise in inflation (but less so output) variability, relative to the counterfactual case of stable and static mark-ups (A to D). As for monetary policy, the fact that these are trade-off inducing shock places limits on its stabilisation capacity. The (level and variability) of the optimal interest rate path is, as a result, less affected by increased market power, despite significant shifts in policy possibility frontiers and policymaker preferences.
The fact that the U.S. economy has continued to grow at around a 2 percent pace in 2013 despite this quite intense fiscal restraint provides evidence to the second key point, which is that the private sector of the economy has largely completed its healing process and is now poised to ramp up its level of activity. Key measures of household leverage have declined and are now near the lowest levels they have been in well over a decade. Household net worth, expressed as a percent of disposable income, has increased back to its average of the previous decade, reflecting rising equity and home prices and declining debt. Recently, banks have eased credit standards somewhat after a prolonged period of tightness. As a result, we are now experiencing a fairly typical cyclical recovery of consumer spending on durable goods. For example, sales of light-weight motor vehicles have increased steadily over the past four years, reaching an annual rate of 15.7 million in the third quarter of 2013, though sales in September and October have been somewhat below that average. Similarly, after five years in which housing production was well below what is consistent with underlying demographic trends and the replacement demand for houses, it now appears that we have worked off the excess supply of housing built up during the boom years of the last decade.

However, the notion that the economy will grow more swiftly remains a forecast rather than a reality at this point. As is always the case, there is substantial uncertainty surrounding this forecast. Moreover, there is always the possibility of some unforeseen shock. Thus, we will continue to monitor U.S. and global economic conditions very carefully and will adjust our views on the likely path for growth, inflation and the unemployment rate accordingly. Regional economic conditions Let me turn now to the regional economy. A year has passed since Superstorm Sandy devastated the tri-state region. And even today, many of the hardest-hit places are still struggling to recover and rebuild from the storm. In fact, reminders of the storm’s damage remain visible in neighborhoods across Brooklyn, Queens and Staten Island, as well as along the coasts of Long Island and New Jersey. On a more encouraging note, however, the broader regional economy has proven to be remarkably resilient. After a brief dip following the storm, the regional economy quickly rebounded and has continued to add jobs at a reasonably good pace. Moreover, the region’s housing markets have continued to show steady improvement throughout the year. To help monitor the performance of the regional economy more generally, the New York Fed produces economic activity indexes for New York State, New York City and New Jersey. Based on these measures, New York City’s economy has continued to grow strongly throughout the year, and both New York State and New Jersey have seen some pickup in growth in recent months.
Should a crash occur, however, risk-taking incentives go into reverse gear. Their closeness to a disaster event causes drivers to move more slowly than might be justified by the underlying risk. The experience heuristic leads to an over-weighting of recent, severe, personal events. Risk appetite then switches from too high to too low relative to the true risk. The result is traffic congestion. Financial crashes and car crashes have common psychological roots. One of the causes of the crisis was an under-pricing of risk. That was rooted in disaster myopia – an under-estimation of risk during the so-called Great Moderation. Memories of financial disaster had faded, with the Great Depression in almost no-one’s experience sample. The upshot was an over-healthy appetite for risk-taking. The subsequent crash has turned these behaviours on their head. Memories of financial disaster are now fresh, as after the Great Depression, causing an over-estimation of the probability of a repeat disaster. In these situations, psychological scarring is likely to result in risk appetite and risk-taking being lower than reality might suggest. Risk will be over-priced. Today, the very disaster myopia that caused the crisis may be retarding the recovery. Disaster myopia may be more potent in the markets than on the motorways. Asset prices are guesses about the future. Faced with uncertainty about the future, market participants form these guesses using their own heuristics. One such heuristic is the “popular narrative” – a simple story that aims to make sense of reality.

But past evidence suggests that any recovery in risk appetite might take time – more time than fundamentals would imply. All of these behavioural elements have come together in today’s financial markets – disaster myopia, intrinsic uncertainty and deep trauma. This may help explain why risk-takers have their foot poised on both brake and accelerator, why risk capital is in stop-start mode. That implies a risk of heavy and persistent financial congestion in the period ahead. With hindsight, Roosevelt’s fear (of fear) in 1933 was well-founded, economically and psychologically. It may also be being repeated. The role of macro-prudential policy As long as aversion to risk-taking is causing financial congestion, growth (like traffic) will remain sluggish. The public policy question, then, is whether anything can be done to allay the fear factor, speed the repair of balance sheets and stimulate risk-taking. Experience during the Great Depression taught us a great deal about the role of fiscal and monetary policy in these situations. Indeed, in many respects the Great Depression was the birthplace of activist monetary and fiscal policy, today’s conventional arms of macro-economic policy. For different reasons, however, these arms are at present close to fully stretched. In countering the fear factor, that begs the question of what else might be done? With fortuitous timing, there is a new tool in the box, a third arm of macro-economic policy. This is so-called macro-prudential policy. As its name implies, this policy tool is intended to meet macro ends using prudential means.
In October 2011, the number of persons registered as unemployed in the groups regarded as vulnerable amounted to 220,000 (of a total of 372,000 persons registered as unemployed), which is almost double the amount in 2008 (an increase of 100,000). A large number of the persons registered as unemployed also have long periods without work behind them. One in four people has been without work for more than three years of the past ten years. As the matching for vulnerable groups appears to function poorly and there has been a rapid inflow in recent years to the labour force of people from groups that have difficulty getting jobs quickly, this is having a more long-term impact on unemployment and is thus also impacting various measures of equilibrium unemployment. It means that a change in the composition of the labour supply could lead to substantial changes in equilibrium unemployment and resource utilisation. When we try to assess resource utilisation, we therefore need to take into account the heterogeneity of the labour supply and expected changes in the composition of the labour supply. Concluding thoughts What I have discussed today points, as I see it, to a general truth; namely that many apparently simple and straightforward concepts are suddenly revealed, in a confrontation with reality, to be much more complicated. We have an official measure of unemployment, but even here there is reason to reflect on what this measure says about the amount of spare  10  BIS central bankers’ speeches  capacity in the labour market.

With the pandemic also affecting global supply chains for goods it’s proved that much harder1. There are still good reasons to think that this rapid inflation in tradable goods prices is likely to fade, and in some cases reverse, before a policy decision taken now could do much to offset it. In contrast, and although Many individual policy makers have discussed these points (I did so in a couple of speeches earlier this year - “Covid and the Composition of Spending” in January, and then “Mismatch” in July). As the MPC we’ve done so in successive Monetary Policy Reports this year (see, in particular, the ‘in focus’ section in the August Report). 1  3  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  3  it’s so far contributed much less, the tightening of the domestic labour market is likely to be a more persistent source of inflation. That’s why the MPC has paid close attention to it, and in particular how it’s behaving now that the furlough scheme has ended. As I say, I’ll have a little more to say about these things – whether rapid goods inflation is likely to prove transitory, what people have actually meant by that word, and what we’ve learned about the post-furlough labour market – in a bit. Sandwiched around those points, both at the end and now, are a couple of more general points about monetary policy. These too are familiar but they’re particularly relevant in the current environment and are therefore worth reiterating.
Should they raise interest rates, even if this would not be appropriate from the perspective of price stability and economic activity (cf. slide 22)? There are three reasons for not doing so. First, we have the rule postulated by Tinbergen in the 1950s (cf. slide 23), which states that for each economic policy target there needs to be a separate policy instrument. 22 This reduces potential conflicts of interest when using instruments and contributes to the efficient achievement of each individual target. The Tinbergen rule is also justified in our case. If central banks were to use the interest rate tool for the purposes of financial stability, they might have to accept departures from the objective of price stability. Such an approach, though, would call into question the credibility of the central bank’s avowed pursuit of price stability. In the long term this would have a negative impact on trust in the central bank and limit its ability to ensure the goal of price stability. Second, the crucial question is how effectively interest rate rises actually influence overheating in the credit market. I have already explained how the interest rate environment affects the behaviour of economic agents in the credit market. Higher interest rates, then, should have a dampening effect on credit growth. Yet various analyses indicate that it often takes a very sharp interest rate rise to significantly counteract excesses in the credit market.

Individual lenders fail to take into account that their behaviour has an impact on the ability of other market participants to bear debt. This applies, for example, when investors are increasingly exposed to the same risks and invest in the same markets. For instance, let us assume that a large number of companies or households simultaneously take out loans to purchase real estate. This situation creates systemic risk because a negative surprise on the real estate market can lead to many of these investors incurring losses at the same time, forcing them to sell off their assets so that they can continue meeting their loan 15  On ‘Black Monday’, 19 October 1987, the Dow Jones index plunged by more than 20%. As a result, equity markets around the world came under heavy pressure. Page 8/16  commitments. This can generate a self-reinforcing spiral of falling real estate prices, more borrowers who can no longer service their debts, and thus greater pressure to sell. Distorted expectations  Moreover, the behaviour of economic agents during a credit boom is not always entirely rational. This brings us to the third factor that can contribute to excesses on the credit market – distorted expectations (cf. slide 12). A glance at the history of financial crises shows: The longer an economic upturn persists, and the higher asset prices rise at the same time, the more over-optimistic economic agents are about future growth.
Collaborative Data Platforms Industry collaboration through technology and data sharing platforms will become an important driver of innovation in the future of Finance. MAS has been promoting such collaboration since the beginning of our FinTech journey in 2015. Let me highlight three recent initiatives. First, ChekFin, a decentralised credentials platform to support partnerships between financial institutions and FinTech firms. Financial institutions seeking collaboration with FinTech firms often have difficulty ascertaining their reliability and capacity. ChekFin will enable financial institutions to obtain verified credentials of FinTech firms, such as business references, awards they have obtained, and investor funding records. These credentials are immutably stored on a blockchain as a golden source of information. FinTech firms decide who they want to share their private credentials with. ChekFin is a partnership among the ASEAN Financial Innovation Network, BCG FinTech Control Tower, and Affinidi, with MAS as a founding partner. Ten global financial institutions have already signed up for ChekFin, and the platform will be launched next month. Second, Project Greenprint – a technology and data platform to support the green finance ecosystem.

Mervyn King: Monetary policy developments Speech by Mr Mervyn King, Governor of the Bank of England, to the CBI Dinner, Manchester, 20 January 2005. *  *  *  Now that the Christmas celebrations are over, and the decorations have been taken down, it is time for a much-loved New Year tradition - speculating on how much we all spent over the Christmas period. With over 200 coaches bringing shoppers from all round the country to the Trafford Centre over the weekend before Christmas, New Trafford seems to be as popular and entertaining as Old Trafford. Tonight, though, I want to look beyond the immediate prospect for consumer spending and ask whether the level of saving in this country is adequate to provide for our future needs. But, first, a few words on the immediate outlook. Tomorrow the ONS will publish its first estimate of retail sales in December. Among the more lurid headlines reporting sales over the holiday period was “Retail Festive Slump”, followed shortly by reports of “Record Levels of Sales”. To interpret the experience of a few retailers - whether positive or negative - as a national trend is highly misleading. Of course, exactly the same happens each year. Last year newspapers reported “Confirmation of a Disastrous Christmas” and “Shoppers Played Scrooge in December”. A week later the ONS said that the volume of retail sales in December rose at a rate more than double the increase expected by City economists, and the headlines became “Spending Spree Signals Rate Rise”.
The strategies pursued have involved using the least possible amount of public funds, concentrating on cleaning up bank balance sheets by demanding additional provisions, raising capital requirements, encouraging mergers, transforming savings banks and improving their governance, reducing capacity, increasing efficiency by bolstering the size of banks, making the worst managed banks disappear and minimising the time the State has a presence in banks in which it had to intervene. The results mean we can be encouraged by what we see Spain has been able to do during these difficult years of crisis. As regards cleaning up bank balance sheets, since late 2007 to the end of last year provisions have been increased by € billion. Once this year, thanks to the recent legislation, an additional write-down of € billion is completed, a figure of € billion will have been reached, namely 14% of GDP. As regards capitalisation, deposit institutions have during this period increased their capital both in absolute terms and in relation to their assets, thanks partly to the fact that the legislation passed in 2011 and 2012 has imposed on Spanish banks capital requirements greater than those required by the Basel III calendar. As regards capacity, although the plans are not complete, there have been reductions of 12% in the number of branch offices and 10% in the number of staff, with sharper falls at savings banks (of the order of 16% and 13%, respectively).

The FPC has recommended that banks should ensure that they take the necessary steps to put our system in a place where it can support the economy without compromising its stability. The Bank of England has taken steps to extend the Funding for Lending Scheme, and within that has acted to provide a clear incentive to stimulate lending by banks to small firms. But banks that are short of capital cannot increase lending. That is why in March the FPC made a series of recommendations to ensure that UK banks are well capitalised, and that banks meet that requirement in a way that does not hinder lending to the economy. You may be assured that we are determined that the newly formed PRA follows through on those recommendations. 2  BIS central bankers’ speeches