samchain/econo-pairs-v1 huggingface dataset:
In particular, we need to understand as best we can how all the threads of the reform effort interact within one integrated global financial system. We also need to ensure that, where the law gives us latitude, that compliance and other costs are calibrated to be commensurate with the financial stability benefits generated by particular reform measures. In this respect, we must be particularly sensitive to the burden that the regulatory environment places on smaller, less systemically important institutions. But the private sector has responsibilities too. Banking leaders and industry trade groups should propose smart solutions to achieve essential financial stability objectives and not simply lobby against change. The industry has an interest in a healthy financial system that can withstand shocks and adverse economic circumstances. More statesman-like engagement is both warranted and welcome. Thank you very much for your attention. I am happy to take a few questions. 8  BIS central bankers’ speeches

Technological enhancements bring new opportunities to businesses but the pace of innovation must be met by the pace of corresponding safeguards to deal with the risks. In particular, the risk of cyberattack is a great concern. The pace here is really changing very rapidly. As with the other risks, insurers are affected for both good and ill: with ever more frequent and increasingly sophisticated cyber-attacks on businesses and individuals, insurers are being relied upon more and more for protection. A new business opportunity for sure. But, unlike most other insured risks, insurance firms could themselves be significant victims. It is difficult to predict how cyber-crime – or even cyber accidents – will evolve, and it is very challenging to obtain data for losses that arise out of cyber-events. This makes it all the more difficult to quantify reserves, models and prices as well as develop operational safeguards internally. An Insurer wishing to expand into any new business area needs to demonstrate to the PRA that new risk exposures are well understood and that the required capital for an altered risk profile has been fully considered. As stated previously, business model analysis forms an important part of the PRA’s supervisory approach and a focus for its supervisory activity. Insurers will need to deal with the PRA in an open, co-operative and constructive manner to allow us to understand whether the business model is sustainable and to identify key vulnerabilities. This will ensure a more informed, focussed and proportionate supervisory approach.
And it must be possible to distribute the socioeconomic burdens in the wake of a cross-border crisis in a reasonable and preferably fairly predictable manner. Otherwise there is a risk that conflicts between national interests will make the management of a crisis more difficult and prolonged. Another aspect which has come to the fore in the recent financial turmoil is the banks’ increased dependence on liquidity in the securities markets for their risk management and financing. Central banks around the world need to examine whether they have the necessary tools to manage coming liquidity crises. The question of when and how liquidity support can be given and how such a decision should be communicated without having a stigmatising effect that counteracts its purpose may require new ways of thinking. 10  BIS Review 30/2008  Better regulations and increased cross-border cooperation are necessary Let me in conclusion observe that the financial turmoil currently prevailing bears a number of clear parallels to many other financial crises – not least the Swedish bank crisis of the 1990s. The bank crisis was in many ways the wake-up call that made the Riksbank and other authorities realise the serious consequences that a lack of stability in the financial system can have. It led to the Riksbank developing an analysis capacity in the field of financial stability. Ten years ago the Riksbank published the first of its now regular Financial Stability Reports. I can warmly recommend that you read them.

To sustain this trend, further in-depth applied research is needed to develop more financial products that create closer links between Islamic finance and real economic activity, in terms of its operating models, risk management and supporting infrastructure. This includes more innovative risk sharing products and to evolve from the common structures of Islamic financial products to the more unique structures with greater growth opportunities. This trend is already apparent in the sukuk market. There has been the issuance of several new and innovative structures in this segment, with unique underlying features that has drawn significant global attention. This includes the recent issuance of the first Renminbi (RMB) 1 billion sukuk with airtime vouchers as its underlying assets and the debut issuance of a “green” sukuk by France. Another high-potential segment is the Islamic fund industry. Its recent growth momentum has spanned more than 36 countries, including markets that are relatively new to Islamic finance, such as Australia and Ireland. The second imperative is for the outreach of Islamic finance to be inclusive and to be accessible to all, particularly the lower income groups and small businesses. An important agenda in the global economy is to achieve a more balanced growth with reduced income disparities. Financial services has a tremendous role in contributing towards a more equitable economic growth and a more sustainable development. In relation to this, Islamic financial institutions need to strive to enhance the access of their financial services to all segments of society.
The best way to do this is to craft a plan that starts small in terms of its near-term impact, then grows very substantially over time as the economy grows healthier. Of course this requires that the longer-term consolidation is truly credible. It is also important that any plan have broad bipartisan support so that that households and businesses understand that it will in fact be carried out. We saw in the summer of 2011 when the debt ceiling limit was in play that a failure to come to grips with our nation’s economic challenges and responsibilities can have a large effect on U.S. household and business confidence. We do not want to repeat this experience at the start of 2013. Moreover, what happens will influence how we are perceived abroad. When I meet with economic leaders across the globe they do not doubt the underlying strength and dynamism of the U.S. economy, or the entrepreneurialism and inventiveness of our people. Nor do they doubt that we have the resources and capability to overcome the challenges we face. But they do wonder whether our political system is capable of putting the national interest above partisan interests and making the tough choices needed to address these challenges. If a credible bipartisan agreement is reached, it will strengthen global confidence in the U.S. and underscore to the world that our country remains a great place to do business and invest in.

Of course, there is the physical damage, which was geographically widespread, but particularly devastating in some communities right here in New York City, including Breezy Point, the Rockaways, and portions of Staten Island, and in so many cities and towns along the Long Island, New Jersey and Connecticut waterfronts, such as Long Beach, Seaside Heights, Spring Lake and Hoboken. Estimates of the costs of disruption to economic activity – that is, services that couldn’t be rendered and goods that couldn’t be produced because of protracted transit shutdowns, power outages and other such damage produced by the storm – are particularly difficult to pin down. Thus, it will be some time before concrete figures are available. However, the early read from recently-released data confirm these disruptions have been widespread. Every one of the New York City area firms that responded to our recent Empire State Manufacturing Survey – fielded one to two weeks after the storm – indicated that the storm disrupted activity at their firm, and 40 percent of them indicated that they were completely shut down or severely crippled for at least five days. Furthermore, the number of workers filing initial claims for unemployment insurance in both New York and New Jersey surged to more than triple their pre-storm levels in the week after Sandy hit, suggesting at least 70,000 storm-related job losses in these two states thus far. These data suggest that the disruptions that we have seen, and continue to see, could be substantial.
Timothy F Geithner: Actions by the New York Fed in response to liquidity pressures in financial markets Testimony of Mr Timothy F Geithner, President and Chief Executive Officer of the Federal Reserve Bank of New York, before the US Senate Committee on Banking, Housing and Urban Affairs, Washington DC, 3 April 2008. The original speech, which contains three Annexes, can be found on the Federal Reserve Bank of New York’s website. *  *  *  Good morning, Chairman Dodd, Ranking Member Shelby, and other members of the Committee. Thank you for giving me the opportunity to appear before you today. I am here to outline the actions by the Federal Reserve Bank of New York in response to present challenges in financial markets, including those in relation to the proposed merger of Bear Stearns and JPMorgan Chase. On the evening of Thursday, March 13, 2008, I took part in a conference call with representatives from the Securities and Exchange Commission, the Board of Governors of the Federal Reserve and the Treasury Department. On that call, the SEC staff informed us that Bear Stearns’ funding resources were inadequate to meet its obligations and that the firm had concluded that it would have to file for bankruptcy protection the next morning. The SEC said it concurred in that judgment, and it would spend the evening discussing with Bear what kind of bankruptcy filing was appropriate. The conference call that evening took place against the backdrop of an extraordinarily challenging period in the U.S. financial system.

We are all eyewitnesses to the tremendous economic impact of the integration of hundreds of millions of people in China, India, and the former Soviet Union into the world trading system. Globalisation has magnified world supplies of manufactured goods and capital as well as the labour force. Prices of all three have changed, and we have not been immune to those changes. Between 1995 and 2005 the prices of consumer goods imported into Britain fell by around one-third relative to the average price of other goods and services. But the greater supply of manufactured goods from newly-industrialised countries has come at the cost of a greater demand by those same countries for energy and raw materials of all kinds. The prices of oil, steel, copper, lead and nickel have all more than doubled. And in a buoyant British labour market it is not just foreign-born footballers who have been in demand. Over the past two years, around half a million migrant workers (or possibly considerably more, we simply do not know) have arrived from the new member countries of the European Union and elsewhere in the world. It is unlikely that migration on that scale has had no effect on wages, or, indeed, on rents and house prices. Some of you may be tempted to think that because the growth of the Chinese economy has affected key prices in our own economy, inflation in Britain is now largely determined overseas. Low inflation in industrialised countries, it is argued, is made in China.
6 Let me give you a concrete example of such an analysis. On 8 February 2018, the Swiss franc appreciated significantly against the euro in a matter of minutes. Chart 2 shows the limit order book for EURCHF on the interbank market between 17:00 and 17:45. The red bars represent the bid volume, and the blue bars the ask volume. The triangles denote the transactions carried out at the bid price (in red) and ask price (in blue), respectively. For each tick, the system records the volume on the bid and ask sides. The dark colours indicate more volume for a given price level. We can see that prior to 17:15, there was a liquid order book on both sides. Thereafter, a large number of EUR sell orders were executed; this was accompanied by a drop in bid volume and a downward revision of bid and ask prices. Price levels with high volume – as denoted by the darker red bars on the bid side – steadily declined to end up at CHF 1.1448 per euro. After this short-lived episode, the euro gradually recovered in the minutes that followed. Now let’s look at the trading activity and market liquidity on that day. In the two panels of slide 3, the green curve represents the spot rate for EURCHF on 8 February 2018.

The existing money market infrastructure managed by SIX has many advantages: for instance, it has a wide range of participants, including the SNB, who make up a homogeneous market and interact on a shared platform. Moreover, that infrastructure is highly automated and standardised. It is in the process of being upgraded, to better respond to the changing needs of participants. A new repo trading platform, CO:RE, was launched in 2016. Moreover, a new triparty agent is being set up which will offer market participants a wide range of services and will enable a more efficient management of collateral through closer integration with pure trading activities. Page 7/9  Finally, a resilient and modern repo market infrastructure is essential to allow the SNB to deploy its entire monetary policy toolkit effectively and at any time. Indeed, the SNB uses the same SIX platform as private participants to implement its monetary policy, by auctioning/exchanging repos or reverse repos or even issuing SNB Bills. As you will recall, the latter were issued at the beginning of the crisis. They proved to be an efficient and flexible way to absorb liquidity. I will now turn to the second point: the replacement of the Libor as the reference money market interest rate. It should be noted that the decline in transaction volumes for the unsecured segment of the money market involves not just the Swiss franc but all currencies.
It is also now conventional wisdom that the public good of price stability is best safeguarded by delegating monetary policy to independent central banks 2 , which are not subject to interference from short-sighted political concerns. These consensual points – which are laid down in the Maastricht Treaty and, hence, have a constitutional character in the case of the EU – are a reflection of the painful, central bank led disinflationary processes that in many countries followed the so-called “Great Inflation” era of the 1970s and early 1980s 3 . They are also a sign of a more general dissatisfaction with the experience during those years of stop-and-go policies, where policy-induced booms proved later on to be unsustainable and short-lived. In keeping with the primary objective of price stability, a number of central banks – following the lead of the Reserve Bank of New Zealand – adopted a strategy of inflation targeting during the 1990s. The key element is the public announcement of an inflation rate to be maintained over a more or less defined time horizon. Pioneers of inflation targeting were joined later on by a number of developing countries (for example Brazil, South Africa and Thailand) as well as by some East European transitional economies (such as Poland, the Czech Republic and Hungary). With hindsight, the policies pursued within this framework have been a success, particularly in those countries which – starting from a relatively high inflation level – needed to bring inflation expectations back into line with the central bank’s objective.

However, a major critique of utilitarian ethics is that it ignores the interests of the minority in favour of the majority, downplays the importance of family and society over individualism and strangers, and prioritises aggregate benefits over other ethical principles such as justice or equality. One could thus argue that the Maqasid Shariah, which underpins the foundation of Islamic Finance and the Islamic Economy, has a more holistic perspective on the pursuit of public interests, in that it aims to leave no one behind in pursuit of prosperity while building a cohesive society. In Malaysia, Islamic financial institutions are leading the sustainability agenda and spearheading 1/5  BIS central bankers' speeches  sustainable finance through the adoption of value-based intermediation (VBI) initiatives. VBI is the vehicle to transform the industry, from one focused on profits and shariah compliance to one that is also focused on positive impact. Through VBI, Islamic finance will bring various stakeholders together to advance the sustainability agenda, encouraging Islamic financial institutions to assess how they create value and impact, particularly in response to changing economic, social and environmental conditions. This will support the socioeconomic development in line with Malaysia’s long-term agenda of economic growth and shared prosperity for all. The commitment by the Islamic finacial institutions has been encouraging.
For instance, if the long-term trend growth of the economy is overestimated, the output gap (in absolute terms) would as a consequence be overestimated too and so would the deflationary risks. Monetary and fiscal policies would then be considered, ceteris paribus, as excessively tight and there would be a bias towards excessive expansion, with a view to achieving an optimistic rate of growth. The borrowing capacity of countries, households and companies would also be overestimated if their potential growth were overestimated. Ex post, the miscalculation of growth potential would result in an excessive accumulation of debt, both public and private, a misalignment between the interest rate and its long-term “neutral” level, and insufficient savings. As shown by Kydland and Prescott in their work on time inconsistency of optimal policy, which was later applied to monetary policy by Barro and Gordon, policy-makers who aim at excessively “optimistic” growth will conduct an inconsistent policy which will generate instability. The solution to this problem, at least for monetary policy, is to set a rule or establish an independent central bank which is aware of such an inconsistency and has a sufficiently long horizon to avoid it. This assumes however that the independent policy-maker knows what the right, “not over-optimistic” long-term growth of the economy is. He or she also has to know what the right model of the world economy is. This brings me back to the question I raised at the start, i.e. the impact of globalisation on the long-term growth of advanced economies.

In the case of annuity firms, the reforms are reliant on our confidence in the level of MA benefit taken – and hence on the fundamental spread being appropriately calculated. More broadly, in addition to the use of safeguards where appropriate, the reforms are contingent on the continued effectiveness of a central pillar of the Solvency II regime, the quality of firms’ own risk management. That will remain at the core of firm-to-supervisor dialogue and engagement. Our overall work on potential Solvency II reform has already benefited from the effective engagement as part of the pre-consultation phase of the review. Following the publication of our DP at the end of April, we are requesting more information from firms and I am looking forward to our next series of meetings in order to hear the views of firms, their investors and other stakeholders. Thank you. I am grateful to Saoirse Carberry, Craig Turnbull, Alan Sheppard, Avni Gangadia and Miranda Hewkin Smith for their assistance in helping me prepare this speech. 1. Review of Solvency II: Call for Evidence | HM Treasury 2. Brave new world - speech by Sam Woods | Bank of England. 3. Four Rs: Creating the conditions for long-term sustainable growth in the life annuity sector – speech by Charlotte Gerken | Bank of England 4. The Prudential Regulation Authority’s approach to insurance supervision | Bank of England Section 1 explains the PRA’s objectives. 5. At YE21 ‘Investment and cash excluding participations’ - Insurance aggregate data report | Bank of England, 6.
Case Study 6: Stabilization measures of 2012 Mr. Chairman, the next illustration I want to present to you is one of the clearest examples of policy co-ordination between fiscal and monetary policy. That was the stabilization package of 2012, which was introduced by the MoF and the CB from February to April 2012, in response to the pressure on the balance of payments, high imports, high credit growth and pressure on the exchange rate. As we all know, to deal with that growing tension, the Central Bank increased the policy interest rates, allowed the exchange rate to be more flexible and placed a 18% credit ceiling upon banks’ lending. In tandem, the Government imposed higher duties on the import of vehicles and a few other commodities, and increased the administratively determined prices of petroleum products. These measures were implemented in a carefully planned out and logical sequence. As a consequence, the desired stability within the economy was achieved quickly, with the Balance of Payments returning to positive territory, and the exchange rate stabilizing. In fact, this new situation enabled the Monetary Board to relax the monetary policy tightening cycle that commenced in February 2012, as early as in December 2012. This joint exercise therefore shows how quickly and effectively, a coordinated fiscal and monetary policy could deliver results, instead of the implementation of stand-alone monetary or fiscal policies, which usually take a long time to impact the economy, thus resulting in to the entire economy having to suffer from tight policies for longer periods of time.

So, I was not surprised when he remarked that he was not sure as to how he can explain all what I had said to him, to ordinary people, as my explanation seemed too technical and high-flown. He then told me, “Governor, Can you please explain what you just said to me, in layman’s language?” This was my reply to that challenging question: “To score runs in a cricket match, when one batsman strikes the ball, both batsmen have to run, each to their opposite ends. When the second batsman strikes the ball, once again, both batsmen have to run, each to their opposite ends. That is how the team will be able to accumulate its runs. For an effective partnership to be built, both batsmen have to diligently run for each other’s strikes. In the same way, for an economic partnership of the country to succeed, it is vital that there is a clear understanding between the Governor and the Secretary, Treasury. And, each time the Governor strikes, both the Governor and the Secretary have to run, and when the Secretary strikes, both the Governor and the Secretary have to run once again. That is the type of relationship that has to exist between the Governor and the Secretary to the Treasury.” My journalist friend’s eyes brightened and his boredom vanished. The expression on his face indicated to me that he had finally understood what this complex relationship is all about.