samchain/econo-pairs-v1 huggingface dataset:
Liquidity risk-related losses piled up over losses registered as a result of fair value accounting as risks in the real estate sector started to materialise on a scale unseen since the Great Depression. In the absence of asset liquidity and with many of the main actors in financial markets undergoing painful processes of loss-recognition, consolidation and deleveraging, some of the assumptions of the models regularly used for risk management did not hold anymore. For  2  BIS central bankers’ speeches  instance, this was the case of the assumptions of price continuity and sufficient arbitraging activity that underlie proper market functioning. Furthermore, a variety of assets had to be priced using models that were over-reliant on assumptions and inputs such as credit ratings that had come under strain, thereby increasing the scope for model risk. As a result, uncertainty about the “true” fair value of the assets being held by financial institutions increased significantly. As if the discovery of these “forgotten” risks – the liquidity risk as well as tail market and credit risks – would have not been sufficient evidence of the failures of investment decisionmaking practices at the global level, the default of Lehman opened our eyes even wider and the focus shifted to counterparty risk. This source of risk became increasingly important due to the implementation of hedging and trading strategies based on derivatives contracts, which were very concentrated on a few institutions.

Within domestic demand, consumption slowed slightly in 2006 and construction began to show signs of decelerating in Q4, a trend that ran into early 2007. However, investment in capital goods underwent a significant increase which is holding in the year to date. 2  BIS Review 67/2007  Behind these developments in the Spanish economy, along with the improved external environment, is the continuing influence of the favourable factors that have underpinned its dynamism throughout this cyclical upturn. First, there is the impulse stemming from the Spanish economy’s integration into the euro area. That has been acting as a powerful spur to demand, as a result of the effects on confidence and expectations and, naturally, of the expansionary financial conditions that have continued to prevail in 2006, despite the change in the stance of the single monetary policy dating back to the closing months of the previous year. Further, there are the factors that have provided for growth on the supply side, including most particularly the growing demographic boost to the Spanish economy over the past decade, which is contributing, among many other aspects, to generating a substantial expansion in the Spanish economy’s growth capacity. Finally, the importance of reform initiatives in recent decades cannot be ignored, as these have promoted market flexibility and dynamism among agents and institutions. And pivotal too have been the recent macroeconomic and financial policies, which have been a guarantee for stability.
Secondly, SMEs with good track records will not only enjoy a wider acceptance from banks, they will also be able to access financing on more favourable terms, and obtain faster decisions on their financing applications. This is because the Bureau acts as a one-stop center for banks to obtain consolidated information on SMEs, which is currently scattered, and will take longer for banks to obtain and verify individually. We have already seen how this can work in the case of consumer financing, where real-time and comprehensive information on consumers’ credit exposures and history that is available from CCRIS has  2  BIS Review 67/2008  significantly shortened loan-processing times. With greater availability of information on SMEs, the processing time for SME loans can be similarly shortened. Thirdly, the Bureau includes and takes into account both positive and negative information on SMEs. Certain third party information that financial institutions use in the evaluation of credit applications only provides negative information on the business conducts. Examples are information on bankruptcy and legal suits, which are sometimes not updated and may result in a biased assessment of creditworthiness. By collecting and disseminating both positive and negative information, the SME Credit Bureau will benefit SME loan applicants by providing a more balanced view of SMEs’ credit standings. In an objective rating process, credit bureaus typically accord greater weight to the more recent credit information or behavior. Negative records in the past can thus be mitigated by more current and consistent good track records.

The information provided by the SME Credit Bureau can further support efforts by banks to strengthen risk management for their SME portfolios, regardless of the level of sophistication and size of the institutions. Banks with an SME credit model already in place can benefit from the Bureau information in various ways. For example, as the Bureau rating is determined based on diverse information obtained from various sources including CCRIS, trade credit data and the Companies Commission of Malaysia, banks can use such information to bridge any information gaps and address the limited pool of internal data available for their internal models. Such gaps currently exist, as banks in general are highly dependent on borrower information alone. In addition, given the diversity of information available within the SME Credit Bureau, banks would now have access to information on various economic sectors that may not be available within existing credit portfolios. At the same time, Bureau ratings could be used by the banks to validate the robustness of their own internal models by comparing the ratings produced between their internal ratings and that by the SME Credit Bureau. For smaller and less sophisticated banks, the Bureau information will supplement the current SME credit assessment methodology that is traditionally qualitative in nature. Such banks will be able to obtain quantitative information from the Bureau database to enhance the overall credit evaluation process, thereby supporting more informed and objective credit decisions.
Although London has tremendous critical mass – especially in the crucial area of human capital – one major implication of what I will say in a minute about technological innovation is that certain aspects of financial services – especially trading and settlement – are potentially more geographically mobile now than in the past. We are already in a market where it is possible for a trader in London to deal on a German exchange, call for delivery in Luxembourg and make payment in Paris. So, the advent of the euro is just one factor transforming the environment in which UK based financial services firms must operate. I would now like to talk about a few others. First and foremost, technological advances. Even from just a few years’ perspective it is clear that financial services have been transformed by technological innovation. Arguably we are moving to a world in which more and more trading and settlement processes will use automated, electronic systems. And the pace of change is probably increasing. The LSE moved away from a trading floor in 1986. It has since moved to electronic and largely dematerialised share settlement in CREST in 1996, and to the electronic order book SETS for its largest 100 or so stocks in 1997. Last year LIFFE decided to switch from floor trading to its new electronic CONNECT system. More broadly, electronic trading systems have been, or are being, introduced in a whole range of government bond, repo, Eurobond and foreign exchange markets.

I will now turn to possible developments in particular markets. First the market for euro area bonds. In aggregate, the euro area government bond market is of a broadly similar size to the US Treasuries market. So it is one of the largest securities markets in the world. It is of course not yet as fully integrated as the Treasuries market. Substantial further progress in that direction probably depends on how quickly the various initiatives to link together Europe-wide trading and settlement systems come to fruition. And there are, and will remain, credit differences between particular issuers. But I would nevertheless expect the market to become increasingly integrated and, with other bond markets, more sophisticated over time. This ‘cash’ market is of course important in its own right; and London based market participants will remain very big players in it. But as far as the development of UK financial services business is concerned, the other interest rate markets which spin off the government bond market may be the ones where we see the most rapid growth, and the greatest scope for innovation. Good examples would be the markets for repo, swaps, and other interest rate derivatives. I think that in terms of new market opportunities, one of the most important areas in the evolving euro-denominated markets could be that for corporate bonds.
As we advance forward, the reputation, image and stature of the Centre will depend on the performance of its participants and their contributions to the environment and the organisations they represent. ICLIF regards its alumni members as important and looks forward to your continuous support to building ICLIF into a regional centre of excellence for leadership development in financial services. While ICLIF has put in great efforts in working with leading international consultants and the best schools in the design and delivery of its leadership development programmes, we see this as an evolving process. In this context, we see alumni members as an important sounding board in providing feedback to enhance the relevance and effectiveness of ICLIF’s programmes. As beneficiaries of  BIS Review 72/2004  1  ICLIF’s programmes, the alumni members are the best intermediaries in making ICLIF better known to the industry. Ladies and Gentlemen, ICLIF Leadership Competency Model One of the first initiatives by ICLIF upon its inception is to develop a unique leadership competency model that will analyse and enhance the understanding of what makes for great corporate leaders in the regional context. The Competency Model was developed through a participatory process involving strategic insights by industry leaders in the country and the region. This was achieved through behavioural-event interviews as well as benchmarking exercises based on literature research and the database of leadership competency models of world class companies.

If, as expected, second round effects remain contained, the rate of inflation should drop back below 2% during the course of 2009, and long-term inflation expectations should remain low. Based on these assumptions, current monetary policy is appropriate. However, if inflation does not fall back due to second round effects as expected, the SNB would need to counter this development in order to anchor price stability. BIS Review 103/2008  1
In particular, we cannot rule out here that unfavourable new developments will arise, whether because the worsening infection figures we are seeing during the second wave continue for a lengthy period of time, because it is necessary to resort to more severe containment measures, or because an effective medical solution does not become available in the time frame the scientific community has suggested as most realistic, namely around mid-2021. Should these risks materialise, they would weigh down on the recovery in economic activity envisaged in the above-mentioned scenarios. And we cannot rule out very marked effects as a result of abrupt and potentially non-linear changes in the dynamics of capital markets, the stability of financial institutions or agents’ confidence. Setting aside how the pandemic may evolve, some significant sources of uncertainty remain on the external front. One of these is the possibility that the Brexit negotiations will conclude without an agreement at the end of the transition period, an aspect on which risks currently remain tilted to the downside. A further source of uncertainty concerns future US-China trade relations. Undoubtedly, this matter will be greatly influenced by the outcome of yesterday’s US presidential election, though it is still early to accurately gauge all the ensuing implications. On the domestic front, a significant factor for the Spanish economy, not only in the coming quarters but also in the medium and long term, is unquestionably our ability to mobilise and efficiently assign the European funds available under the Next Generation EU (NGEU) programme.

These include a broad range of tax rate reductions, exemptions and deductions that, ultimately, reduce revenues significantly and introduce distortions that contravene the principles of efficiency and fairness. 3.4  Population ageing and pension system reform  One factor that makes it all the more necessary to reduce the vulnerability of public finances in Spain is the challenge of population ageing. The large projected increase in the dependency ratio over the next 30 years will give rise to a very significant increase in public spending on pensions, health and long-term care. Consequently, a crucial aspect of the medium and long-term budget plans is the sustainability of spending in these areas. 32  In the specific case of the pension system, recurrent deficits have been recorded in recent years. In its recent recommendations, the Toledo Pact Commission emphasises that the social security system currently bears burdens for which it should not be responsible and therefore it proposes transferring them to the State. In addition, the AIReF has proposed transferring some of the social contributions currently allocated to the National Public Employment Service to the social security system. These measures seek to significantly reduce the social security system’s deficit, at the expense of the State deficit.
It is therefore the expectation of the Bank of Zambia that this Conference will discuss this trend and its implications, particularly with regard to limited accessibility to technology and technicalknow how of consumers in SADC member countries. Other themes I am sure you will deliberate upon include confidentially of financial information, money laundering and terrorist financing. Effective payment system oversight needs to be promoted so that public confidence in the safety and soundness of the national payment systems is maintained. Understandably, this is a new area and in most member countries work is still exploratory. I therefore urge you all to double your efforts in this regard and deliver on this very important central bank responsibility. Ladies and Gentlemen, another new area is that of mobile phone enabled payment services. This development has a huge potential to help the SADC region leap frog a number of financial sector development challenges particularly those related to improving access and availability of financial services. This is because mobile phone based services, particularly those focused on low-value payments where swift and convenient service is the primary goal could be a practical solution for SADC member countries. The challenge therefore is how well we all respond without damaging this sprouting and potentially cost-effective delivery channel for financial services, which can be damaged with over regulation or lack of mitigation for the risks its poses.

Twenty years of low and stable inflation had provided confidence in central banks’ ability to control inflation, which in turn had paved the way for a sharp reduction in real interest rates without compromising the overall monetary policy target. This contrasts with the downturn in the late 80s, as illustrated in the case of Norway, as well as during the Depression, when real interest rates were kept high due to faltering credibility. Fiscal policy has also been used everywhere, and has prevented an even sharper fall in output. After two years of extensive fiscal measures, many governments are facing the wall. They are unable to finance further deficit spending and have to cut spending and increase taxes now. The graph shows the increasing government deficit in the UK. The government has no choice but to tighten policy. The Swedish government, on the other hand, in spite of expansionary policies in the aftermath of the crisis, had maintained a surplus in the years before, and the Swedish economy has thus fared well. Although countries were hit by the crisis in a fairly similar way, they emerged from it very differently. Some countries have experienced good growth rates and falling unemployment. Others are struggling to keep their head above water. Production is still far below the precrisis level, with unemployment hovering at record levels. Are these differences predictable? As a participant in OECD meetings for many years, I have sometimes been among the backbenchers, trying to check the pulse of the economy in various countries.
The Desk always welcomes discussion with market participants on ways in which it can support market functioning.19  Preventing tantrums I noted earlier that my confidence that the FOMC’s plan for balance sheet normalization was in part due to its clear communication: the gradual and predictable nature of the balance sheet decline should help ensure that market participants’ expectations remain well aligned with what eventually transpires. In my view, a “trust, but verify” approach is called for to ensure that this confidence is appropriate. While I trust that the program design will keep expectations for the portfolio realistic, I believe that a robust analytical mechanism to verify this, underpinned through continuous market monitoring, broad-based surveys of primary dealers and market participants, and a diverse suite of statistical data collections, will help ensure that policymakers can detect early and respond promptly to situations where market participants expect the portfolio to evolve significantly differently from policymakers’ expectations. The idea is simple: keeping these two sets of expectations aligned should help prevent the risk that they get very far apart, an adjustment has to take place, and there is large move in asset prices. But the experience of the 2013 “taper tantrum,” when asset prices moved sharply and unexpectedly following former Chairman Bernanke’s announcement of an eventual cessation in asset purchases, poses some questions about doing this in practice. What might have caused the taper tantrum, and why have financial markets been so much more stable in comparison this time around?

During the post-meeting press conference, Chairman Bernanke stated “While participants continue to think that, in the long run, the Federal Reserve’s portfolio should consist predominantly of Treasury securities, a strong majority now expects that the Committee will not sell agency mortgage-backed securities during the process of normalizing monetary policy, although in the longer run, limited sales could be used to reduce or eliminate residual MBS holdings.” Surveys conducted after this meeting revealed no expectation for agency MBS sales, and for the portfolio to be larger over time as a result. 21 “What explained markets’ strong reaction – and why did it surprise us? In retrospect, I think our view of market  expectations was too dependent on our survey of securities dealers. Futures markets gave us a reliable read of where markets thought the federal funds rate was going – but not for our securities purchases. For that, economists at the New York Fed asked their counterparts at the securities firms, who paid careful attention to every nuance of Fed policymakers’ public statements. In effect, our Ph.D. economists surveyed their Ph.D. economists. It was a little like looking in a mirror. It didn’t tell us what the rank-and-file traders were thinking. Many traders, apparently, didn’t pay much attention to their economists…” 22 These figures include results from the Desk’s September Surveys of Primary Dealers and Market Participants. The results from these surveys will be released tomorrow on the New York Fed’s website.
There are two categories of awards, both of which are open to Shenzhen and Hong Kong-based regulated financial institutions. The first is for the use of fintech, while the second is for cross-border financial innovation. It is a prestigious award and I would encourage Hong Kong financial institutions to take part and showcase their achievements. The Director-General of OFDS will share with us more details about this exciting competition in the next session. Soft-landing scheme 11. The second initiative is a mutual referral system for fintech firms – this is sometimes called “soft-landing”. Under this programme, the OFDS will provide support to Hong Kong fintech firms that want to establish a presence in Shenzhen, perhaps with a view to using it as a springboard to tap into the enormous market of Mainland China. 12. To better utilise this valuable opportunity, we are working with our strategic partner, Cyberport, on the establishment of cross-border soft-landing facilities in Shenzhen. Such an arrangement would give qualified Hong Kong fintech firms access to the business support from OFDS, which would be helpful for these firms to expand their business to the Mainland. At the same time, Cyberport will leverage on this platform in Shenzhen to assist Mainland fintech companies to establish operations in Hong Kong. 13. Given the geographical proximity between Hong Kong and Shenzhen, I have no doubt that this collaboration will further enhance Hong Kong’s role as the springboard to help homegrown and overseas firms reaching out to the Mainland market. Talent development programme 14.

This adds additional complexity to the setting of monetary and macro-prudential policies. It is possible to explore this complex interplay using simulations from models comprising both nominal and financial frictions. Both are needed to accommodate a role for monetary policy (whose effectiveness relies primarily on nominal frictions) and macro-prudential policies (whose effectiveness relies principally on financial frictions). A number of models have recently been developed with these core ingredients and have been used to explore monetary and macro-prudential policy interactions (Smets (2013), Paustian and De Paoli (2013)). Chart 18 shows the results of a simulation from a model developed by two colleagues at the Bank (Aikman and Nelson (2014)). This, too, embodies both nominal and financial frictions. On the axes are plotted two measures of stability – macro-economic stability (as proxied by the variability of nominal GDP) on the x-axis, financial stability (as proxied by the variance of  12  More details are available at www.crisis-economics.eu. 13  For more on the Bank’s research agenda, please see http://www.bankofengland.co.uk/research/Documents/onebank/discussion.pdf. 12  BIS central bankers’ speeches  credit spreads) on the y-axis. Historically estimated levels of these two variables, normalised to one, are shown at point A in Chart 18. If we now allow monetary policy to play an active role in stabilising the business cycle, through an optimal policy rule which weights output and inflation deviations from target, we can move the economy to point B.