samchain/econo-pairs-v1 huggingface dataset:
Only then can they effectively perform their critical financial intermediation role in funneling funds from savers to borrowers, and in helping firms and households manage their finances and risk exposure. As I see it, incentives drive behavior, and behavior establishes the social norms that define culture. This means that bank leaders need to take a close look at the incentives they put in place with respect to compensation and promotion in particular. In addition, bank leaders must foster an atmosphere that encourages people to speak up when they witness questionable behavior. Preet Bharara, the U.S. Attorney for the Southern District of New York, highlighted the importance of getting people to speak up when he spoke at the New York Fed’s conference on bank culture in October. He argued—and I agree—that big problems can be nipped in the bud when people speak up and senior management responds appropriately. Therefore, bank leaders ought to recognize and reward those who speak up. Actions speak louder than words in shaping culture. Establishing appropriate incentives and fostering an environment in which people feel they can speak up would go a long way toward bolstering bank culture. I am gratified that many bank leaders and boards of directors are working hard to improve their firms’ cultures, and I very much appreciate the G30’s efforts in this area. I think most leaders recognize that good culture is fully consistent with strong financial performance, and that it helps enable banks to attract the talent needed to sustain such performance.

Hong Kong as an Ideal Platform to Go into Mainland China 6. The Mainland of China is home to the second largest stock market and bond market in the world. While Mainland China’s capital markets have long been rather difficult to access, this paradigm is gradually changing. 7. In the old days everyone had to go through the different programmes of QFII, RQFII, CIBM direct, with all the associated processes of applying for quotas, signing up new service providers and counterparties, setting up new trading system, conforming to onshore rules, 1/4  BIS central bankers' speeches  etc. But the introduction of Stock Connect in 2014 and Bond Connect in 2017 are gamechangers for a lot of international investors. 8. While the pre-existing access channels still cater for some investors like ourselves who have already set up all the systems, the Connect schemes enable all international investors to implement and manage their Chinese investments much more easily based on familiar international rules and practices. They can continue to leverage their existing systems and global partners, such as brokers, custodians and banks without the need to engage onshore service providers. For example, Mainland China is one of the very few markets that require direct holding of securities. But Bond Connect makes nominee holding possible to foreign investors. This drastically reduces the complexities for them to settle trades and manage assets. 9. The Connect schemes are fast gaining popularity among offshore investors.
The current inflationary wave will undoubtedly give a new impetus to this debate. How did one rather narrow and quite technical approach come to dominate macroeconomics? It's hard to say. Personally I think it mainly reflects psychological factors. From my experience of more than 30 years in both the academic and financial sectors, I see a rather strong conflict between the exact scientific thinking in the ideal of the natural sciences and the excessive uncertainty associated with the unpredictable behaviour of social systems. I have met many very smart people, including winners of what is inaccurately referred to as the Nobel Prize in Economics, and I have observed that even extremely intelligent people tend to simplify situations dramatically in the face  2/5  BIS - Central bankers' speeches  of high levels of uncertainty. They simply cling to a highly stylised economic model, abstract from many theoretical and practical inconveniences, and then offer a clear answer that can be claimed to be "scientifically" derived. Without this, they would probably have to say, "I don't know, it depends on this, that and the other". Trying to simplify things through highly stylised models would not matter in itself if their users were fully aware of this and understood that they were dealing with a partial presentation of the economy that needs to be complemented by other modelling or analytical approaches. But my experience is that even top economists tend to be timeinconsistent.

This defence must be accompanied, on the one hand, by a reform of the rules of world trade so as to include more effective mechanisms to guarantee a more balanced playing field; and, on the other, by domestic policies (flexibility of the labour market, a sound social security network, and the creation of educational and training opportunities) that adequately address the distributive problems that may stem from trade exchanges. It is also worth mentioning the promotion of trade openness in new sectors, mainly services, where the potential profit margin is significantly higher. Without further ado, let me introduce the panelists. We are honoured to have with us today three very experienced representatives of the central bank community of the Mediterranean region. 4/5  Mr. Abdellatif Jouahri, Governor of the Bank Al Maghrib. Mr. Sadiq al-Kabir, Governor of the Central Bank of Libya. Mr. Marc-Olivier Strauss-Kahn, Managing Director and Special Adviser of the Governor. They are very well suited to address the topics of this panel as they have a far-reaching knowledge of the economies of the region and long-dated experience as policymakers. Governor Jouahri, the floor is yours. 5/5
However, we may also have seen an extra wave in the exchange rate if market participants are basing their expectations on higher government spending of petroleum revenues than implied by the fiscal rule. Given the current level of the exchange rate, it would appear that foreign exchange market operators have been expecting a substantial increase in the use of petroleum revenues. Fiscal policy discipline will therefore be of importance to the krone exchange rate. Fiscal policy • The fiscal policy guideline: the central government budget deficit shall be equivalent over time to the expected real return on the Government Petroleum Fund. • The fiscal guideline has been adhered to • The fiscal guideline implies that petroleum revenues shall be phased in gradually  • The fiscal guideline is robust to fluctuations in government revenues  SG Gausdal 31.01.03  According to the guideline for fiscal policy, the central government budget deficit shall over time be equivalent to the expected real return on the Petroleum Fund. The fiscal rule is robust to fluctuations in government revenues and provides a stable framework for economic developments. The fiscal rule has been adhered to. In the budget for 2003, petroleum revenue spending was indeed somewhat higher than 4 per cent of the Petroleum Fund. This was because the estimated value of the Petroleum Fund at the end of 2002 was markedly reduced through the year as a result of the sharp decline in equity prices and the appreciation of the krone.

BIS Review 86/2001  1  In connection with increasing signs in August of a more marked economic slowdown in the rest of the world as well as in Sweden, share prices started falling again. For the krona, which had appreciated in July, this was a negative factor in the same way as it had been during the spring. Early in the autumn the picture of an international economic slowdown became even more accentuated. A number of indicators pointed to a worsening of demand in the United States even before the terrorist attacks. The uncertainty stemming from the attacks was liable to subdue demand in the rest of the world even more. After the U.S. Federal Reserve and other central banks had cut their instrumental rates on 17 September, on the same day the Riksbank decided to lower the repo rate 0.5 percentage points. An increased risk was perceived of inflation two years ahead being below the target, mainly because business and household confidence in the future might weaken and lead to a slowdown that was deeper and more protracted. The terrorist attacks led to great uncertainty in the financial markets. From what I have now said it will be clear that in recent months monetary policy has taken its cue from declining economic activity. GDP growth has slackened from a level of 3 to 4 per cent in recent years to a rate of between 1 and 1.5 per cent. Meanwhile, since last year the krona has depreciated by around 15 per cent.
5 Banks differ from other firms in that they fund their activities through deposits from customers who do not know the extent of risk taken by banks. Since a collapse in the banking system would have very severe consequences, the authorities have a strong interest in ensuring that banks operate in a responsible manner. Banks are therefore subject to stricter regulation than other companies and are supervised by the authorities. In principle, banks diversify risk by extending many small loans to firms, local government and households. In isolation, this implies that banks can operate with far lower equity capital  5  For a discussion of the role of banks in the economy, see King, Mervyn (2009): “Finance: A Return from Risk”, Bank of England, speech to the Worshipful Company of International Bankers, Mansion House. 4  BIS Review 131/2009  than other companies. When times are good, banks will have the incentive to deplete their capital base and take higher risk in order to “put equity capital to work”. Banks are therefore required to hold capital in proportion to their risk-taking, the so-called minimum Tier 1 capital requirement. Tier 1 capital is composed of equity capital and other capital that can be used to absorb losses on a going-concern basis. Risk-weighted assets, i.e. the calculation basis for the Tier 1 capital requirement, must reflect the risk the bank exposes itself to. A bank’s exposures are therefore assigned different risk weights.

and Stein, J.C. (2004), “Cyclical Implications of the Basel II Standards”, Economic Perspectives, Federal Reserve Bank of Chicago, Quarter 1, p. 18-31. BIS Review 131/2009  11  downturn, loan losses increase and erode the banks’ capital. Banks respond by tightening lending. Bank behaviour therefore amplifies fluctuations in economic activity. An analysis by Norges Bank sheds light on the procyclical effects of the Basel II capital requirements. The analysis is based on a path where the Norwegian economy is exposed to a severe disturbance. During a downturn, the debt-servicing capacity of borrowers declines and the value of bank collateral falls. The risk of bank losses increases. This leads to an upward adjustment of the risk weights used to calculate the minimum capital requirement under Basel II. The minimum capital requirement increases. The shorter the data series applied by banks in their risk models are, the more the capital requirements fluctuate with business cycles. The effects may be considerable. Higher capital requirements for banks in a downturn will amplify the downturn. In an upturn, the effect will be the opposite. If banks apply a time series that is longer than 20 years, which includes at least one pronounced economic downturn, the effect on the minimum capital requirement during a downturn under Basel II will not be as strong as when the banks use short series. Risk weights calculated on short series that do not include downturns are thus of little value. There are also other approaches to reducing the procyclicality of bank behaviour.
And it is important that plans are legally robust and that they are regularly tested. Another lesson from the recent episode is that disclosure practices in relation to liquidity risk management objectives, controls and metrics vary significantly. In some cases banks go as far as providing information on stress tests and contingency funding plans; in others there is a relative paucity of information. That hampers market functioning: in times of heightened uncertainty a lack of information can lead to defensive reactions by market counterparties that provision of additional information could prevent. There are some risks from greater disclosure. For example, a bank revealing a weak funding position could precipitate an adverse reaction, although that should of course lead to stronger risk management as a precaution against that risk. There are also measurement challenges. It is difficult to present a simple, representative summary measure of liquidity risks run by a given bank – any single definition of such a complex array of risks will necessarily be approximate. But that does not seem a sufficient reason not to disclose any measure – indeed there may be some parallels with market risk where a single metric such as a firm’s overall value-at-risk is not viewed as encapsulating all dimensions of such risk. Nonetheless, the degree of disclosure on market risks which banks are now providing under Pillar 3 of the Basel II Accord marks a definite improvement in this area.

In any case, as a breach of the threshold becomes imminent, it seems likely that the Committee will wish to provide further guidance on the future determinants of policy in order to reduce any uncertainty surrounding our reaction function. Can we say anything yet about the effectiveness of the introduction of forward guidance? As already noted, the primary objective is to give confidence to business and households that policy will not be tightened until there is a material reduction in economic slack (assuming that neither price nor financial stability are threatened) and to prevent an excessive snapback in market interest rates taking place simply because a recovery is under way. As far as the broad message to businesses and households goes, contacts of the Bank’s Agents suggest that businesses have got the message that the MPC will only begin to tighten policy once the recovery is entrenched and slack has been materially reduced. And in the period after the MPC’s announcement, the Markit Household Finance Index suggested that households expected Bank Rate to rise later than before, although the date has since come back in again, perhaps reflecting the continued flow of positive data. At first sight, the evidence from market interest rates is more equivocal. Chart 5 shows the instantaneous forward yield curve in May, August and today. Yields have risen substantially since May. On the face of it, that appears to suggest that the guidance has not been very effective at influencing the expectations of market participants.
Benoît Cœuré: Ensuring an adequate loss-absorbing capacity of central counterparties Special invited lecture by Mr Benoît Cœuré, Member of the Executive Board of the European Central Bank, at the Federal Reserve Bank of Chicago 2015 Symposium on Central Clearing, Chicago, 10 April 2015. *  *  *  Ladies and gentlemen1 This Symposium organised by the Federal Reserve Bank of Chicago is a major event for discussions on key themes regarding central clearing, and it is a privilege for me to deliver this lecture in front of such a distinguished audience. I would like to make some comments on a topic which has been steadily going up the central clearing agenda, namely the need to increase the loss-absorbing capacity of central counterparties (CCPs) beyond their current levels. Because of their growing systemic importance, CCPs need to be exceptionally robust, and that means being able to cope with even extreme losses. And to achieve this, it may well be necessary to increase their existing loss-absorbing capacity. But what is less clear at the moment is whether this can be done by having CCPs observe the existing, tough international standards, which have been introduced only relatively recently. Or whether there is a need for new requirements that are more demanding or more specific. And if so, how can we best do that in a way that preserves the benefits of central clearing, provides the right incentives to CCPs and to their clearing members, and strengthens the financial system as a whole?

Thomas Jordan: Monetary policy under the spell of the financial crisis Summary of a speech by Mr Thomas Jordan, Member of the Governing Board of the Swiss National Bank, at the State Street Global Advisors (SSgA) Prima Talk, Zurich, 6 May 2009. The complete speech can be found in German on the Swiss National Bank’s website (www.snb.ch). *  *  *  The crisis in global financial markets has led to a sharp downturn in the world economy. Unavoidably, the Swiss economy has been pulled down too. The Swiss National Bank (SNB) has reacted by considerably relaxing its monetary policy, moving – in effect – to a zero interest rate policy. The SNB is maintaining its ability to act at times of zero interest rates by making use of three unconventional measures: increasing the number of long-term repo transactions, purchasing Swiss franc bonds issued by private sector borrowers and buying foreign currency on the open market. The initial impact of these measures has been positive. Risk premiums in the money and capital markets have fallen slightly. The tendency of the Swiss franc to appreciate against the euro has been checked and volatility is declining. Curbing the upward pressure on the Swiss franc helps to protect against deflation risks in Switzerland. The Swiss economy is currently experiencing the most severe economic crisis since the midseventies.
To some extent this tighter approach permeated beyond the securities industry to other parts of the financial sector, and continued right up to 1997, when we shifted course. Development of the financial industry MAS’ third responsibility was to promote the development of the financial industry. Singapore did not become a financial centre by accident or luck. The Government saw an opportunity to develop Singapore as a regional financial centre. We had a time zone advantage, bridging the gap between the close of markets in the US and the reopening of business the next day in Europe. We were also  2  BIS Review 67/2001  well-placed, with our good infrastructure and political stability, to serve as a point of intermediation for fund flows in an industrialising Asia. We started by permitting banks to establish Asian Currency Units (ACUs) to accept non-Singapore dollar deposits. This paved the way for the creation of the Asian Dollar Market, the counterpart of the Eurodollar Market in London. We attracted international banks to set up ACUs here, and abolished withholding tax on interest income earned by non-resident depositors. We introduced a lower tax rate 1 of 10% for offshore income . From these modest beginnings, the Asian Dollar Market expanded, to reach total assets of $ 500 billion today. Another major initiative was the creation of SIMEX. In 1984, the Gold Exchange of Singapore expanded beyond trading of gold futures to include financial futures, and renamed itself the Singapore International Monetary Exchange (SIMEX).

SIMEX was the first financial futures exchange in Asia. Well before exchange linkages became the norm, SIMEX co-pioneered the world’s first mutual offset trading link with the Chicago Mercantile Exchange, facilitating round-the-clock trading. Renamed SGX-DT, the derivatives exchange today trades a broad range of interest rate, fixed income, equity and energy derivatives. A later initiative was the programme launched in 1994 to develop the fund management industry in Singapore. Our fund management industry was small compared with other financial centres. The Central Provident Fund (CPF) system was absorbing the bulk of the population’s long-term savings, and starving the private fund management industry of local funds. The Government liberalised the rules to allow CPF savings to be invested in approved unit trusts and fund management accounts. MAS and GIC went on to give modest mandates to external fund managers, although these could only be the seed money to grow the industry. At the end of 2000, the total assets managed by Singaporebased financial institutions was $ billion, four times the $ billion in 1994 when we embarked on the programme. New directions The approaches that we took in monetary policy, financial supervision and development have served Singapore well. We maintained low inflation and a macroeconomic environment favourable to growth. Our capital markets have grown rapidly over the past few years, while our forex market is one of the largest in the world. With over 200 banks and merchant banks, 150 insurance companies and 160 investment advisors in Singapore, we have become a major financial centre.
It will probably be necessary to scale it back in increments as demand pressures in the domestic economy recede and growth in trading partner countries gathers more momentum. Current forecasts indicate that this will happen, as can be seen at the right in the chart. Long-term interest rates will reflect this, and the longterm interest rate differential will narrow. Chart 6  Another important factor is that it is unclear what benefit the investments affected by the capital flow management measure have for Iceland at present. The Treasury’s borrowing need is limited in historical context, and strictly speaking, the Treasury does not need the funds generated by the bonds in question. If the special reserve requirement were not in effect, the Central Bank would probably have to hold larger foreign exchange reserves so as to mitigate the risk associated with carry trade-related inflows and the potential for sudden outflows. This would be quite costly, as the global market returns on the reserves are unusually low at present. At the same time, foreign investors can expect attractive returns on Icelandic Treasury bonds, and the more stable the króna, the greater the risk-adjusted interest rate differential. In order to reduce 7  that differential, the Central Bank would therefore need to allow increased exchange rate fluctuations, which would also exacerbate the risk faced by residents. Under current conditions, it can even be argued that for the Icelandic economy, the net benefit from such inflows is negative.

That left two possibilities: joining the eurozone after a negotiated agreement and continuing with a flexible exchange rate and an inflation target. The problem was that there were drawbacks to both. The financial crisis had uncovered flaws in the design of the eurozone, and it also came to light that political support for eurozone membership was lacking. Independent monetary policy and a flexible exchange rate had not been very successful. Has something changed? The euro area is still putting in place the reforms deemed necessary for it to function smoothly, and it does not seem to me that political support for membership has increased significantly since the Bank’s report was issued. But various reforms have been made to monetary policy conduct in Iceland, and financial stability policy has been vastly improved. Much of what I have called inflation targeting plus has already been put in place. And in the past few years, we have seen that independent monetary policy can work effectively, also in Iceland. This is where we are now. That need not mean that we will be here for the indefinite future. There is no eternal monetary solution, and various options develop over time. 4  See reference in Footnote 3. 10