samchain/econo-pairs-v1 huggingface dataset:
Telecom stocks have fallen seriously out of favour, particularly in Europe as the companies embark upon what the Economist has just described as perhaps the “biggest gamble in business history”. This is the $ billion investment in 3G licenses and networks - a lot of money to spend when the return on the investment is uncertain to say the least. It remains to be seen – outside Japan at least - how consumers will take to the mobile internet concept. The lukewarm response to WAP phones is not a good omen, although admittedly the technology in this case is much cruder than what is being claimed for 3G. Let us just hope that 3G will live up to the expectations. Even with the traditional pc-based internet, the signals are mixed. Everyone can see the ability of the internet to transform communication, flows of information and business processes. But the means to turn this into revenues and more especially into profits have proved to be somewhat elusive, as the closure or consolidation of a number of e-tailers has shown. In a period of radical transformation such as we are going through at present there are bound to be a number of false starts and failures before the business models that can successfully exploit the new technology emerge. This period of uncertainty poses important strategic challenges and increased risks for the banks in their role both as major users of the technology and as providers of funds to the companies which are putting that technology in place.

One priority has been to take account of the e-banking developments I have already mentioned. A particular landmark was the guideline on virtual banks which we issued in May of this year. I will not go into the details of this except to say that it was first drafted when the dot.com frenzy was at its peak, and I believe that the cautionary notes that we uttered have stood the test of time. In particular, our guideline stressed that virtual banks must have substance rather than being a concept, and that  BIS Review 93/2000  2  virtual banks are subject to the same risks as conventional banks and should be subject to the same prudential criteria. Essentially, we were warning of the need not to be blinded by the technology. We also warned against over-aggressive pricing and of the need to strike an appropriate balance between acquisition of market share and earning a reasonable return. As with other new banks that we authorise, we would normally expect a virtual bank to be making a profit by the end of its third year. This was criticised in some quarters as being unrealistic and not in keeping with the internet business model. However, as events have turned out, it was that model that was unrealistic rather than our guideline. Under our current rules, it is not possible to establish from scratch a new locally incorporated virtual, or indeed conventional, bank in Hong Kong.
Employment, measured as the number of hours worked, increased at an unexpectedly high rate and productivity growth last year was weaker than expected in the Report. The National Institute of Economic Research’s business tendency survey for February shows a clear slowdown in economic activity in the business sector as a whole. The business tendency survey suggests that employment has continued to increase, but at a slower rate. Companies have adjusted their recruitment plans downwards ahead of the coming months. In contrast, the purchasing managers index displays a more positive view in February. The total index rose somewhat and during several months fluctuated around the level of 55, which is close to the average since 2001. However, at the same time, the survey shows that growth in employment has slackened and that companies have become less optimistic about output growth in the future. In January inflation in Sweden was somewhat lower compared with the forecast in the Monetary Policy Report. However, this was largely connected with the fact that the weights in the CPI basket, as at the end of each year, had changed. The effects of this change were unusually large this time. This could be interpreted as though consumers, to a greater extent than normal, have replaced goods and services that increased rapidly in price in their consumption. The so-called substitution effect was then greater than the Riksbank and most other analysts had assumed.

When I weighed together the great uncertainty about developments in the financial markets and the risk for a weaker development abroad with the Swedish economic outlook and the risk of inflation in Sweden remaining high, my conclusion was that the interest rate should be left unchanged. I would like to emphasise that it should not be regarded as though I wished to attach less weight to the inflation target. It was and is more a question of how much time it will take to bring inflation back on target. I also pointed out that the Riksbank has raised the interest rate in a number of stages since January 2006 and that these increases have not yet had a full impact on the economy. What has happened since the monetary policy meeting? So far my assessment is that outcome data and indicators in the euro area are largely in line with the assessment in the main scenario of the Monetary Policy Report. My opinion is also that the indications of weak US growth at the beginning of this year and the continued problems on the housing and property markets are in line with the assessment in the main scenario. In the short-term perspective the assessment does not differ from my own. I am however more concerned that it will take longer before the recovery gathers pace. Swedish GDP growth during the fourth quarter last year was somewhat stronger than expected in the Monetary Policy Report.
For financial systems, the implications are just as far-reaching. The flipside of under-saving is over-borrowing. Consumer credit is one means of bringing forward tomorrow’s spending to today. In that sense, credit addiction and drug addiction are close relatives. And accompanying over-borrowing is likely to be over-trading: a propensity to realise investments sooner rather than later, to twist rather than stick. So where does this leave us? Patience is an evolutionary human trait which has played an important role in the development of economic and financial systems. But impatience is also a human trait whose implications for growth are potentially malign. How have these two traits evolved over time? Has the good gene, by a Darwinian process, deselected the bad? The evolution of patience In most economic models, people’s rate of time preference is assumed to be fixed. Studies of real-world behaviour suggest that assumption is rarely satisfied. People’s preferences, and their cognitive architecture, have evolved importantly over time. Patience evolved dramatically from Neanderthal to modern man. It continues to evolve today from child to adult. Preferences also adapt with the environment. Consider people’s risk preferences. Economists typically assume these too are fixed. But the real-world suggests that the environment is key. For example, in the face of a losing streak, experimental evidence shows that human risk preferences tend to flip from risk-averting to risk-loving behaviour. 13 That is why we often hear “double or quits”.

Mugur Isărescu: Christine Lagarde’s visit to Romania Opening speech by Mr Mugur Isărescu, Governor of the National Bank of Romania, on the occasion of the IMF Managing Director Christine Lagarde’s visit to Romania, Bucharest, 16 July 2013. *  *  *  Madame Christine Lagarde, Distinguished guests, Ladies and gentlemen, Today I have the pleasure to welcome again here, at the National Bank of Romania Madame Christine Lagarde, Managing Director of the International Monetary Fund. It’s good to mention from the beginning that she is the first woman to ever lead the IMF. Timothy Geithner, the U.S. Treasury Secretary at the time, said upon her appointment, on July 5th, 2011: “Lagarde’s exceptional talent and broad experience will provide invaluable leadership for this institution at a critical time for the global economy.” Allow me to briefly introduce Madame Lagarde to you. She was born in Paris. Her father was an English professor. She spent her childhood in Le Havre and after graduating high school she went on a scholarship to Maryland, USA, attending Holton Arms School in Bethesda. Madame Lagarde got her law degree at University Paris X (dix), and holds a Master’s degree from the Political Science Institute in Aix-en-Provence. Already a member of the Paris Bar Association, Christine Lagarde joined the international law firm of Baker & McKenzie, becoming its Chairman of the Global Executive Committee in 1999. Subsequently, she acted as Chairman of the Global Strategic Committee in 2004.
There is of course a downside to this strong work ethic. Many people appear not to have much time for fun. It worries me if people say they cannot afford the time for their favourite recreations or pastimes. It worries me when, late in the evening, someone jumps up from the dinner table immediately after the last mouthful, saying that he must get back to the office. But perhaps such people regard work itself as sufficient fun. So, when people ask what is it that has made Hong Kong a leading business and financial centre, I would reply that it's not just the position in the Asian time-zone, or low taxes, or the legal framework, or the English language, or the entrepot trade with the Mainland, or the Convention Centre, or the airport with its excellent international connections, or the MTR, or the rugby sevens, or the hotels and restaurants, or the shops. It is of course all of those, but additionally, and arguably foremost, I would emphasise the people and the work ethic, and the fact that in Hong Kong you can get the job done. It is in this respect – and relating back to the title of my talk - that there is perhaps something really special about Hong Kong. We may take it too much for granted, but our "can do" mentality is acknowledged by outsiders as something special and is a crucial component of Hong Kong's reputation as a business and financial centre.

In particular, given Asia’s role as an important growth centre in the global economy and the growing significance of the financial markets in Asia as a destination for global financial flows, there has been increased focus on central banks in Asia. Asian economies for several decades have established strong financial and economic linkages with the rest of the world. In this recent decade in particular, Asia has experienced significant structural changes that have altered the dynamics of the global economy and growth patterns. Since 2000, per capita income levels in Asia have risen twofold. With a growing middle class population that will reach 3.3 billion by 2030, Asia is projected to become the world’s largest market for consumer goods and services. Low unemployment and a resilient financial sector has reinforced this trend. Domestic demand has continued to strengthen while the growth in intra-regional economic and financial activities has been sustained. Intra-regional trade now represents more than 50% of total trade, increasing from 32% in 1995. Similarly, intra-regional portfolio investments have risen from 20% of total assets holdings in 2001 to 28% today. The growth in cross-border trade and investments in Asia has not only provided the impetus for the development of the domestic economies, but also enabled the region to emerge as an important economic bloc. A more recent phenomenon is the effort to promote greater regional financial integration through increased cross-border banking and financial activities within the region.
What are the implications of these challenges or qualifications to what is, overall, a favorable picture of the strength of the U.S. financial system? One of the more persistent features of financial history is that discipline tends to ebb and flow to some degree with changes in financial and economic conditions. Even though we have seen a broad-based, secular improvement in risk management practices over the past decade, competitive pressure and the search for return in a low interest rate environment can lead to a relaxation of internal disciplines even as potential risk in the balance sheet increases. There are a number of factors that suggest these forces have not led to the build up of major imbalances that would present a major source of strain as these incentives diminish in a changing financial environment. Net borrowing by the non-financial corporate sector has been quite moderate, especially as compared with the late 1990s. The financial position of this sector is very strong, with declining leverage, particularly for smaller firms, which tend to be more highly levered. Credit to the household sector has of course risen quite considerably, but debt service burdens still look relatively manageable. Net credit growth to emerging market sovereigns has been quite moderate relative to past periods. While growth in commercial bank assets has picked up in recent quarters, it also remains below the pace of the late 1990s.

With financial growth and innovation, we have seen a dramatic increase in the complexity of the risk management challenge. The frontier of innovation inevitably advances somewhat ahead of the pace of improvements in the risk management and supervisory infrastructure. The models used to inform credit judgments, to measure exposure, and to price risk in the newest instruments and trading strategies are by definition less grounded in experience. The process of assigning fair or market value is much more subjective and less amenable to objective verification. Consensus on the appropriate accounting treatment is less well established. As the complexity of risks has grown, so have the demands on firms to understand how exposures might evolve, especially in times of market stress. As an example, basis risk - in which hedged positions only partially offset one another - is an increasingly important concern for many firms, especially those that deal in complex products such as options. Assessing and managing these more complex risks requires risk management tools with a commensurate level of sophistication. In particular, the further development of techniques for stress testing and scenario analysis and of methods for translating stress test results into concrete risk management outcomes are important areas for additional progress. The risk management challenge is complicated by the nature of the institutions at the core of the system. Large, diversified financial institutions comprise many separate, highly specialized business units, each of which can have its own approach to tracking and managing risk exposures.
The high cost level in the Norwegian business sector is adapted to a situation where we are developing the petroleum sector and phasing in the use of petroleum revenues into the mainland economy. After a period, we will be able to cover a smaller share of our imports using current petroleum revenues and by drawing on capital in the Petroleum Fund. The Norwegian cost level will then have to be dampened, also compared with that of Sweden. Competitiveness may in the longer run be brought back to the level prevailing at the end of the 1960s before Norway became an oil nation. During such a period of adaptation, which may start in 5 or 10 or 15 years, a flexible exchange rate, with a fall in the Norwegian krone against the Swedish krona, will have to play an important role. Where do we stand today? Tariff barriers for trade in goods are low. The EU/EEA agreement also provides for increased trade in services. During the 1990s, capital mobility has increased to a level that is higher than 100 year ago. Free capital flows and free trade pave the way for high economic growth and prosperity, but also entail challenges. Competition has increased in many industries. Labour-intensive processes are being transferred to new EU member states such as the Baltic countries. Some multinational companies have streamlined various production processes and distribution and centralised them in the same location. Saab has been acquired by General Motors and Volvo by Ford.

Second, we have close trade relations, even if there were setbacks during the interwar period and the two World Wars. Third, both countries participated in various fixed exchange rate systems for long periods. After World War II, we adhered to the international fixed exchange rate system Bretton Woods. During the period 1900 to 1970, the Norwegian and Swedish economy grew at an average annual rate of 3.2 and 3.3 per cent respectively. With Norway’s emergence as an oil nation, a change occurred. The Norwegian economy continued to grow at about the same pace. From 1970 to date, the Norwegian economy has expanded by an  1  Report no. 39 (1983): Act on Norges Bank and the Monetary System  BIS Review 15/2005  1  annual average of 3.4 per cent. The development of the petroleum sector and the use of petroleum revenues contributed to relatively high growth also in the mainland economy. In Sweden, however, growth fell to an annual average of 2 per cent. Business sector competitiveness in Norway After Norway became an oil nation, competitiveness in the business sector in Norway deteriorated in relation to Sweden. First, wage growth in Norway has been somewhat higher than in Sweden. Second, the value of the Norwegian krone against the Swedish krona has appreciated sharply. The rise in labour costs in local and common currency was particularly high in the mid-1980s and after 1997.
But precisely because the world has moved on so much since the 1970s, it has not been straightforward to predict or understand the impact of higher energy prices on the inflationary process. (I will return to this subject later in my remarks). The MPC tackles challenges like these all the time: you will see these questions discussed in the minutes of our policy meetings, in our speeches, and in the quarterly Inflation Report. We also commission research into these questions, which we publish in academic papers. This is not research for its own sake; it is carried out to help Committee members, present and future, do a better job. We need to keep refreshing our intellectual capital. Half a century ago, Governor Cobbold famously said that the Bank of England is a bank, not a study group. Nowadays, the best central banks have something of the study group about them. Anniversaries are a good moment to take stock. So the TC enquiry and other events will prompt us to review what we have learnt, and to identify where there are gaps in our knowledge. Procedures and communications The 1997 institutional reforms did more than take political considerations out of interest rate decisions. They were intended to convince people that the inflation target regime was here to stay. The idea was to align expectations of future inflation more closely to the target, by putting monetary policy in the  4  BIS Review 20/2007  hands of technocrats whose behaviour would epitomise professionalism.

The Thai government also uses PromptPay to deliver electronic welfare payments to individuals, with a 1  ADB and World Bank statistics, 2015 ADB, 2015: from $ billion in 1992 to $ billion in 2015 3 Greater Mekong Subregion Regional Investment Framework Implementation Plan 2020, 2016 4 World Bank Remittance Prices, 2017 2  2  view to minimizing costs, risks of fraud as well as financial leakage. Given PromptPay’s open architecture, we hope that the system will soon be integrated into the daily lives of the Thai public. Up to now, these payment platforms are mostly used for domestic transactions. What we need is to connect these platforms to facilitate larger cross-border financial activities in the GMS. Having an efficient cross-border payment platform in the GMS will yield tremendous benefits for economic activities in the region, especially for border trade. I believe that it will not take long before solutions for cross-border payments become widespread. As of now, a partnership between a Thai telecommunication company and Myanmar businesses offers a cross-border remittance solution that allows sending money directly to recipients, including those in rural areas of Myanmar. In Thailand, cooperation between a Thai bank and a Chinese FinTech firm will soon launch a low-cost baht-yuan cross-currency remittance platform based on blockchain technology. These initiatives are promising projects that will lower costs of financial transaction, and enhance closer financial connectivity and economic integration in the GMS region. *** On coverage of financial services: At present, financial services in the GMS are mainly provided by local players.
The new legislation will make clear that the aim  2  BIS central bankers’ speeches  of banking regulation will be to ensure that the adverse impact of a failure of a firm on the stability of the system as a whole is minimised. That is why resolution will be at the heart of the new regulatory regime – supervisors should act knowing that resolution powers can and will be deployed in the event of failure. But adequate resolution procedures are not an alternative to ensuring that banks have sufficient loss-absorbing capital; rather they are complements. All institutions, especially so-called systemically important financial institutions, must have much higher levels of loss-absorbing capital than before the crisis. That should be in the form of common equity. A crucial part of the new Basel III framework is the recognition that only common equity is ultimately a truly loss-absorbing layer of capital. I am, therefore, concerned that the European Commission will propose a weakening of the Basel standards in that area. Moreover, as the IMF made clear in its recent Article IV Report, it would be misguided for the EU Capital Requirements Directive to prevent member countries from imposing higher capital requirements to protect the interests of domestic taxpayers. Nor should European legislation try to prevent the FPC from varying macro-prudential instruments, including capital ratios and risk weights, as appropriate to national circumstances. The Basel framework was agreed globally after long and difficult negotiations, at the request of the G20.

Mervyn King: Monetary policy developments Speech by Mr Mervyn King, Governor of the Bank of England, at the Lord Mayor’s Banquet for Bankers and Merchants of the City of London, Mansion House, 15 June 2011. *  *  *  My Lord Mayor, Mr Chancellor, My Lords, Ladies and Gentlemen: In recent years, I have set the Mansion House audience a numerical examination. After a pleasant dinner, you will not want to listen to more numbers. A more literary style is appropriate. So my question to you tonight is: which aspect of financial regulation is most deserving of the adjective “tragic”? The answer comes later. A year ago, we met in the wake of a major sovereign debt crisis in Greece with market nervousness about how far that might spread. Since then, this crisis of external indebtedness has consumed Ireland and now Portugal, as well as Greece. Current account imbalances in the euro area remain large, should concern us all, and will certainly affect us all. Inexorably, the world economy is adjusting from an unstable disequilibrium to a new equilibrium. Trade imbalances and the associated levels of borrowing proved unsustainable. In more biblical language, failure to tackle the imbalances during the seven years of plenty before 2007 threatens seven lean years thereafter for at least part of the world economy.