samchain/econo-pairs-v1 huggingface dataset:
48 49  42  See E. Gerald Corrigan (1990): “Future Priorities in Banking and Finance”, Remarks given before the 62nd Annual Mid-Winter Meeting of the New York State Bankers’ Association, 25 January 1990. Published in Federal Reserve Bank of New York Quarterly Review/Winter 1989-90, p.7. See also p. 36 in “Norske finansmarkeder – pengepolitikk og finansiell stabilitet (Norwegian financial markets – monetary policy and financial stability)”, Norges Bank’s Occasional Papers, no. 34 (2004). 43  The concept of “constructive ambiguity” refers to the deliberate use of ambiguous language in order to advance a political purpose. The concept has been particularly associated with Henry Kissinger, said to be the foremost exponent of constructive ambiguity as a negotiating tactic. 44  See Riksrettstidende 1926/1927. 45  On 7 November 2008, Bloomberg LP (on behalf of Bloomberg News) filed a federal lawsuit against the Federal Reserve for violation of the Freedom of Information Act. The news agency had called on the central bank to identify the US banks funded by its emergency lending because the taxpayers should be aware of the risks involved in these investments. The Fed refused to name the borrowers, disclose the amounts of loans or the assets banks provided as collateral, arguing that doing so might “set off a run by depositors and unsettle shareholders”. See article “Fed makes taxpayers ‘involuntary investors’ in banks, suit says”, Bloomberg, 15 April 2009. 46  See for example Bernhard Winkler (2000): “Which kind of transparency?

It is easy to conceive of a situation where a bank that is in fact solid, but has payment problems, might collapse if the authorities expose the problems to the general public. Moreover, banks may take excessive risks if they know the authorities will come to their rescue. It can be argued that in this case it may be appropriate for the  36  Guthorm Immanuel Hallager (1935): Norges høiesteret: 1815-1915 (The Supreme Court of Norway: 18151915), 1 vol., H. Aschehoug & Co, p. 131. 37  See parliamentary deliberations for August 1821, Part 5, Addendum, p. 119. 38  The Supreme Court argued that if the citizens discern “svagheten af den menneskelige kundskab og viden netop der, hvor han ventede at finde vished da er det meget at befrygte, at saadan erfaring heller vil nedstemme den agtelse, han forhen følte for den samme domstole, saalænge han blot kjendte de for ham forstaaelige resultater af stemmegivningen og deliberationerne. (weaknesses in human knowledge and expertise notably where they expect to find certitude, there is a risk that such an experience will diminish the high esteem in which the court was previously held before their insight was confined to the comprehensible outcome of the voting and deliberations.)”. See parliamentary deliberations for August 1821, Part 5, Addendum, p. 128. 39  Professor Peter Lødrup wrote in 1998: “Den offentlige voteringen er etter nåtidens rettsoppfatning en selvfølge, og det må konstateres at Høyesteretts motstand mot den var et feilsyn.
Chart 11: Alternative scenarios a) GDP growth Percentage changes on a year ago 4.0 3.5 3.0 Stronger investment scenario  2.5 2.0 1.5  May 2018 Inflation Report central projection  Weaker consumption scenario  1.0 0.5 0.0 -0.5 -1.0  2012  2013  2014  2015  2016  2017  2018  2019  2020  2021  b) Inflation Per cent 4.0 3.5 May 2018 Inflation Report central projection  3.0 Stronger investment scenario  2.5 2.0  2% target Weaker consumption scenario  1.5 1.0 0.5 0.0 -0.5 -1.0  2012  2013  2014  2015  2016  2017  2018  2019  2020  2021  18  In this scenario, consumers increase saving rates back towards pre-crisis levels, so that quarterly consumption growth is only around 0% – ¼% compared with ¼% – ½% in the May 2018 Inflation Report projections. 17  All speeches are available online at www.bankofengland.co.uk/speeches  17  c) Excess supply / demand Projections 2018 Q2  2019 Q2  2020Q2  2021 Q2  May Inflation Report central projection  -¼  0  0  ¼  Weaker consumption scenario  -¼  -½  -¾  -¾  Stronger investment scenario  -¼  ¼  ½  1  Notes: Per cent of potential GDP.

4  All speeches are available online at www.bankofengland.co.uk/speeches  4  Chart 1: Close correlation pre-crisis between output growth and policy  60  3 month moving average, bps 50 Combined CIPS output survey (LHS) 25  55  0  50  -25  45  -50  40  -75  3 month moving average, balance 65  Average MPC vote, including QE (RHS)  35 30 1998  -100 -125  2000  2002  2004  2006  2008  2010  2012  2014  2016  2018  Sources: IHS Markit, ONS and Bank calculations. Notes: Combined CIPS output survey is a weighted average of the Markit/CIPS PMIs for services, manufacturing and construction. Average MPC vote includes both decisions on Bank Rate and QE, with every extra £ of asset purchases (gilts and corporate bonds) treated as equivalent to a 25bp cut in Bank Rate (see Joyce, Tong and Woods, 2011). Five years ago, the MPC recognised that past should not be prologue. The MPC was pretty certain there was a large amount of slack, although it had questions over how much productive capacity had been destroyed following the crisis; how quickly productivity growth would recover; and whether labour supply would change in the wake of reforms and a heavy burden of household debt. Such uncertainties about supply meant that knowing what was happening to demand was no longer sufficient for gauging the appropriate policy response.
Global Risks and Thailand’s Economic Outlook Veerathai Santiprabhob, Governor of the Bank of Thailand Fitch Ratings Thailand’s Annual Conference 2018 October 2, 2018 Ladies and gentlemen, I am delighted to be here with you this morning, and I would like to thank Fitch Ratings (Thailand) for inviting me to speak at this event. When I was asked to deliver the opening speech for this event, I thought, what would be the most important message I can share with you as a central banker? I thought that, in many ways, the job of the central bank and that of a credit rating agency are similar. We both need to look far ahead into the future; we both need to be conservative; and we both need to assess risks to the economy. With this in mind, I would like to share with you my thoughts on the risks that the Thai economy is facing, where Thailand stands in terms of dealing with those risks, and how we can ensure a solid footing going forward. Ladies and gentlemen, As evidenced by vulnerable fund flows and sharp currency movements, there is no denying that the global financial markets have become increasingly turbulent. The complex financial network that has helped facilitate efficient flows of fund across the world could, in times of turbulence, become a contagion linkage that disrupts economic activities. As a part of this interconnected financial network, Thailand is no exception.

Monetary policy must be conducted with caution as to not contribute to further build-up of financial vulnerabilities. Furthermore, amidst the prolonged period of low interest rate and the increasing search-for-yield behaviors, it is our view that supervisory coordination is increasingly imperative for effective risk monitoring to make sure that the regulations across different regulators are broadly aligned and that financial 4  activities cannot simply move from a regulated to an unregulated umbrella. This is reflected through our close collaborations with other regulatory bodies such as the Securities and Exchange Commission (SEC) and the Office of Insurance Commission (OIC). Ladies and gentlemen, While we have adequate external buffers to withstand short-term vulnerability in the global market, what would ensure the economy’s stability and resilience in the longer-run are productivity-enhancing infrastructures and ecosystem. This is crucial for the country’s competitiveness in the years to come. I am delighted to say that we are on the path of productivity improvement. With the limited time I have, it is difficult to do justice to all the projects that have been initiated. Some of the most notable examples are the Eastern Economic Corridor (EEC) and transportation and digital infrastructure projects that have been long-overdue. On our side, the Bank of Thailand is doing its part to develop infrastructure and ecosystem needed for the ongoing transition towards the digital economy. Under the e-Payment Masterplan, we, together with the Ministry of Finance and the Thai Bankers’ Association, launched PromptPay, which has allowed real-time fund transfers among individuals and businesses.
It is analogous to physical capital, like equipment, buildings and property, or to human capital, like the accumulated knowledge and skills of workers,6 or reputational capital, like the franchise value or brand recognition.7 Cultural capital is an input into a firm’s production process—impacting how it does its business. Cultural capital is an intangible asset. That is, we generally experience the impact rather than the thing itself—but its impact can be measured, assessed, and ultimately influenced. For example, in an organization with a high level of cultural capital, misconduct risk is low and observed structures, processes, formal incentives, and desired business outcomes are consistent with the firm’s stated values. The unspoken patterns of behavior reinforce this alignment. Problems are escalated to senior managers routinely, as employees feel empowered to raise their hand and believe that their efforts will result in meaningful responses. And senior leaders advance through the organization because, in addition to strong business performance, they set a credible tone from above by modeling behaviors consistent with the firm’s values. By contrast, consider some characteristics of an organization with low levels of cultural capital.

In banking regulation, externalities are the conceptual driver behind the enhanced prudential standards for capital, liquidity, and risk management that are currently applied to the largest, most systemically important financial institutions.8 Principal-agent problems Principal-agent problems reflect incentives for employees to act in ways that don’t align with the broader interests of management or shareholders. This can lead to excessive risk-taking, underinvestment in risk-reduction and risk-control mechanisms, and a focus on short-term returns at the cost of long-run viability. Think about the trader who is compensated on short-term P&L and not long-term value creation. These issues can be amplified by the opacity intrinsic to many financial activities that allows misconduct to persist and erodes the cultural capital of the firm. 3/5  BIS central bankers' speeches  Adverse selection Adverse selection occurs when those particularly ill-suited for something are the most likely to participate. This could be a complicating factor in this context if conduct-related events change the composition of a firm’s workforce. Firms with relatively low cultural capital (and a relatively high tolerance of misconduct risk) may attract and retain employees and clients more inclined to take inappropriate risks and push beyond internal limits and controls. Further, high-quality directors, executives, and employees might leave such firms or decline to join them, depleting the firm’s human capital and contributing to the deterioration of cultural capital.
Current estimates suggest that approximately 7500 hedge funds manage assets totaling close to USD 1000bn (graph 1).3 Remarkably, according to the CSFB/Tremont Hedge Fund Index, there have been only a few quarters with net outflows since 1994.4 These figures demonstrate that the hedge fund industry has matured at an extraordinary rate and today constitutes a non-negligible component of the global asset management industry.5  1  A more detailed study on hedge funds will be published in the forthcoming Quarterly Bulletin of the Swiss National Bank (March 2005). 2  Alfred Winslow Jones is credited for the creation of the first hedge fund in 1949. His strategy consisted in combining long positions in undervalued stocks and short positions in overvalued stocks, in an attempt to minimise the influence of overall stock market moves. To magnify his portfolio’s return, Jones added leverage. 3  According to Hedge Fund Research Inc., 7436 Funds managed USD 973bn of assets at the end of 2004. Other sources may come up with different figures. 4  The CSFB/Tremont Hedge Fund Index is the largest asset-weighted hedge fund index. The CSFB/Tremont Index is broadly diversified, encompassing around 400 funds across ten style-based sectors, and representative of the entire hedge fund industry. Assets included within the CSFB/Tremont Hedge Fund Index amounted to USD 615bn in September 2004. Performance is calculated net of fees.

Regulatory initiatives in the arena of position reporting strike me as misguided. Position reporting is at best an unrealistic proposition. At worst, it could undermine the integrity of financial markets. It is unrealistic because the timeliness and aggregation problems are virtually insurmountable in an industry which today represents nearly 25% of the total mutual funds industry in the United States. More importantly, it is potentially counterproductive because, amongst other things, position leaks could encourage behavior by market participants which is fundamentally incompatible with a market-based price finding mechanism. The most complex potential regulatory arena concerns leverage in the hedge fund industry. Extreme levels of leverage are an obvious source of concern for central banks in light of the credit risk nexus between hedge funds and the global banking system. This credit risk nexus could become particularly precarious if a large scale credit crisis were to coincide with a global capital market liquidity crisis. Regulatory initiatives directed at assessing the degree of leverage in the hedge fund industry should therefore not be dismissed ex ante. 7  4  I.e. the value of the positions as a multiple of the equity value. BIS Review 8/2005  Nonetheless, meaningful efforts to measure leverage in the hedge fund industry are bound to be undermined by complex aggregation problems not dissimilar to those prevalent in the arena of position reporting. Misguided regulatory initiatives will fail to accomplish what they set out to do and thus undermine the credibility of regulation. Ineffective regulation can ultimately undermine the competitiveness of financial centers.
A continued recovery requires that this is accompanied by a broad and sustained increase in demand; otherwise the upswing is liable to be relatively brief. In this respect there may still be some uncertainty, mainly perhaps as regards the American economy. The economic imbalances in the United States are still large and stock-market values are high, both historically and in relation to the current cyclical phase. However, high productivity compared with the rest of the world may make these problems less troublesome. Household saving has admittedly become somewhat higher relative to disposable income since the end of last year but the level remains very low compared with earlier years. Unemployment continues to rise. Against this background there are grounds for expecting that growth in the coming years will not be as high as in the late 1990s. But as overall economic policy is expansionary, there should be a successive recovery during the second half-year, though of course there are both upside and downside risks. Turning now to Europe, there do not seem to be any clear signs of a strong recovery. Leading indicators admittedly point to a more positive business mood but the prospects for Germany – the largest economy in the euro area – are still uncertain and unemployment is rising from a high initial level. The euro area has not accumulated imbalances such as those in the United States and this may help to maintain a recovery once it has begun.

They created a “Risk Profiler” bot which is not perfect but plays a useful role in directing our enquiries. More recently, our credit union supervisors got in touch with our competition team about working on barriers to growth issues. They observed that the structure of our requirements creates some difficult cliff-edge effects for growing firms. This arises in the following way. For all deposit-takers in the UK (banks, building societies and credit unions) capital requirements go up in tiers as they get larger. This works as a “slab” system. To illustrate this let me take the perilous step of drawing an analogy with tax, perilous in that it is considered a cardinal sin for central bank officials to utter the word “tax”. You can contrast this “slab” system with income tax. When a firm’s size exceeds a certain threshold, it has to carry an extra layer of capital not only for each asset it takes on above that threshold, but for its entire asset base. To make the comparison with income tax, it’s as though if your income exceeded £ the higher tax rate of 40% was then applied not only to your earnings above £ but also to all of your earnings below the threshold. We tend to think – in line with the international consensus in Basel – that this tougher “slab” approach is a good thing for deposit-takers because it should discourage them from becoming too large too quickly.
One reasons for this is because the LCR scenario is one specific set of liquidity parameters, representing a stress motivated in large part by the experience of the Global Financial Crisis. In normal times, this set of parameters ensures that banks hold sufficient liquidity to weather a range of potential severe stresses. [33] But those same static parameters mean that when a real stress hits – which may look quite different to the stress embodied in the LCR – the LCR can move in counter-intuitive ways, and changes in the LCR are not straightforwardly related to changes in banks’ liquidity position. [34] And ultimately, the LCR is not the only liquidity metric. That’s why when banks face liquidity stress, the PRA considers a much broader range of liquidity information in determining its regulatory response. So a given level of LCR can be consistent with quite different levels of liquidity resilience depending on the nature of a stress – and if the LCR metric is constraining banks’ ability to appropriately draw on their liquid assets, we should consider ways to address that problem. Policy implications The question of how to prudently manage liquid assets in a given stress is no doubt a difficult one, and there are fundamental reasons why banks may be cautious. But the evidence suggests that the way the prudential framework itself is working may be inhibiting banks in appropriately using their liquidity when facing stress.

Our average ownership in listed European companies is almost three times our average holdings in Asia or the Americas. Slide 12: Changing regional allocation (starting point) At the start of this year, more than half of the Fund was invested in Europe. As the Fund has grown, we have come to realise that a more even distribution between regions will better enable the Fund to take part in global value creation. Slide 13: Changing regional allocation (target) Recently, a new principle for the regional allocation of the Fund’s assets has been approved. A consequence of this principle is that the relative allocation to Europe is reduced. The Fund’s relative holdings in the Americas, Asia and emerging economies will increase accordingly. For the Fund as a whole, a more even allocation across regions will improve the overall long-term trade-off between risk and expected return. In accordance with the new allocation of the Fund’s assets, new purchases will primarily be made outside of Europe, until the adjustment process is completed. As the Fund receives inflows of fresh capital on month-by-month basis, we are able to undertake the adjustment through new purchases. This will ensure a gradual process, and will not entail a large sell-off on our part. Instead, the effect will be merely a temporary drop in our purchases of European assets. Under the new principle, the Fund will still be overweight in European assets, compared to a market neutral position.
That for home mortgages has nevertheless been falling, thanks to substantially lower mortgage interest rates, but higher unemployment may reverse the trend. At times such as this, it is necessary to look very carefully to see how our financial system is coping with the stresses and strains of prolonged economic difficulty, particularly since that difficulty is likely to continue for some time. In the light of September 11th, it is also important to reflect on how resilient our system is in the face of a sudden emergency. How strong is the financial and banking infrastructure we have built in Hong Kong over the years, and what further building is necessary to make it still stronger? Building stability The attacks in Lower Manhattan on September 11th were, among many things, an attempt to bring the world's largest financial centre to its knees. Given the scale and the location of the attacks, it is remarkable how quickly operations resumed in New York and, consequently, how little disruption occurred to financial markets across the world. In particular, the all-important payment systems were able to remain in operation without failure or gridlock. This is a tribute to the crisis-readiness of the organisations involved - whether private or public - and an example of that quality of determination in the New York spirit, which has impressed, and moved, all of us. Because the US financial infrastructure was robust enough to cope, there was no contagion in Hong Kong or elsewhere.

In September 2013, shareholders of a major U.S. bank requested that the bank prepare “a full report on what the bank has done to end [its] unethical activities, to rebuild [its] credibility and provide new strong, effective checks and balances within the [b]ank.” That request was forwarded, by the way, by a Catholic nun. The bank responded through its attorneys that the nun’s proposal was “materially false and misleading” and “impermissibly vague and indefinite.”9 Fast forward to May 2015. The Federal Advisory Council-a panel of bankers that advises the Federal Reserve System-reported that “Regulators and the banking industry have worked extensively to restore financial stability through a series of mechanisms and rules that establish appropriate levels of capital, liquidity, and leverage. . . . As often as not, however, the challenges faced in recent years have been behavioral and cultural; post-crisis episodes such as LIBOR and foreign exchange manipulation provide hard evidence that there remains work to be done.”10 This is clearly an encouraging difference in perspectives. The public sector, too, has paid increasing attention to culture. The Group of Thirty, the Basel Committee, the European Systemic Risk Board, and the Financial Stability Board have issued papers on culture, governance, and misconduct risk. The Fair and Effective Markets Reviewa joint project of the Bank of England, the Financial Conduct Authority, and Her Majesty’s Treasury-has called for heightened standards for market practice in matters affecting the public good.