samchain/econo-pairs-v1 huggingface dataset:
Over the past year, developments in financial markets have been largely dominated by several political events, while generally positive economic news seemed to matter much less. These political events ranged from trade tensions, especially between the US and China, to Brexit-related developments, a slowdown in emerging market economies, most notably in Argentina and Turkey, and also the rise of populist movements in some European countries that have led to tensions, particularly between Italy and the European Commission. All this led to volatility in financial markets, with a constant turn in Risk-On /Risk-Off sentiment, which has made it more challenging for investment strategies. As a Central Bank, financial market developments are of a direct interest to us as these have an impact on both the domestic banking system and the Central Bank itself. While such volatility in financial markets and persistence of interest rates at a relatively low level in Europe have continued to exert pressure on interest income flows and potential on capital gains, and hence impinge on profitability, nevertheless domestic banks have absorbed such turbulence relatively well. For the  Page | 3  year ahead, the situation is likely to remain equally challenging on interest income and profitability, as signs are emerging that world economic growth, including in Europe, is losing momentum. This could be also particularly challenging for the process of the normalization of the monetary policy stance in Europe, which is likely to be very gradual.

2  BIS central bankers’ speeches  When leaning against the wind of the credit cycle, macro-prudential authorities do, like their monetary policy colleagues, still need to find the optimal path. To use the words of the UK Chancellor, their objective is not to ensure “the stability of the graveyard”. How they balance cost and risk, where they set the trade-offs, will depend in large part on how confident they are about the underlying resilience of the system – in other words how well they have done on the first impulse. International governance The second big change I want, therefore, to highlight is the development since the crisis of much stronger international governance. This stems from the creation, at the April 2009 G20 London summit, of the Financial Stability Board (FSB). And, equally important, from the decision at the Summit that the FSB should report directly to the G20 Leaders and Finance Ministers to give it the necessary “clout”. Working with the standard setting organisations like the Basel Committee, the FSB has provided the drive and coordination to reform and develop global standards for bank capital, liquidity, and resolution. If one remembers the best part of a decade that it took to develop and reach agreement on the Basel 2 capital standard, the progress made and international agreement reached over the past 5 years has been extraordinary.
In September of this year, a Regional Conference on Climate Change was organised to raise awareness and call for action in managing climate change risks and opportunities, attracting more than 500 board of directors and senior management of financial institutions, 3/5  BIS central bankers' speeches  regional central banks and supervisory authorities. A technical workshop had also been hosted earlier by the Bank with strategic partners to evaluate and manage environmental and social risks in the energy and primary commodity sectors for VBI CoP members and risk managers of financial institutions. Another focus area of the Bank is in developing greater standardisation of understanding and definition of green finance for the domestic financial industry. The development of a principlesbased taxonomy aims to achieve this, which would support informed decisions and analysis of exposures to climate change in fund raising, lending and investment activities. Ultimately, this can potentially increase financing to green projects. The first draft of the taxonomy is targetted before the end of this month and we would welcome feedback from the industry on this. The Joint Committee on Climate Change is also there to build industry capacity, by sharing knowledge, expertise and best practices in assessing and managing climate-related risk. The four sub-committees formed under the Joint Committee are in the midst of developing their action plans, including strategies and initiatives to upskill financial institutions in managing climate-related risks and transition to a low carbon economy.

Successful further cooperation along these lines is in the interests of us all. BIS Review 77/2010  1
The 1.00 percentage point cut in 2009 relaxed the financial burden of the banking system’s intermediation activity. The Bank of Albania has consistently supported the banking system with the required liquidity. In addition to cutting the key interest rate, the Bank of Albania has helped Albania’s banking system activity through:   the change of the refinancing auction form from fixed-amount auction to unlimited-amount auction;    up to 3-month extension of the maturity term of injected liquidity;    expansion of the range of collateral in our refinancing operations;  BIS Review 78/2010  5    increase of the use of required reserve; and the reduction of the overnight loan interest rate. We have employed almost all of our range of instruments for implementing monetary policy. The amount of liquidity injected by the Bank of Albania peaked in summer with ALL 40 billion. As a result of the deposits entering the banking system, this amount reduced gradually to about ALL 28 billion at the end of 2009. 2. Banking supervision and financial stability  The banking system performance was significantly conditioned by the economic slowdown and wavering of confidence, aspects that were elaborated at length in my speech. Consequently, there was higher uncertainty, higher bank sensitivity to liquidity, a more cautious lending behaviour, and an increase in non-performing loans. These are the main highlights of the banking system performance during 2009. Despite the downward profitability, capitalization indicators remain at satisfactory levels.

Mervyn King: Rebalancing the United Kingdom’s economy Speech by Mr Mervyn King, Deputy Governor of the Bank of England, to the British Chambers of Commerce National Conference, London, 23 April 2002. *  *  *  For a decade now, the British economy has grown at an average rate of close to 3% a year, just above its long-run trend rate. The spare capacity created by the recession of the early 1990s has gradually been used up. Unemployment has more than halved from over 10% in early 1993 to around 5% now, on the internationally standardised measure. And growth has been more stable than for decades. But overall this stability has concealed the contrasting fortunes of different sectors in the economy. Since 1997 household spending on consumption has risen, on average, by 4% a year in volume terms. It is most unlikely that consumer spending can continue to rise at this rate. The trade deficit has widened sharply in recent years, reaching some 3% of GDP at the end of last year. And the increase in the trade deficit would have been even larger had it not been for an improvement in the terms of trade, the ratio of export to import prices, which rose by 8% over the past five years. The result of the widening trade deficit, and the improvement in the terms of trade, is that domestic demand has been able to grow faster than output.
We understand that some banks may have concerns about reporting ongoing investigations, for fear of litigation risks. But we don’t want to create a potential loophole such that “bad apples” could just get around the Scheme by leaving one firm to join another firm once an investigation commences. To strike a balance, the industry guidelines set out factors that banks should take into account when exercising judgement on whether or not to share information about ongoing internal investigations. To ensure transparent and fair treatment to the job applicants, they will be provided with an opportunity to be heard in case of any negative information. 14. I would like to emphasise that the MRC Scheme is a very important milestone of our efforts to enhance bank culture. And this is one of the earlier efforts among major international banking centres to tackle the “rolling bad apples” problem. We certainly look forward to collaborating with the industry to ensure smooth implementation of the Scheme. Phase 1 of the Scheme covering senior positions will formally start in May 2023. But I would strongly encourage banks to start sharing and reporting any misconduct information as soon as they are ready to do so. Talent pool for the financial sector  15. So that’s the part on conduct and risk culture, or what I normally referred to as the efforts on the “mindset” of bank employees.

We value highly human and civil rights ranging from gender equality, data protection, to the condemnation of torture, including the rejection of capital punishment. The protection of these values and rights relies on the vigilance of the legal professionals here in this room and elsewhere. This is even more important vis-à-vis a reality of extreme and obsessive forms of nationalism. The EU has also increased personal choices. The ability to travel, work and live across borders has been enhanced. The European Health Insurance Card permits European citizens to obtain healthcare wherever they are. 1.5 million people, perhaps including some of you here today,  BIS central bankers’ speeches  1  have completed part of their studies in another member state as part of the Erasmus programme. More than 15 million EU citizens have moved to other EU countries to work or to enjoy their retirement. This wider range of options increases people’s wellbeing. These reasons, and the other positive aspects of membership, have been drowned out in debate by concerns over migration and the large wave of refugees from troubles in the Middle East and elsewhere, the impact of the crisis, disaffection with high levels of unemployment – especially youth unemployment, and a perceived lack of accountability and legitimacy of the EU institutions. I fully recognise that Europe in its current state is not perfect. The crisis has shown that Economic and Monetary Union is incomplete, and further work is required, particularly in the areas of banking and credit markets.
Rating system design  The first area concerns the design of a risk rating system, which is, of course, central to ensuring the effectiveness of the IRB approach. The Basel Committee believes that banks’ internal rating systems should accurately and consistently differentiate between degrees of risk. The minimum IRB standards in this area build on the strongest risk management practices observed in the industry. To illustrate the point, many organizations either already have, or are in the process of developing a ratings system that captures both the risk of borrower default, as well as transaction-specific factors that shed light on the amount of loss that would arise if default occurs. In other words, these banks’ systems are now oriented to capturing the several essential components in estimating credit risk under the IRB approach. Credit risk rating systems are clearly improving in various dimensions, including how finely they seek to distinguish differing degrees of borrower risk. To do so, banks typically look to expand the number of ratings categories into which they slot their exposures. However, just establishing more rating categories is not enough. The challenge is for banks to define clearly and objectively the criteria for these ratings categories in order to provide more meaningful assessments of both individual credit exposures and, ultimately, their overall risk profile. The clarity and transparency of the ratings criteria will be critical to ensuring that ratings are assigned in a disciplined and reliable manner. b.

Our analysis includes banks’ assessments of their economic capital requirements for operational risk, and how this capital is allocated to business lines to reinforce efforts to improve internal controls. With respect to those specific business lines, we are increasingly looking to drill down to test key controls. The aim is to ensure that the internal processes in place are in fact working and are effective in mitigating relevant risks. Without question, it will be important to devote the necessary supervisory resources - in terms of skilled personnel, technical training, and a targeted strategy - to these new supervisory efforts. In this regard, the Basel Committee anticipates providing much assistance, both formally and informally, to supervisory agencies around the world that are preparing for the added responsibilities we will all assume as the New Accord comes into force. Moreover, I am pleased to note that the Financial Stability Institute (or FSI) will continue its collaboration with the Basel Committee, especially in assisting supervisors globally in understanding and implementing all aspects of the revised Accord. The FSI anticipates that more than half of its 50 seminars and programs this year will concentrate on components of Basel II. In fact, shortly after the release of the final consultative package later this spring, the FSI intends to offer three special seminars around the world to introduce other supervisors to the most important features of the new framework.
Price stability is not sufficient for financial stability  The two decades leading up to the financial crisis had been characterized, across the developed world, by low and stable inflation, and, by historical standards, by exceptionally stable output growth. It is not by chance, indeed, that macroeconomists labeled those years as the “Great Moderation” era. At the same time, however, as extensively documented in particular by the BIS in several perceptive, early papers, 1 those years had been also characterized, compared with the previous portion of the post-WWII era, by a significantly more frequent occurrence of asset price bubbles and subsequent crashes. A longer-term perspective clearly shows that the occurrence of asset prices booms and busts under conditions of price stability, far from being a “fluke” of the Great Moderation era, had been, in fact, quite common. Until the outbreak of World War I, indeed, metallic standards had dominated for centuries, guaranteeing an extent of price stability which is, by today’s standards, virtually unimaginable. Just to mention a single example, the price level in England in 1661, five years before the Great Fire of London, had been virtually the same as that prevailing in 1913, one year before the collapse of the international Gold Standard. In spite of such remarkable price stability, however, metallic standards had been recurrently plagued by financial crises and asset prices booms and busts, from the South Sea bubble of  1  See in particular Claudio Borio and William White (2003), “Wither Monetary and Financial Stability?

3 A more recent example of this phenomenon is provided by Japan, where the persistent deflation which has gripped the country since the early 1990s has consistently led, ceteris paribus, to a heavier debt burden for households that had contracted mortgages in the boom phase of the late 1980s and deterioration of banks’ balance sheets. In a symmetric fashion, high inflation – which, historically has also consistently meant volatile inflation – threatens the very foundations of the financial system because of the resulting capricious and unpredictable redistribution of wealth between debtor and creditor institutions. The most glaring example of such a phenomenon is provided by episodes of very high, or hyper-inflation, such as those plaguing a significant fraction of belligerent nations in the aftermath of World War I. Evidence from the Great Inflation episode of the 1970s is, although less dramatic, equally telling. Altogether, historical evidence therefore leads us to conclude that, although not sufficient, price stability is indeed a necessary precondition for financial stability. I now turn to a final point concerning the relationship between financial and price stability, namely the need to preserve the stability of the financial system in order to prevent the emergence of “tail risks” to price stability. I will start by discussing risks on the downside – that is, the possibility that the economy falls into a deflationary spiral – and I will then turn to those on the upside.
In modern times, most societies would demand proper protection of consumers when they purchase a wide variety of goods and services, such as food, electrical appliances, drugs, health care and financial services. Consumers, as compared to suppliers and their intermediaries, are normally in a disadvantaged position in terms of product knowledge and bargaining power. Therefore, they need to be protected from unscrupulous sales practices or misrepresentations. Regardless of what kinds of goods or services are involved, the basic principle in consumer protection is that consumers should be treated fairly. In essence, what it means is that consumers should be able to know what they are buying, the costs involved and all other relevant terms and features of the transactions and should not be subject to high handed sales tactics. In Hong Kong, when a customer walks into a typical retail bank, he or she can undertake a wide variety of financial transactions, ranging from conventional banking services, such as deposits, currency conversion, credit cards, remittances and loans, to the purchase of wealth management or insurance products. This is what we call “universal banking”, a regime in which banks operate like financial supermarkets. Naturally, banks like the universal banking regime as it offers non-interest income such as fees and commission as well as diversification of businesses. At the same time, customers also like universal banking as it offers great convenience in the form of a one-stop service instead of having to go through different firms for different types of financial transactions or products.

The bank should also ensure that the key terms and conditions are clearly spelt out and understood by the customer. For example, when a customer wants to take out a loan, the bank should highlight the key features about interest rates and any applicable fees, charges or penalty for late or early repayments. When it comes to the selling of investment products, the situation becomes more complicated. The complication arises not only from the risk inherent in the investment products, some of which can be rather complex, but also from the special relationship between banks and their customers. Banks serve a special function in modern times. They are different from other financial firms in that they are the institutions with which most of our citizens entrust their life savings. There is a special trust between banks and their customers. However, over the years and for a number of reasons including strong competition, narrowing interest margins and pressure for revenue growth, banks have sought to increase the share of fee- or commission-based income by expanding their businesses to the sale of financial products to customers. As a result, bank depositors have become the main sales targets for different kinds of investment or wealth management products. Very often the special customer trust that banks enjoy has made it easier for bank staff, as compared to their counterparts in other financial firms, such as securities firms, brokers, investment advisers and insurance agents, to market and sell investment products to their customers.
…and here at home Sweden has also been affected by the turbulence in the financial markets, albeit to a much lesser extent than, for instance, the United Kingdom, Germany and the United States. The fact that Sweden has been affected despite not being, as it were, involved in the problems that started the unrest is not so remarkable. We are a part of the global financial system and not an isolated northern outpost. The Riksbank governs the short-term rate that applies for one day, the so-called overnight rate, and this has remained stable around the repo rate. In brief, the Riksbank’s method of steering interest rates has worked well. But the interbank rates with slightly longer durations have risen, although not as much as in some parts of the world. This is primarily a question of different effects from the uncertainty in the financial markets, such as rising risk premiums. On the whole, the Swedish financial system and the interbank market have nevertheless functioned well. 6  BIS Review 106/2007  What is the role of the Riksbank? What does the Riksbank do when there is unrest in the money market? One of the most important tasks is to continue to ensure that the economy develops in a stable manner. We have to conduct our monetary policy so that we attain the inflation target of 2 per cent. Where possible, when the price stability objective allows scope for this, we should also ensure that production and employment develop in a balanced manner.

In comparison with other countries, this is particularly the case for banks and other service sectors, reducing their production costs. The business sector has been quick to adapt and change, and to make use of new technology that is available in an international market. This is probably due to the 1980s and 1990s’ modernisation of the way the economy functions, which resulted in more efficient markets. In addition, growth in labour productivity reflected a marked fall in sickness absence in 2004. The latest figures nonetheless indicate that productivity growth is falling back. Although we do not have satisfactory current statistics for central government and local government productivity, government agencies have probably also become more efficient. New technology and new organisational structures have certainly provided opportunities to increase efficiency. Wage-earners and enterprises have both fared well. Low import prices have resulted in a slow rise in consumer prices and a solid increase in wage-earners’ real wages. High export prices have contributed to holding down the rise in real wages. Combined with high productivity growth, this has resulted in high corporate earnings and solid growth in employment. It remains to be seen whether the combination of low unemployment and a low wage share is sustainable. This partly depends on whether positive supply-side conditions persist. There is probably symmetry here. First, should Norway’s terms of trade deteriorate, productivity growth slacken and foreign workers return to their home country, the wage share will increase, profits fall and  4  BIS Review 139/2007  unemployment will rise.