samchain/econo-pairs-v1 huggingface dataset:
But I’ll say now, if there are aspects of the timetable which firms are going to struggle to meet, we would like to understand that at an early stage – so we would welcome feedback on any barriers to providing high-quality data as soon as possible. The QIS will focus on areas of potential policy change which are the easiest to quantify and have a more obvious immediate balance sheet impact. The bricks, windows and foundations of the structure. There are other areas, less easy to quantify but no less important, which are also in scope of reform. I’ll cover those briefly at the end of this speech. But starting with the bricks and mortar:  Risk Margin 3/6  BIS central bankers' speeches  Firstly the risk margin. There is, I think a consensus in the UK that the risk margin as currently designed is not doing its job correctly. The risk margin is there to provide a margin over the best estimate of liabilities on the regulatory balance sheet, so that the total technical provisions represent an estimated transfer value. The principle for the risk margin is sound, and is widely accepted. But as we have made clear before, we see significant scope for reform. In particular, the risk margin is too sensitive to interest rates. And under current interest rate conditions it is too high. Many annuity writers are choosing to reinsure longevity risk from their balance sheets but retain credit risk.

Anna Sweeney: Solvency II Review - protecting policyholders while improving the regime Speech by Ms Anna Sweeney, Executive Director for Insurance Supervision of the Bank of England, at the JP Morgan European Insurance Conference, 15 June 2021. * * *  Introduction In the Channel Four show Grand Designs, people set themselves the task of self-building a new house, starting with an empty field or sometimes an existing property, and finishing a number of years later with a beautiful new place to live. Along the way there are invariably dilemmas around which building materials to use, how best to deliver on the architect’s plans, and whether the end result will be as originally envisaged. Fortunately with the Solvency II Review we are not starting with an empty field. The task at hand is more like the considered modernisation of a listed building. We already have a well-embedded regime, where there is a shared understanding of the benefits as well as the limitations. Our house has ‘good bones’; we are committed to upholding the principles which underpin the current regime. There are many important features that we want to preserve. But like any good self-builder, we’ve been walking around with a notebook, making lists and early sketches for the areas that might most benefit from upgrading; extending; reinforcing; or streamlining. Some areas may only need thoughtful tweaks. Others may need structural work.
This makes it harder for the conventional array of risk management tools to capture the actual risk faced by financial institutions today. The challenge we face is not simply in determining whether we are better off today than we were at past periods of considerable stress in the financial system, but also in assessing how well positioned the current system is to deal with prospective sources of stress. That assessment is harder to make today because of the changes now underway in the nature of financial intermediation and the overall conditions in which these changes have occurred. Several examples of these changes are worth noting: The more critical role played by hedge funds and other nonbank financial institutions in credit and other markets has the potential to magnify the impact of distress in those institutions on market dynamics and liquidity if counterparty risks are not managed appropriately. BIS Review 28/2006  1  The proliferation of new forms of derivatives and structured financial products has changed the nature of leverage in the financial system. The addition of leverage imbedded in financial instruments to balance sheet leverage has made this source of potential risk harder to assess. New players, new products and more dynamic ways of intermediating and managing credit may increase the sensitivity of balance sheets and income-to-market volatility and potentially amplify the impact of a sharp change in perceptions about macroeconomic risk or credit on asset prices and liquidity.

The increased international integration of both capital and goods markets has brought a huge increase in the scale of cross-border financial activity. The largest global financial institutions now play significant roles in a large number of financial systems outside of their home market. These changes are likely to affect the manner in which financial shocks in one region are propagated to other regions. Finally, we have witnessed an increase in the degree of concentration in some markets, a development that has the potential to make the system more vulnerable to the deterioration in conditions at one of the major bank or nonbank financial intermediaries. The degree of systemic risk presented by these changes depends importantly on two things. It depends on the robustness of the infrastructure that supports these markets. And it depends on the level of reserves, capital, margin and collateral that the major financial institutions hold against risk, which is in part a function of the strength of risk management systems. In both of these areas, market practice has made significant progress over the past decade, and further improvements are underway. A few quick points about two areas in which we believe further progress offers the highest possible return in terms of improving the overall resilience of the financial system. In the broad area of market infrastructure, we think the greatest near-term imperative is to strengthen the post-trade processing systems that underpin the rapidly growing over-the-counter derivatives market.
Companies comment to us that the time and resources needed to win new business and secure contracts has increased sharply in the face of weak demand.7 I’m sure that these mechanisms and many more like them are at work today. But are they sufficiently strong for us to be confident that the likely relationship between growth and inflation would be unusually favourable were demand to increase strongly? Why should these mechanisms be so much more pronounced now than in previous recessions? Wouldn’t most of them have seemed equally important in the past? I find it hard to believe that these types of effects are the entire – or even the main – explanation for the weakness in productivity. What is unusual about this downturn is that it has been associated with a severe and prolonged financial crisis. Several of our banks are still not in a position to lend normally. Many firms have had to economise on working capital as the cost has increased and the availability reduced. The ability of many SMEs to raise finance to fund new investments or business expansion has been constrained. The efficiency with which banks have been able (or willing) to reallocate funds from outdated businesses and sectors towards new and dynamic companies has been stunted.

A messaging standard is a common set of rules for exchanging relevant payment information in order to enable efficient communication with participants and related infrastructures. Messaging standards cover such things as: •  How senders and receivers identify each other;  •  How key properties of a payment message, such as currency, amount and value date, are represented; and  •  What additional information can be included. The Bank is committed to transitioning to a new standard, specifically ISO 20022, as is the New Payment System Operator (NPSO). This is an open and global standard which can continually evolve to meet the needs of users. It is network agnostic to enhance interoperability with various operating systems and it has substantially increased data carrying capacity. Ultimately, in the very long term, ISO 20022 could also enable us to include a diverse range of characters from existing languages and other communications systems, though we will focus on ensuring we get the basics right first. In any case, this transition from the legacy and 3  Bank of England, RTGS Renewal Programme Proof of Concept: Supporting DLT Settlement Models, https://www.bankofengland.co.uk/news/2018/july/rtgs-renewal-programme-proof-of-concept-supporting-dlt-settlement-models 4 Bank of England, Call for interest: Synchronised settlement in central bank money, https://www.bankofengland.co.uk//media/BoE/Files/payments/rtgs-call-for-interest-synchronised-settlement-in-central-bank-money  5  All speeches are available online at www.bankofengland.co.uk/speeches  5  restrictive standards currently used will have far-reaching implications and benefits for not only the UK’s payments system, but participants and their customers.
The biannual presentations made by the Governor before the Council of Ministers and the Planning and Budget Commission of the Grand National Assembly of Turkey – to provide information about the activities and monetary policy implementations of the Bank –; monthly “Price Developments” reports issued on the next working day of the release of the inflation figures; “Financial Stability Report” issued biannually; press releases; and presentations and speeches made by the Central Bank authorities in Turkey and abroad will play important role in informing the public.1 Working papers, booklets, technical notes published and conferences and workshops arranged by the Bank will also continue to be used as effective tools of the communication policy. Exchange rate policy and liquidity management Exchange rate policy Along with inflation targeting, the Central Bank will continue to implement the floating exchange rate regime in 2009. As stated in the annual monetary and exchange rate policy announcements, which have been published since 2002, the foreign exchange rate is not a policy tool or target under this regime and it is determined by the supply and demand conditions in the market. Whereas the main factors affecting foreign exchange supply and demand are the monetary and fiscal policies implemented, international developments, economic fundamentals and expectations. Although there is no exchange rate level to be maintained in a floating exchange rate regime, a strong foreign exchange reserve position is very important for emerging economies like Turkey to eliminate the unfavorable effects of potential internal and external shocks and to boost the confidence in the country.

Instruments Extensive and persistent exchange-market interventions to influence the krone exchange rate have, in Norges Bank’s experience, yielded poor results. Market participants may perceive such transactions as an interesting opportunity to make a profit, which may trigger enormous capital movements. The interest rate is therefore Norges Bank’s most important instrument. Higher interest rates normally lead to a strengthening of the krone exchange rate. However, interest rates may reach such a high level that this contributes to a cyclical downturn. This would undermine the credibility of monetary policy and result in downward pressures on the krone. In this situation, lower interest rates may contribute to stability and strengthen the krone. Along the same lines, lower interest rates will normally lead to a weakening of the krone. But if interest rates are so low that this contributes to inflation, this will also undermine monetary policy credibility, and the krone will be unstable. The objective and the mandate Monetary policy can provide a nominal anchor for the economy. Since 1986 the authorities have focused on exchange rate stability. Price inflation has been low. Yields on long-term securities indicate no expectations of rising inflation. The perception of market participants seems to be that Norway will not resume a policy resulting in high inflation. 1  BIS Review 51/1999  The political authorities formulate Norges Bank’s mandate for the conduct of monetary policy.
Ladies and gentlemen, allow me to illustrate the elements I have just described and the logic behind our profit appropriation using this table (Slide 4). In 2020, the SNB recorded a profit of nearly CHF 21 billion. We first made an allocation of around CHF 8 billion to the provisions for currency reserves. We did so because strengthening the balance sheet takes precedence over the distribution of profits, as I mentioned before. The remaining amount of the annual result together with the available distribution reserve (i.e. the profit carried forward from the 2019 financial year) gives a net profit for 2020 of just under CHF 97 billion. This amount is then used for the payment of a dividend and the distribution to the Confederation and the cantons. The level of the distribution is determined by the new agreement – which I will come to in due course – and amounts to CHF 6 billion for the 2020 financial year. The not quite CHF 91 billion remaining forms the profit carried forward to the next year, in other words the new distribution reserve. This is how we implement both statutory requirements, namely the precedence of building provisions over making distributions, and the smoothing of distribution payments. New agreement on the SNB’s distribution of profits This brings me to the new profit distribution agreement concluded between the Federal Department of Finance (FDF) and the SNB at the beginning of this year.

First, in general terms, Europe is more advanced both economically and institutionally than Asia (even if there are notable exceptions, such as Singapore, Hong Kong and Korea). 9 Advanced economies have higher “debt tolerance,” because of their stronger institutions, a more favourable composition of debt and a more stable fiscal revenue base (less dependent on a small set of goods, such as commodities). 7  8  See: Dornbusch, R., I. Goldfajn and R.O. Valdés (1995). “Currency crises and collapses,” Brookings Papers on Economic Activity 2, pp. 219–293. See: Eichengreen, B., R. Hausmann and U. Panizza (2005). “The pain of original sin”, in B. Eichengreen and R. Hausmann (eds.) Other people’s money, Chicago University Press, pp. 87–102. 9  One measure of institutional quality is reported in the World Economic Forum’s annual Global Competitiveness Report. 4  BIS central bankers’ speeches  Thus while the dynamics of financial crises may be similar, the level of debt at which they occur may be different. Of course, this can be a mixed blessing. The ability to accumulate more exposures may permit the pre-crisis boom to last longer. But it may also mean that the subsequent downfall is deeper. The second difference is that, by having a national currency, even if it is rigidly pegged to an external anchor, as in the case of Argentina’s dollar currency board prior to 2001, the EMEs retain scope to devalue.
When making that assessment, we have to take into account that Iceland’s recession was the result  2  BIS central bankers’ speeches  of two stories: the macroeconomic boom-bust cycle in a small, open, and financially integrated economy, and the rise and collapse of three cross-border banks operating on the basis of EU legislation. The first is familiar, and Iceland was already on its way into a recession as a result of it when the banks collapsed. The second was unique at the time, as it occurred during the first international financial crisis since the birth of the EU single market. Iceland lost around 12% of GDP from peak to trough during the recession. But the recovery began in the middle of 2010, and the Central Bank forecast from February is that Iceland’s economy will grow by just over 2% this year. The recovery has already reduced the seasonally adjusted unemployment rate from over 9% at the peak to around 4½%. New banks, smaller and domestically oriented, have been rebuilt. But there are still significant legacy issues and challenges, including capital controls and inflation expectations well above target. Source: Philippon (2008): The Evolution of the US Financial Industry from 1860–2007. Source: Philippon and Reshef (2008): Wages and Human Capital in the US Financial Industry 1909–2006. BIS central bankers’ speeches  3  Before I close, let me expand my scope again and say a few words about possible broad long-term future trends regarding the relative size and importance of the financial sector.

In that respect, we need to look at what drove the demand for liquidity in the 2020 episode, whether there were unnecessary constraints in the supply of liquidity, and crucially whether there were amplification mechanisms that turned the flight for safety into the dash for cash. And to take action, where necessary, to avoid similar dynamics in future. This is the context in which to see the Financial Stability Board’s (FSB’s) programme of work on the March 2020 market turmoil. The first stage of this work, the ‘holistic review’ of the March market turmoil, was published in November 2020. The review analysed the dynamics at play in the non-bank financial intermediation (NBFI) sector and set in train further international work, on various vulnerabilities that were exposed. This work covers: money market funds, on which policy recommendations have been published; the liquidity demand on open-ended investment funds; the structure and drivers of liquidity in core bond markets during stress; USD cross-border funding and its interaction with emerging market economies; and the impact of margining practices, on which I will now focus. In order to assess the role played by margin, a group of senior representatives from central banks and market regulators was established, which I co-chair with Russ Behnam of the Commodity Futures Trading Commission (CFTC).
But I should first say this: while the HKIMR was established by the HKMA, its Council of Advisors, of which I am not a member, determines its programme of activities. It therefore enjoys professional independence. Thus, I was not a party to the Council’s deliberation of, and its decision to support, Professor Crosby’s proposal to hold the Workshop here. But I am very pleased that the Council of Advisors decided to do so. I will start from the observation that Hong Kong’s economy - like many Asian economies - is a small ship in a big ocean. While the weather today may be placid, the winds can pick up without warning and the waves can be forbidding. You all know about the series of massive speculative capital flows that Asian economies, and even Australia and New Zealand, were exposed to during the Asian financial crisis, and how Hong Kong finally rode out that storm. In times such as those, policymakers naturally ask what is the right course to steer, what are the right policies to follow. One policy is clear - to ensure that the boat is as seaworthy as possible. This, of course, we have sought to do. Following the Asian financial crisis we took a large number of measures to improve the functioning of the currency board, and the efficiency of the financial infrastructure in Hong Kong more broadly.

Let me just say that I remain convinced that the currency board has remained a fundamental source of stability for Hong Kong in the 239 months of its existence since it came into being in October 1983. What else can be done to ensure monetary and financial stability not just in Hong Kong, but also in this rather fragmented and diverse region, in terms of geography, size of markets, culture and stages of economic development? To my mind, much greater regional co-operation in the monetary and financial arenas should be on the policy agenda. Such co-operation can take many forms, ranging from increasing and more open interactions between central banks in the Asian region for the purpose of enhancing the stability, integrity, diversity and efficiency of financial intermediation in the region, and admittedly very much further down the road, to serious discussions of whether monetary integration and the establishment of an Asian Monetary Union should be a goal. BIS Review 42/2003  1  But to do that, we need to build stronger personal links between economists working on monetary and financial issues at universities, in central banks and in international institutions such as the IMF and the BIS. By debating and discussing and, yes, disagreeing, we can over time generate much more clarity about what path we need to follow in enhancing monetary and financial stability in Asia and elsewhere. Some may wonder why I include academic economists in that list. I do so for three important reasons.
I hope to be up to the task of the legacy you are leaving us. My thanks, too, to the members of the Bank’s Executive Commission and Governing Council and, most particularly, to the Deputy Governor, Javier Alonso. Javier, your help and far-reaching knowledge of the Bank are making these first weeks in the job easier for me. But, above all, I should like to thank my colleagues over the course of the years. It would be impossible to list them all; many are here today. The career of a Banco España employee can only fully be understood through the prism of the numerous interactions and discussions between us, which are the bedrock on which we build our knowledge and our particular human capital. It is a privilege to be part of this environment and to participate in such an enriching process. Finally, the most singular thanks are for my family. Without them none of this would have been possible. Let me seize this opportunity to refer briefly to what should, in my view, be the two main objectives of the Banco de España at this juncture and which are related to our relevance and reputation. The first has to do with our insertion into the Eurosystem and into the Single Supervisory Mechanism. Some think this means that the Banco de España has an increasingly diminished role, given that the main functions linked to monetary policy and supervision of the financial system are decided in that framework.

I would like to express my special thanks for the good cooperation with all parties involved on these important issues. Even though important milestones have been attained, sound operation of payment systems will remain an important and extensive task. A multicurrency country? Every so often the question has cropped up of whether Iceland is destined to become what has sometimes been called a multicurrency country. This apparently refers to when a large share of business transactions are conducted in more than one currency and liabilities of various kinds are mostly denominated in foreign currencies. Indications that have been cited include performance-related wages in the fisheries sector, which represent indirect indexation of wages to the exchange rate; an increasing trend for corporate accounting to be conducted in foreign currencies;  4  BIS Review 18/2004  and the fact that recently even households have been offered foreign currency-denominated loans. Other factors mentioned have been greater globalisation, the growing importance of external trade, and of foreign investment. There is a tendency to paint a rather exaggerated picture of Iceland’s dependence on global trade. Admittedly, foreign trade has been on the increase, but is still quite small relative to the size of the economy. Direct foreign investment is proportionally much lower than in most advanced economies, while the scope of foreign indirect investment is similar to that in neighbouring countries. Foreign currency deposits are an established feature of the banking system in Iceland.