samchain/econo-pairs-v1 huggingface dataset:
But even so, this skewing would have to be very marked to have had a material impact on the quality of the capital stock.11 The capital stock is also likely to have been eroded by increased levels of capital scrapping, as some companies were forced out of business and others scaled back their operations in order to survive. Although increased levels of capital scrapping are likely to have played some role, they seem unlikely to provide the key to the productivity puzzle. In particular, although corporate liquidations have increased in the recession, that increase has been relatively contained and significantly less than we might have feared given the depth of the recession. Rather if the evidence from the business surveys is to be believed, and the growth of productive potential in the manufacturing and services sector has indeed largely stalled in recent years, this is more likely to reflect a slowing in total factor productivity (or TFP for short). I know what some of you might be thinking: this sounds like another one of those unobservable, abstract concepts so beloved by economists, but with little connection to the real world. And you would have a point! But think of it as efficiency gains. The fact that companies, as they hone their working practices and improve their internal processes, are able to increase the amount of output they produce for a given level of labour and capital input. Did the financial crisis and recession dampen the pace of efficiency gains in our economy, at least temporarily?

But the IEO also raises some deeper questions about how much protection the PRA should seek to deliver, for which sorts of policyholders, and with what confidence. And it is those deeper questions that I intend to consider briefly in the remainder of my comments today. Insurers are subject to what is known as “twin peaks” regulation in the UK. In addition to supervision from us in the PRA, the Financial Conduct Authority also supervises insurers. And the IEO report makes it clear that, in the context of securing policyholder protection, the FCA has the primary role. The key word of the PRA’s objective is “contribute”. We should only act when there are prudential concerns, whereas the FCA acts on wider matters of fairness. To give an example: the PRA might intervene to prevent an insurer from selling new policies if it had inadequate financial resources, but it would be for the FCA to consider whether those policies contained unfair terms and conditions. In most circumstances the split of responsibilities is clear, but we need to be sure we are sufficiently explicit about the limits of the PRA’s role in respect of areas such as with-profits business, corporate restructurings and firms that close to new business and go into run-off. Another important consideration for us is whether the PRA should seek to protect all policyholders equally. The insurers we supervise received £ of gross written premium in 2016.
As part of efforts to ensure sustainability in this new and more challenging environment, a Task Force on Islamic Finance and Global Financial Stability was formed by the Islamic Development Bank (IDB) and the Islamic Financial Services Board (IFSB). The report, which was completed in April this year, sets out eight areas that need to be further strengthened to bring the Islamic financial system to a  2  BIS Review 95/2010  higher level of performance in this new economic and financial order that is emerging. A recommendation of the report is the establishment of an Islamic Financial Stability Forum (IFSF) based at the IFSB as a strategic platform for productive dialogues to promote financial stability in Islamic financial system. The IFSF would also be a platform for the Islamic financial system to interface with the conventional system via the Financial Stability Board to facilitate the common objective of achieving global financial stability. To enhance the efficiency of the Islamic financial institutions, a solution is currently being developed to facilitate liquidity management at both national and international level. A Liquidity Management Task Force was established by the IFSB and the IDB to develop this solution. This task force is expected to make key announcements later this year to facilitate cross border liquidity flows for efficient resource utilisation by Islamic financial institutions. Islamic finance has come a long way and is set to continue its trajectory upwards and onwards.

Thomas Jordan: Discussions on the topic of the euro/Swiss franc minimum exchange rate Speech by Mr Thomas Jordan, Vice-Chairman of the Governing Board of the Swiss National Bank, held at the Swiss National Bank, Zurich, 10 April 2012. *  *  *  Ladies and Gentlemen I would like to welcome you to this discussion on the topic of the euro/Swiss franc minimum exchange rate and thank you for attending at such short notice. As you are aware, on Thursday of last week a few of the transactions in the foreign exchange market for the euro were concluded at a rate below the minimum exchange rate set by the Swiss National Bank (SNB). I consider it important that you are aware of the sequence of events, and also that I reaffirm the SNB’s current policy. Since this is a specifically market-related topic, we have chosen this rather special approach involving a discussion with news agencies. The fact that a few individual transactions at less than CHF 1.20 per euro were observed last Thursday has led to some isolated doubts being raised about the SNB’s resolve to enforce its minimum exchange rate. Right from the start I want to make it quite clear that such doubts are misplaced. The Swiss National Bank is enforcing the minimum exchange rate with all the means at its disposal. We are prepared to buy foreign currency in unlimited quantities for this purpose. In this respect, our policies are totally unchanged. What precisely occurred last Thursday?
Detailed rules on governance in banks and deliberations on transposing extensive rules on banks’ internal control systems into national law complicate or even prevent the desired level playing field of consistent supervision – they increase fragmentation. Moreover, European supervisory legislation provides more than 150 options to choose from, options which have so far been exercised along highly different lines at the national level. Some are justified by local features – in this respect, the principle is that similar things should be treated similarly and dissimilar things should be treated dissimilarly. Many of the options are based rather more on tradition, and are in conflict with the principle of “same business, same risk, same rules”. The smaller proportion of these options remains national in character. Competence for the majority of the options – for over 100 – has been vested in the SSM since 4 November 2014. The ECB, together with the national supervisory authorities, has now begun to arrange for their consistent application. This process and the resulting adaptations will not always be simple or convenient, but the benefits of the outcome should outweigh the cost of adaption – not just in terms of financial stability, but also through more balanced competition and lower transaction costs. In some respects, we are still at the beginning of the road, but I am confident that the SSM has put us are on the right path towards achieving these objectives. 5.

I have three key messages on GMS connectivity to share with you today and would like to invite you to be a part of this exciting journey: Let’s think of the young vibrant graduate I mentioned, there is so much potential and opportunity she can explore. She can broaden her skills and horizon as she gains experience and professional networks over time. She will unavoidably face some challenges along the way. But with support from her peers, together with technological advancement, she will be able to stay on course for success. This is similar for our vibrant GMS. First: The GMS is a region full of opportunities. This is owing to its geography, complementarity and connectivity among its members and with other regions; Second: GMS’s endowments and opportunities can be expanded through enhancing financial connectivity, technology and innovation; and Third: Despite many challenges, policymakers and their private-sector partners can make a difference to the GMS region. ***  1  1. Why do I say that the GMS is a region of opportunities? Over the past 25 years, integration within the GMS has deepened, integrating a diverse group of members through physical, trade, investment as well as people-to-people connectivity. Even more remarkable is the recent growth momentum of the GMS.
Publication of aggregate results allows the regulator to communicate to the market and the public our view on the resilience of the sector in plausible, narrated stresses, and identify sector-wide risks. This serves our accountability and can enhance confidence in the capacity of the insurance sector as a whole to continue to support the wider economy through provision of essential financial services. We should also think about whether it will be valuable in the longer term not only to give a sector view but a firm-specific view as well. In stress testing the banking system through the annual cyclical scenario (ACS), the Bank publishes the results for the seven participants. The objectives for the ACS test include improving firms’ risk management and enhancing market discipline, with confidence in disclosures contributing  7  See Discussion Paper 'The 2021 biennial exploratory scenario on the financial risks from climate change' (December 2019). 5  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  5  positively to access to capital markets. Publication has been helpful in cementing the integrity of the exercise and being part of the regulator’s accountability. These are valuable benefits, and the current consideration of both the future regulatory framework and the review of Solvency II, on which HM Treasury recently published a call for evidence, suggest we should look carefully at both what we are seeking to achieve, why, and how.

Our current plan is to publish results in the first quarter of 2022, following a second round of submissions if that proves necessary. (2) We will also run another comprehensive insurance stress test in 2022, which amongst other things will include a dedicated scenario for general insurers underwriting cyber risk, reflecting our view that firms still need to improve the way they assess and manage their cyber exposures. Life insurers were included in the stress test for the first time in 2019 and it was hard to produce robust results, comparable across firms with diverse business models and capable of being sensibly aggregated. We will be engaging with life firms in the very near future on lessons learned from the 2019 exercise to understand better where investment is needed – by most firms – to improve capability. Also what the PRA can do to make the test more successful, including the way in which we specify stresses, and what can be achieved in time for the 2022 and subsequent exercises. By 2022, our objective is to be able to use our stress testing exercises alongside our other supervisory analysis to improve our insights into the resilience of both the general and life insurance sectors. Looking further ahead, stress and scenario testing has more scope to develop as a supervisory tool. Areas to explore include transparency and the potential role of sector-wide stress testing in the solvency assessment framework.
17  All speeches are available online at www.bankofengland.co.uk/speeches  17  Table 2: GDP losses from a 10 percentage point increase in tariffs on US trade would be substantial29 GDP impact (peak impact over three year period, %)  US  UK  EA  World (PPP)  Trade war  - 2½  -½  -1  -1¼  Tighter financial conditions  -1  -1  -¾  -½  Greater uncertainty  -½  -¼  -¼  -¼  Permanent tariffs  -¾  0  -½  -½  Total  -5  -1¾  -2¼  - 2½  Notes: Bank calculations. There are signs that concerns about such possibilities are beginning to cascade through economies via reduced investment and demand. Consider the UK as a leading indicator of a nascent global trend. UK business investment has fallen 3.7% over the past year despite the ongoing expansion, high business profitability and accommodative financial conditions. With fundamental uncertainty about future market access, UK investment hasn’t grown since the referendum was called and has dramatically underperformed both history and peers (Charts 12 and 13). Chart 12: The recovery in UK business investment has stalled since the EU referendum  Chart 13: UK business investment growth has fallen below other advanced economies  Indices: peak in GDP = 100 180 Average  Four-quarter growth (%) 20 Range of G7 countries excl.

2  As indicated by the World Economic Forum in one of its reports on gender equality, “ensuring the full development and appropriate deployment of half of the world’s total talent pool has a vast bearing on the growth, competitiveness and future-readiness of economies and businesses worldwide”.1 I think it is important to underline that this is not about maintaining the existing structures and forcing equality in numbers only. Rather, the aim is to change attitudes and drive innovation, diversity and efficiency by including women in decision-making teams. Nor is it even a question of justice. The decision to promote diversity is supported by numerous studies that have found mixed management teams to be more innovative, more efficient and better prepared to pre-empt and deal with crises. The COVID-19 crisis has allowed us to pit women’s capacity to respond, often with outsidethe-box thinking, against men's. An article published last April in Forbes magazine examined how women leaders had responded to the pandemic. The article highlighted certain feminine traits or aptitudes that contrast with those typically demonstrated by male leaders. Cases in point are Angela Merkel’s honesty and the decisiveness of the President of Taiwan and the Prime Minister of New Zealand. Use of modern technology was pivotal to the responses to the pandemic led by the Prime Ministers of Iceland and Finland. And the Prime Minister of Norway was praised for her innovative approach to communication with the public regarding the pandemic.
Rather, our guidance should reassure you that, absent risks to either price stability or financial stability, we will tighten policy only when we are well along the road to recovery. Yes: interest rates will rise at some point. But only against a far stronger economic backdrop, when your output is higher, your order books are fuller, and you and your customers are better able to withstand a rise in borrowing costs. Moreover, although still some way in the distance, we shouldn’t look at the prospect of an eventual rise in interest rates with a sense of dread and fear. Assuming that interest rates rise due to the vigour and durability of the recovery, rather than concerns about either inflation or financial stability, we should see interest rates beginning to rise as a sign of the strength of our economy. As a sign that that we are well on the way to making a full recovery. As a sign that the emergency life-support measures put in place since the crisis are no longer required. The MPC is fully aware that extraordinary low interest rates are likely to be needed for some time yet. But when they cease to be, this will be a sign that we have finally turned the corner for home. Conclusion Let me summarise At long last, we appear to be moving back to an economic environment of which Eddie would have approved. One in which the economy is growing robustly and inflation is close to target.

Miles, D. (2013), “Monetary Policy and Forward Guidance in the UK”, speech given at Northumbria University, Newcastle, 24 September. BIS central bankers’ speeches  7
However, with regard to leveraged finance, risk managers find it difficult to appropriately and effectively play their role in a market environment characterised by fierce competition. More specifically, there are three areas where we are currently pushing for improvement. First, with regard to procedure, historical credit norms are beginning to weaken and more market-friendly structures have been adopted – I already mentioned the covenant-lite issue. In that regard, the thorniest aspect is the credit approval process. The speed of credit approval has become a cornerstone of competitiveness in the market for leveraged finance. In order to increase their market share, banks have significantly shortened their internal validation process. Anecdotal evidence suggests that many deals are presented by the borrowers as “take it or leave it”. In some cases, potential borrowers requested approval within 48 hours. To me, it seems rather challenging to properly understand a deal within 48 hours – both for the front office as well as for risk management. Second, with regard to limits, risk managers need to be alert regarding a shift towards structures that support an expanding business. Most banks have limits in place with regard to exposures held on their own books. However, these limits have sometimes been shifted upwards to accommodate business needs and the prospect of rewarding transactions; the underwriting limit, for instance, has on average increased by 49% between 2012 and 2014. In such circumstances, risk managers should ensure that stress tests adequately reflect the higher limits.

Regarding the causes, it seems that markets were driven by a broad set of worries relating to three different areas: •  first, the state of the global economy, including weak growth and weak investment, uncertainty with regard to China and emerging markets, as well as worries about the impact of low oil prices on the financial sector;  •  second, the new regulatory environment, including the concrete implementation of the new bail-in regime established by the Bank Resolution and Recovery Directive;  •  and third, some idiosyncratic issues that caused broader concerns. When you listen to some observers, you might get the impression that 2008 is not far away these days. Personally, I would rather argue that it is reasonably far away. In terms of capital ratios as a measure of the resilience of banks, it is actually a couple of percentage points away – since 2008, banks in the euro area have increased their Tier 1 capital ratios from 8.4% to 13.7%. After all, it is not just a matter of the amount of capital held by the banks. It is also a question of capital quality. And that, too, improved dramatically as a result of regulatory reforms in 2010. Euro area banks focus on Common Equity Tier 1 or CET1, the highest quality of capital. The average fully-loaded CET1 ratio of all banks directly supervised by the ECB stood at 12% at the end of last year and will have moved beyond this mark as we speak, pending annual results.
As in the case of activity, the results of the projection exercise under way will allow for calibration of the effects on the current price scenarios and, in particular, on the risk – flagged by the ECB Council at its recent meetings – that the area may become immersed in a prolonged period of too-low inflation. Turning to the Spanish economy, we are all mindful that the crisis that broke in mid-2008 was of unprecedented depth and extent in our recent history and caused acute losses in activity and employment. Fortunately, since the second half of 2013, the Spanish economy has perceptibly been experiencing a recovery, which began with positive, moderate quarter-onquarter rates of change in GDP as from 2013 Q3 and which has continued in 2014 to date. This recent improvement in activity rests on a broad set of factors: some, such as the drastic correction of the external imbalance, have been helping underpin production for some time; others, such as the progressive normalisation of the financial environment, are more recent. BIS central bankers’ speeches  1  Here, both the easing of grave uncertainty, which at one point threatened the current configuration of the euro area, and the restoration of confidence in our banking system following the restructuring and recapitalisation drive undertaken, which culminated in January, have proved decisive. Against this background, the contributions to activity of external demand and national demand are being re-balanced.

The ECB and the National Central Banks of the Eurosystem are finalising a new projection exercise, whose results will be published in early June. That will be the time to assess the effects that this first-quarter figure and all the new information compiled since the last exercise may have exerted on the baseline scenario for GDP growth in the coming quarters. As you know, in any event, the procedural rules for the ECB Governing Council set a brief period immediately before each of the monetary policy meetings in which the members, myself among them, must not make any statement that may be interpreted as pre-judging in any way the outcome of the meeting. You will therefore understand if I abstain from making any further assessment in relation to this scenario. In terms of employment, last year also saw a turnaround and the job destruction phase in the euro area touched bottom in the second quarter. But the still-moderate recovery has not yet provided for significant improvements in employment levels, meaning that hours worked in the labour market remain far below the historical average and unemployment rates are at a high. On the prices front, sluggish demand and labour market slack are strongly influencing areawide inflation developments. The growth rate of the Harmonised Index of Consumer Prices has stood at a level below 1% since October 2013, with figures that have generally tended to surprise on the downside.