samchain/econo-pairs-v1 huggingface dataset:
Hedge funds also tend to be leveraged and can trade in derivatives, whereas traditional funds have limited scope for borrowing and dealing in derivatives. Further, retail investors may be lulled into thinking that hedge funds are low risk investments based on studies showing hedge fund returns to be less volatile than mutual fund returns. Such statistics must be carefully considered especially since hedge fund returns are anything but normally distributed. Indeed, they are negatively skewed and exhibit high kurtosis. A fat-tail event, such as the Russian default in 1998, was enough to scuttle any profits Long Term Capital Management might have projected with its elaborate models. Retail investors may not realise that hedge funds also display other characteristics that make them riskier than traditional funds. For one thing, hedge funds have an average life span of 3.5 years, with one-third of newly-established funds folding before those three years are up primarily due to poor 8 performance . Further, hedge funds are usually subject to a lock-up period and, after that, fixed redemption windows, unlike unit trusts which are typically redeemable every trading day. This is not a preamble to a blanket prohibition on the marketing of retail hedge funds. Retail hedge funds will continue to be permitted under a comprehensive regulatory framework. MAS’ approach is to balance investor needs and investor protection on three pillars – enhanced disclosure, enabling regulation and enlightened investors.

To sum up, a cross-check of the outcome of the economic analysis with the signals coming from the monetary analysis confirms the need to closely monitor the risks to the outlook for  2  BIS central bankers’ speeches  price developments over the medium term and to be prepared to provide further monetary policy accommodation, if needed. Monetary policy is focused on maintaining price stability over the medium term and its accommodative stance contributes to supporting economic activity. However, in order to strengthen investment activity, boost job creation and raise productivity growth, other policy areas need to contribute decisively. In particular, the determined implementation of product and labour market reforms as well as actions to improve the business environment for firms need to gain momentum in several countries. It is crucial that structural reforms be implemented credibly and effectively as this will raise expectations of higher incomes and encourage firms to increase investment today and bring forward the economic recovery. Fiscal policies should support the economic recovery, while ensuring debt sustainability in compliance with the Stability and Growth Pact, which remains the anchor for confidence. All countries should use the available scope for a more growth-friendly composition of fiscal policies. The Investment Plan for Europe which the European Commission announced on 26 November 2014 will also support the recovery. We are now at your disposal for questions. BIS central bankers’ speeches  3
I want to share with you this assessment, which can be summarized in three main points. First, economic recovery in the first half of this year is firm, and the momentum is likely to continue in the second half, supported by global economic recovery, accommodative fiscal and monetary policies, as well as the strong momentum of recovery itself. As for the impact of the political turmoil, April and May data clearly suggests that the impact is limited and the collateral consequences will be felt largely in the tourism sector which will take a bit longer to recover. For the whole of this year, we are expecting growth to be higher than the range of 4.3–5.8 percent that we had forecasted earlier in April. So, similar to other economies in the  BIS Review 101/2010  1  region, Thailand should recover firmly this year, and the recovery momentum should carry forward into the next year. Second, with the economy recovering well, inflationary pressure is set to increase going forward, reflecting the impact of stronger domestic spending and also higher commodity and raw material prices in global markets. Also, going forward, pressure on asset prices will become more evident on account of continued capital inflows into the region. Therefore, with pressure on prices edging up and the recovery momentum looking firm, the move to begin policy rate normalization is a logical one for maintaining economic and financial stability. So, the decision today is not a surprise for financial markets, rather it is a decision that is longoverdue.

These are the short-term impacts or shocks, that once they happen, the economy will need to adjust to. My second observation is that the Thai economy so far has been resilient in adjusting to such shocks. As I noted, the impact on the economy from the April and May political events seems to be limited. This positive quality can be attributed to the economy’s strong fundamentals and the high sense of tolerance by the Thai public. If, however, such shocks are more frequent or of a longer duration, they can erode the capacity of the economy to adjust to future shocks. And the third observation is that political instability, if it persists or worsens further, will have adverse implications for Thailand’s long-term economic performance. This is because political instability affects policy continuity as well as divert the attention of policymakers away from the longer-term issues. If that happens, the lack of a clear long-term policy can discourage the flows of future investment, both domestic and foreign, thereby limiting the economy’s capital formation and potential growth. Fortunately, Thailand is not yet at this stage. Investment both private and public, are still growing. And at the Bank of Thailand, we always approach the policy decision with a longerterm perspective. Today’s decision to begin the process of policy normalization is a clear example of decision taking with a view of preserving longer-term economic and financial stability. This is what we do and this is what we will continue to do. Let me stop here.
John C Williams: Global issues, global implications Remarks (via videoconference) by Mr John C Williams, President and Chief Executive Officer of the Federal Reserve Bank of New York, at the Central Reserve Bank of Peru (BCRP) Centenary Conference, 25 March 2022. * * * As prepared for delivery It’s a great honor for me to participate in this event commemorating the centenary of the Central Reserve Bank of Peru. I want to start by congratulating Julio and everyone at the Bank on this special and significant anniversary. I am looking forward to a time, hopefully soon, when we can come together, enjoy some ceviche, and celebrate in person. And while it’s not nearly as enticing as a gathering over fine Peruvian food, I need to give the standard Fed disclaimer that the views I express here are my own and do not necessarily reflect those of the Federal Open Market Committee (FOMC) or anyone else in the Federal Reserve System. Given this special occasion, let me begin with some reflections on the importance of communication and engagement in central banking. Shared Concerns As central bankers, we have long understood the value of engaging with colleagues around the world on the challenges we face in our own countries. We all operate in a highly interconnected global economy and financial system. And we have many of the same goals, including price stability, vibrant economies, and financial stability.

A “ratcheting-up” of risk within the banking sector can occur over time, creating increasing vulnerability. 17 Low interest rates also encourage a higher level of leverage. Because financial intermediaries – whether banks, broker-dealers, shadow banks, or hedge funds – finance themselves with short-term liabilities, central bank decisions on the level of short-term rate affect their marginal price of leverage. As a result, the behaviour of financial intermediaries – which, by their nature, have high levels of leverage – can be strongly influenced by even small changes in short-term rates. 18 Low levels of interest rates encourage higher levels of leverage and, as a result, an accumulation of additional risk on bank balance sheets. Through all these channels, a prolonged period of low short-term interest rates can support the accumulation of risks and financial imbalances on the balance sheets of both financial intermediaries and the private sector. These imbalances render the economy vulnerable to financial crises: if confidence evaporates, lenders call in loans, balance sheets contract and a painful readjustment is required, with adverse implications for financial stability and the real economy. In particular, the build-up of leverage within the financial sector may unwind abruptly, leading to a tightening of overall financing conditions. 19 Such thinking sheds light on recent developments in the run-up to the financial crisis. Viewing the impact of globalisation on goods prices as the manifestation of a positive supply shock, we can map this abstract scenario into our experience of the past decade.
François Villeroy de Galhau: Rising temperatures - inflation, climate change and digital transformation Speech by Mr François Villeroy de Galhau, Governor of the Bank of France, at the World Economic Forum, virtual, 19 January 2022. * * * Ladies and Gentlemen, It is a great pleasure to have the opportunity to deliver a few remarks at this virtual edition of the World Economic Forum today. As you may have expected from a central bank governor, my remarks will first be about inflation, with a comparison of the situations in Europe, the United States and Japan. I will then briefly touch upon the two great transformations underway, ecological and digital, which will shape our future. By the way, inflation and climate change share a common feature: rising temperatures… which could be the subtitle of my introductory statement. I. Inflation in Europe, the United States and Japan The strong rebound in 2021 was obviously excellent news for our economies, which have suffered on a scale never before experienced by current generations. Over the last few months, inflation has accelerated, primarily because of tensions in energy and shortages in commodities and intermediate goods. Its magnitude varies across countries: in December, inflation stood at 7.0% in the United States, higher than the 5.0% observed in the euro area, and in sharp contrast with the 0.6% observed in Japan in November.

The establishment of a Single Resolution Mechanism Let me turn to your second chosen topic, the establishment of a Single Resolution Mechanism. The Single Resolution Mechanism should be centred in a Single Resolution Authority with a European Resolution Fund at its disposal. I welcome the European Council’s December statement that during the course of 2013, the Commission will submit a proposal for such a mechanism for Member States that are participating in the Single Supervisory Mechanism. The ECB shares the European Council’s view on timing for the Single Resolution Mechanism, namely that it will be required once bank supervision is effectively moved to the Single Supervisory Mechanism. We therefore welcome the European Council urging the co-legislators to examine the proposal as a matter of priority with the intention of adopting it during the current parliamentary cycle. There are four main reasons for a Single Resolution Mechanism, with a Single Resolution Authority at its centre. The first reason is that only a Single Resolution Authority will ensure timely and impartial decision-making focused on the European dimension. In a situation where a cross-border resolution is required, the Single Resolution Authority would avoid national focus and pursue the optimal resolution strategy, thus mitigating coordination problems. The second reason is that the Single Resolution Authority would credibly pursue the least cost resolution strategy, assessing possible cross-border spillover effects and systemic concerns, and ensuring that resolution costs are first and foremost borne by the private sector. It would thereby minimise resolution costs without recourse to taxpayer money.
The aim is not to infringe on FINMA’s jurisdiction. Instead, FINMA and the SNB need to clearly define how the new responsibilities and tasks arising from the urgent need for more rigorous analysis and regulation of systemic risk should be divided between them. At this point, I also want to stress that this macroprudential task does not call into question the SNB’s primary mandate, which is the maintenance of price stability. Instead, it supports the long-term fulfilment of this mandate. The SNB has also expressed its opinion – along the lines of this proposal – on the recommendations made by the business audit commissions of the National Council and the Council of States in their report on the financial crisis. 2  BIS Review 173/2010  SNB balance sheet risks In my following remarks, I would like to look at the SNB’s balance sheet risks. As the Chairman of the Governing Board, Philipp Hildebrand, has already mentioned, it was primarily the large-scale purchases of foreign currency that contributed to the expansion of our balance sheet to its current level of approximately CHF 280 billion. Of this amount, CHF 260 billion is made up of currency reserves, which comprise not only foreign exchange, but also gold and the IMF’s special drawing rights. If we add to that the SNB’s loan to the stabilisation fund, over 95% of our assets are denominated in foreign currency. Not only is the balance sheet longer as a result, it also carries more risk.

During periods of high network traffic, the average transaction time can take anywhere from 30 minutes to many hours. Transaction fee is also high and can spike up suddenly from time to time. The average fee per transaction in December 2017 was $ To put the matter into proper perspective, electronic payments, using either balances kept by commercial banks at central banks or retail payments using commercial bank balances, typically take a few seconds and cost a fraction of the transaction fees in Bitcoin transfers. Store of value: Crypto-currencies such as Bitcoin have displayed very high volatility in value. Crypto-currencies have no intrinsic value and are not backed by any institution or body regarding its value or purchasing power. Their price and thus value are determined solely by the supply and demand forces prevailing at the time, which can fluctuate sharply depending on the appetite of the participants. It is true that in some countries, there has been high volatility in the value or purchasing power of their (b) money, too. However, one must bear in mind that this kind of volatility normally happens in times of crisis or in jurisdictions that have rather bad macroeconomic, fiscal or monetary discipline. But for Bitcoin and most other crypto-currencies, their volatility seems to be structural in nature and the market dynamics that determine their price or value is rather opaque and hard to discern.
This is one of the main thrusts of the reforms proposed by Jacques de Larosière. How can we strengthen financial stability at the international level? The overall reform agenda that I have just outlined would not be complete without a component concerning the strengthening of the international financial architecture. Let me conclude my speech on this point. This strengthening currently has two very visible faces: the IMF and the Financial Stability Board. The IMF has once again become one of the key actors in the new international architecture. It is tasked, together with the Financial Stability Board, with monitoring the implementation of the G20 agreements on financial regulation. It also has a central role to play in the multilateral surveillance of financial risks: since late April, it has been conducting early warning exercises on financial and macroeconomic risks jointly with the Financial Stability Board; it will also extend its analysis of the resilience of domestic financial sectors as part of the Financial System Assessment Programs (FSAP) to include all systemically important countries. Indeed, one of the notable outcomes of the G20 is that all the member countries undertook to accept this assessment by their peers, including, for the first time, the United States. This broadening of the Fund's role is being supported by a trebling of its resources, which will increase its lending capacity to USD 750 billion.

b) The euro is an “all-risks insurance” for all Member States This view appears to be the opposite of the preceding one; in fact it stems from an equally false perception: attributing excessive evils or benefits to the euro. A currency is an essential nominal value; but this alone does not determine the real performance of the economy. In the first part of the 2000s, once it had acquired the collective gain of the euro, France and Italy, like many 3/6  BIS central bankers' speeches  Southern European countries, wrongly believed that it was possible to let up on competitiveness efforts, which are nonetheless an ongoing imperative – “there is no free lunch”. Today we are suffering the consequences: we have lower economic growth and employment than some of our neighbours, such as Germany and Spain, which succeeded in carrying out the reforms necessary for enterprise (corporate sector), employment, education and expenditure reduction (public sector). Contrary to what some say, our lag in growth is not due to excessive fiscal discipline. The government debt to GDP ratio has more than doubled in Italy since 1980, and it has risen fivefold in France. When my generation was 18 years old, debt stood at 20% of GDP in France. For your generation today, it verges on 100% of GDP in France and in Italy stands at over 130%. We have failed when it comes to intergenerational solidarity and sustainable development.
As a manifestation of this, China’s energy consumption per head in 2009 was half that of the UK level, having been just a fifth a decade earlier. Moreover, demand tends to be relatively price-inelastic, at least in the short run, though over a longer time frame there is surely some scope for increased substitution towards more energy-efficient practices. The immediate prospects for oil prices are, though, likely to hinge on supply conditions. Oil stocks are at reasonably healthy levels and can be utilised to meet short-term demand. More importantly, OPEC is believed to have spare capacity equal to around 5% of consumption, compared to a long-run average level of nearer 3% (Chart 5). That is more than enough to meet any shortfall resulting from the withdrawal of Libyan supply from the market (around 2%  BIS central bankers’ speeches  3  of total oil production). But if the present political upheavals were to disrupt Saudi Arabian supply, then that could potentially lead to very sharp upward pressure on oil prices. Prospects for the medium to longer term must depend on how quickly new sources of supply can be brought on stream to meet growing demand. The investment cycle in oil extraction is relatively long, and the current elevated level of prices is in part a reflection of low investment a decade ago.

In terms of the outlook, a key issue that the Committee faces in deciding the appropriate stance of policy is the extent to which the current elevated levels of inflation will persist into the medium term. Our most recent projections, conditioned on market interest rates, existing fiscal plans and the futures prices of commodities, are shown in Chart 10. The central view is for inflation is to rise further in the near term as recent commodity price increases pass through, but then to fall back, particularly in 2012 as the rise in VAT to 20% drops out of the twelve-month comparison. It then continues to ease back, reflecting the continuing – though uncertain – drag from the margin of spare capacity in the economy. A number of factors will determine the rapidity of that return to target. Profit margins have been squeezed during the recession and businesses are likely to want to rebuild these as the recovery proceeds. But the real purchasing power of wages has also been severely squeezed and employees may also seek to recoup some of that. Ultimately this is about how the costs of the recession and the deterioration in the terms of trade associated with higher real import costs are shared out 7 , but during the adjustment phase it may be manifested in temporarily higher wage and price inflation. Consistently above-target inflation, whatever its cause, may also lead people to believe that it will remain high in the future.
It also will require firm-specific action to manage individual risks. The challenge is that the window for action is narrowing. 5/6  BIS central bankers' speeches  Therefore, we must redouble our efforts to ensure a successful transition from LIBOR to a more sound and durable regime. Thank you for your kind attention. I would be happy to take a few questions. 1 James Bergin, Raymond Check, Caren Cox, Gerard Dages, Joshua Frost, Matthew Lieber, William Riordan, and  Kevin Stiroh assisted in preparing these remarks.

Financial crises typically result when we fail to identify vulnerabilities, and then unexpected triggers turn those vulnerabilities into points of weakness that can lead to catastrophic failure. The discontinuation of LIBOR, however, is different. We can see it coming, and we know the impact of a disorderly transition would be huge. Therefore, a half-hearted effort or a failure to act would be inexcusable, especially after all we have learned from the experience of the financial crisis. Moving this core piece of the global financial system to a firm and durable foundation is essential and worth the cost. This task is admittedly hard, but I am optimistic given our past successes. We have demonstrated that effective collective action can provide solutions to longstanding structural vulnerabilities in the financial system. A key lesson from the crisis is that structural vulnerabilities must be addressed continually. If they are ignored, larger problems eventually will result. For example, through collective action over the past decade, we have successfully addressed structural weaknesses in the tri-party repo market, the over-the-counter derivatives market, and money market mutual funds. Each of these challenges required a tailored solution that relied on different tools—including a diverse mix of market, regulatory and supervisory measures—to get the job done. Everything isn’t a nail, and the best tool is not always a hammer. You have to identify the problem that needs fixing and select the right tool for the job. This is likely to require both official sector engagement and private sector initiative.