samchain/econo-pairs-v1 huggingface dataset:
These variables also affect the exposures of different entities to various categories of risk. This is very much what we observe in practice, where even imbalances arising in some other sector often create ripple effects throughout the financial system and, where this is not robust enough, in the rest of the economy. Consistently with this view, it can be argued that financial stability is best pursued by implementing a coherent set of policies which respond to the underlying macroeconomic fundamentals. Recent episodes of financial crisis, for example, have shown that through their effects on expectations and on  1  This paper was delivered at a seminar organised by Société Universitaire Européenne de Recherches Financières (SUERF), in conjunction with the Central Bank of Malta on Thursday 27 March 2003. 2  Knight, M. 2002. “The Central Bank’s Role in Fostering Financial System Stability: A Canadian Perspective”, in Financial Risks, Stability, and Globalization; ed. O.E.G. Johnson. Washington, D.C.: International Monetary Fund. pg. 314.  asset prices more generally, unchecked variations in property prices can contribute to precipitating a crisis. Similarly, it is often forgotten that a combination of excessive public deficits with an over reliance on short-term capital flows and an overvalued currency is the perfect recipe for a turnaround in market confidence, and consequently for sudden reversals in capital flows.

As the size and importance of financial systems have grown, so have the sources of potential threats to their stability. Apart from the magnitude of short-term private funds which move across the globe daily, financial stability stands to be undermined by the emergence of such factors as asset price bubbles and by the blurring of the erstwhile distinction between financial markets and institutions, developments which complicate the task of the authorities charged with overseeing the financial system. Clearly, “financial stability” has assumed a much broader meaning than that implied by the terms “financial supervision” and “banking stability”, with which it used to be associated in the past. These wider ramifications of the concept are well captured, I believe, by the definition proposed by Mr Malcolm Knight, the Senior Deputy Governor of the Bank of Canada who is soon to take over as General Manager of the Bank for International Settlements. He defines a stable financial system as one in which all economic agents - households, business firms, financial services firms and government - can confidently hold and transfer financial assets without experiencing serious risks of 2 disturbances that undermine financial values or repayment prospects. The notion which this definition conveys very clearly is that risks to stability need not originate within the financial system itself. In particular, while a sound clearing and payment system and regulatory framework remain vital prerequisites, a healthy macroeconomic environment characterised by stable prices, interest rates and exchange rates is equally necessary for financial stability.
The average weekly wage in the education and health services sector is $ in the professional and business services sector it is $ and in the mining sector, the average weekly wage is $ Together these three sectors account for 68 percent of the jobs that have been created in Texas in the past two years. I should point out that in 2010, 9.5 percent of hourly workers in Texas earned at or below the federal minimum wage, a share that exceeds the national average of 6 percent. California’s share was 2 percent and New York’s was 6.5 percent. Texas and New York do not have a state minimum wage that is higher than the federal minimum wage.1 At least 17 states do have minimum wages that are above the federal level of $ California’s minimum wage, for example, is $ The agricultural sector has a relatively high share of minimum wage workers. Approximately 2 percent of Texas’ workers are in the ag sector, whereas 1.1 percent of California’s workforce and a mere 0.5 percent of New York’s workforce are employed in agriculture. This is true especially in the border area, which also has many migrant workers and where the level of education is relatively low. Finally, Texas has a younger workforce than the nation,  1  4  See “Minimum Wage Workers in Texas,” http://www.bls.gov/ro6/fax/minwage_tx.htm.

The assumption underlying both reports was that the Central Bank’s key objective would continue to be price stability, as is mandated by law, and that the exchange rate of the króna would remain flexible, although it would not need to be entirely free-floating. I will not explain the grounds for these assumptions here, as they have been discussed widely, except to point out that it is unrealistic to entrust monetary policy with objectives other than those it has the chance to fulfil using the available instruments, and that adopting a fixed exchange rate would eliminate the advantages of an independent currency and independent monetary policy without eliminating the disadvantages. Therefore, policy formation lies in finding a framework that can work under the above-described conditions. There were a number of drawbacks to Iceland’s pre-crisis monetary policy framework. A major flaw was the lack of an adequate response to the excessive capital inflows that contributed to credit and asset price bubbles and domestic residents’ significant foreign exchange risk, which was to a large extent unhedged. Furthermore, monetary and fiscal policy were not well enough aligned, and the same can be said of other Government decisions that affected demand. The burden on monetary policy was therefore greater than it would have been otherwise, which further stimulated capital inflows. This, together with strong demand, pushed the real exchange rate higher than it would have been otherwise and exacerbated macroeconomic imbalances, as could be seen most clearly in a sizeable current account deficit.
The Riksbank’s material for the assessment of monetary policy in Sweden in 2009 is based on the principles I have just described and this entails a certain renewal compared to the assessments of previous years. 1 I now intend to present the material for assessing monetary policy in 2009 that the Riksbank published a few days ago. As you probably know, from and including the meeting held in April 2009 I have entered reservations against the monetary policy decisions and advocated a lower repo-rate path, on the grounds that this would better stabilise both CPIF inflation and resource utilisation without leading to problems for financial stability or the functioning of the financial markets. 2 However, in my speech today I will focus on the policy conducted by the majority of the Executive Board. 2009 – an extraordinary year for monetary policy In 2009, the Riksbank continued to conduct an increasingly expansionary monetary policy. The aim was to attain the inflation target and to mitigate the effects of the financial crisis on the real economy. From February to the beginning of July, the Riksbank cut the repo rate from 2.0 per cent to the all-time low of 0.25 per cent. The repo-rate path, that is the Riksbank’s forecast of the development of the repo rate in the years ahead, was also revised downwards at every monetary policy meeting during this period. During the rest of the year, the repo rate and the repo-rate path were left unchanged.

There are two channels through which the effects of deleveraging will be transmitted to Asia: financial and trade. The financial channel could see several global banks operating in Asia downsize their assets. The areas more likely to be affected are trade financing, project financing, asset leasing, SME lending, and syndicated lending. No doubt, some Asian banks will step up and fill some of these gaps. But it is unlikely that there would be full substitution. The resultant tightness in credit could lead to a slowdown in economic activity. The trade channel could see transmission through a slowdown in exports to the US and Europe as consumption and investment in the latter become weaker.   According to the ADB, 60% of sales from developing Asia are to the G3 economies.   According to the IMF, if growth in the EU declines by 3.5% points below the baseline for two years, growth in Asia will decline 1.5–4.0% points below the baseline.   Taking the perspective from Singapore, Europe is also one of our largest trading partners and source of investment. A scaling back of global risk appetite precipitated by slower growth in the G3 will dampen consumer and business sentiment in Asia generally. In short, Asia is not decoupled from America and Europe. But while Asia is not decoupled, it will not derail either. Growth will slow but will not stall. Asia is entering the current downturn from a position of strength.   Public finances are healthy.
Adnan Zaylani Mohamad Zahid: Re-inventing payments - the future of financial services Keynote address by Mr Adnan Zaylani Mohamad Zahid, Assistant Governor of the Central Bank of Malaysia (Bank Negara Malaysia), at the Malaysian E-Payments Excellence Awards (MEEA) 2019, Kuala Lumpur, 31 July 2019. * * * It is my pleasure to be speaking here today, at such an exciting time for our payments landscape. Malaysia’s progress in migrating to e-payments has been promising. In less than a decade since 2011, we have reduced cheque usage by half to 101 million in 2018. E-payment acceptance points such as point-of-sale (POS) terminals have more than doubled to 16 terminals per thousand inhabitants in 2018. More merchants are also accepting QR payments with over 400,000 registrations recorded to-date. Meanwhile, e-payment transactions have almost tripled to 125 transactions per capita in 2018. At the same time, new business models are emerging. We estimate that 40% of fintechs in Malaysia are in payments or payment-related services – making it the largest segment. The ewallet space has been particularly vibrant, contributing to rapid growth in mobile payments. From 2017 to 2018, mobile payment transaction volume had increased twenty-fold from just below two million transactions to over 34 million transactions within a year. Keeping these developments in mind, allow me to share three broad priorities in taking Malaysia’s payments journey to greater heights.

In concordance with the modern philosophy of macroeconomic administration, the Bank of Albania remains committed to not allowing that rapid and short-term economic growth impair the long-term development perspectives of our country. At microeconomic level, the growth of consumption in economy was followed by increased indebtedness in Albanian households’ and businesses’ balance sheets and by overinvestments in certain sectors of the economy. Both these indicators are either at lower levels than in the regional countries, or at similar levels; hence, they cannot be specified as problematic. However, their rapid growth rate creates the idea of a short-term vision of the economic agents, and in particular cases, even avoidance of rationality. Dwelling upon household consumption, the Bank of Albania invites all economic agents to be more forward-looking and realistic in their consumption and savings plans. This invitation does not imply the contraction of consumption or the change of preferences related to it, but merely placing it in the context of long-term plans that equal income and expenditure at a household level. Beyond the time-related dimension, as we have continuously drawn the attention, borrowers should be cautious as regards their loan currency. This implies that the matching of their loan currency with that of their income would be their best protection. In a more pragmatic  BIS Review 158/2009  3  approach, this advice may be reduced into an appeal for a close consultation with the banking system and the financial market’s specialized agents.
As we all know, forecasting economic activity and prices is not a simple matter. Since such assessments cannot be very exact, one has to weigh up risks and probabilities. Two secondary alternatives were therefore discussed in the March report, where future inflation might be lower and higher, respectively, than in the main scenario. In the former alternative, lower inflation might result from a weaker development of consumption. In the latter, on the other hand, higher inflation might stem from a weaker exchange rate that leads to higher growth for exports and GDP, thereby generating stronger inflationary pressure. Against this background, I want to say something about our current view of tendencies for private consumption and the exchange rate. Private consumption In 1996 household disposable income fell, unexpectedly, by 0.1 per cent despite a strong increase in the wage bill. The National Institute of Economic Research and many other observers had expected a 2 per cent increase in disposable income. The growth of consumption was therefore financed entirely from a reduction of the saving ratio to 5.4 per cent. This has altered the starting point for assessing private consumption’s future path. BIS Review 56/1997  -6-  In recent years household income has been greatly affected by measures for consolidating government finance, mainly increased taxes and decreased transfers. But for the impact of public systems, household income in each of the years 1994-98 would have been 3 to 4 per cent higher (Diagram 4). As it is, the level is likely to be virtually unchanged.

In the case of non-financial corporations, the subdued levels of production and trade, as well as the ongoing uncertainty surrounding the business outlook, continue to dampen firms’ demand for bank financing, a tendency which is likely to prevail in the coming months. In this respect, it is worthwhile to note that the growth of loans to enterprises typically only picks up with some lag compared with the cycle in economic activity. At the same time, the ongoing improvement in financing conditions should support the demand for credit in the period ahead. Against the background of highly demanding challenges, banks should take appropriate measures to strengthen further their capital bases and, where necessary, take full advantage of government measures to support the financial sector, particularly as regards recapitalisation. To sum up, the current rates remain appropriate. The incoming information and analyses that have become available since our meeting in early October have confirmed our expectations. While annual HICP inflation was -0.1% in October, according to Eurostat’s flash estimate, it is expected to turn positive again in the coming months and to remain at moderately positive rates over the policy-relevant horizon. At the same time, the latest information continues to signal an improvement in economic activity in the second half of this year. The Governing Council expects the euro area economy in 2010 to recover at a gradual pace, recognising that the outlook remains subject to high uncertainty.
And as the crisis progressed, our sense is that securities-lending-based financing of leverage was withdrawn, exacerbating the deleveraging in the system, the erosion of market liquidity, and falls in asset values. There are a number of possible lessons here. One is that there needs to be greater transparency and integrity around key financing markets. In the particular case of securities lending, we should consider whether it might lend itself to central counterparty clearing; and if not, as may well be the case for some types of security, we should explore whether transactions could, nevertheless, usefully be registered with a trade repository, with aggregate data published – along the lines now provided for the CDS market. Second, regulators should consider putting restrictions around what regulated firms can take as collateral against securities lending or, alternatively, should ensure that leverage, counterparty-credit and investment risks are properly disclosed to the market. Third, insurance regulators internationally should be sensitive to business lines that can leave an insurer leveraged and exposed to liquidity runs. 8 Fourth, the custodians and ICSDs should review the basis on which they group different kinds of assets for use as collateral in various of their triparty facilities. It should be obvious to a lender when it is taking risky assets as collateral. And conduct-of-business regulators should probably take a look at how custodians market and explain their services to their clients. In the UK, the Securities Lending and  6  Source: Data Explorers.

Overall, it is surprising how little commentary there has been from the perspective of securities market regulators. An exception is Luigi Zingales, “The Future of Securities Regulation”, Chicago Booth School of Business Working Paper No. 08–27. While I do not necessarily support all of his prescriptions, the paper is noteworthy for approaching the reform agenda from the perspective of securities markets and regulation rather than solely that of bank soundness and prudential supervision. 12  See Gorton, op cit. 13  See Bank for International Settlements (1986), “Recent innovations in international banking”, prepared by a Study Group established by the Central Banks of the Group of Ten Countries, known as “the Cross Report”. 14  For examples of market intelligence on innovations at the beginning of the latest cycle see, Rule D (2001), “Risk transfer between banks, insurance companies and capital markets: An overview”, Bank of England Financial Stability Review, December 2001. BIS Review 6/2010  7  “shadowing banking” has become significant to sustaining stability in the provision of essential financial services to the broader economy; when it is founded on liquidity lines, incomplete risk transfer or other kinds of support from the core commercial banking system; and when it involves the provision of the liquidity or monetary functions of banking as well as credit intermediation. Running leverage and liquidity risk is not sufficient to make a firm or fund a de facto bank. I do not think AIG’s securities lending/credit spread business was really a bank. More like a hedge fund.
Moreover, here in Essex County, there has yet to be any significant upturn in jobs, although neighboring Hudson County has seen a fairly strong rebound. 4  BIS central bankers’ speeches  That’s not to say that there aren’t any strong industry sectors here in New Jersey: job growth has been quite robust in health services, transportation and warehousing, construction and a number of business service industries. There has also been steady job creation in retail trade and leisure and hospitality, though these tend to be low-paying sectors. On the other hand, employment remains depressed in other industries such as finance, publishing, telecommunications and manufacturing. So why is New Jersey not keeping pace with New York in terms of job growth? Well, much of the strength in New York State has been driven by New York City; other parts of the state have seen similar, if not weaker, job growth than New Jersey. Of course, this raises the question: why has New York City’s economy been so much stronger? In fact, there is a body of research suggesting that the long-term drift of economic activity and jobs from cities to suburbs has subsided, and that there is a growing trend toward re-urbanization – a preference for both people and businesses to locate in cities, like New York. Yet there is also a strong tendency for persistent strength in an urban hub to gradually spill over into nearby areas.

Examples of such indicators include retail sales, the ISM manufacturing index, manufacturing production and orders, and single-family housing starts. Overall, I view these downside surprises as reflecting temporary factors to a significant degree. For example, some of the recent softness is likely due to yet another harsh winter in the Northeast and the Midwest. My staff’s analysis of a measure of both the amount of snow and the population affected indicates that January and February weather was 20 to 25 percent more severe than the five-year average. Such large deviations appear to have meaningful negative impacts on a number of economic indicators. Even so, there are some downside risks to the growth outlook. In particular, the steep decline in crude oil prices is likely to lead to a further sharp drop in U.S. oil and gas investment. 2  BIS central bankers’ speeches  Additionally, the significant rise in the value of the dollar is likely to lead to weaker U.S. trade performance. Let me discuss each of these in more detail. Energy prices have declined sharply since mid2014. In recent weeks, the benchmark West Texas Intermediate (WTI) oil price has been hovering in a range of $ to $ per barrel, less than half the price in June of last year. This creates both positives and negatives for the U.S. economy. Starting with the positives, since the U.S. is still a net importer of petroleum, this development has provided substantial benefits, with our oil import bill down by about a ½ percentage point of GDP.
Before I do that, however, I should like just to highlight the challenges and achievements of the past year, and to touch on an issue that I know is of concern to Members: the question of accountability and transparency. The year in review Nineteen-ninety-eight was an extremely tough year for Hong Kong. The Asian financial crisis, and eruptions in other parts of the world, brought continuing instability. The effects on Hong Kong’s open and outward-looking economy were severe. GDP declined by 5.1%, the sharpest decline shown in GDP statistics dating back to 1961. The unemployment rate more than doubled, to 5.7% at the end of the year: it has, since then, increased still further. Property and share prices plummeted, though they have since regained some of their lost value. The strains and uncertainties of recession have penetrated into every home and every business. The distress has been all the more acutely felt because the recession appeared with dramatic suddenness after many years of vigorous and uninterrupted growth. Hong Kong’s banking system, quite naturally, came under severe pressure, though it has handled the downward adjustment in asset prices and the volatilities brought on by the financial crisis with remarkable success. A much more disturbing feature of the larger crisis has been the succession of opportunistic attacks on the Hong Kong dollar and on Hong Kong’s financial markets. These attacks increased the pains of recession by pushing up interest rates and by corroding confidence in our financial system, both locally and overseas.

Firms’ management and boards should ensure that in credit assessments equal focus is placed on the liquidity profile of their clients as on their capital strength. Right-way risk is only right-way if a client is still standing when the hedge matures. Investment banks must bear in mind that their positions can play an important role in the functioning of the economy. Whilst it might be good risk management to reduce a client’s exposures when it suffers cash flow stresses from margin calls, was it good risk management for the bank to sleepwalk into that position in the first place? Working with the client to understand and anticipate all possible future outcomes, and access to facilities in order to meet liquidity demands in a stress, should surely be at the cornerstone of a client-centric business. It is important here for banks to think a few steps ahead and have in mind the potential indirect second-round effect of their counterparty management practices – some of which can otherwise  Page 5  come back to hit them. One other common feature of periods of stress has sometimes been the inadequacy of initial margins required by investment banks over the counter. The spike in nickel markets in March 2022 reminded everyone that progress needs to be made here. And while CCPs have lessons to learn, so do banks. When they undercook initial margins in benign times, banks give their clients the illusion that some products – for example hedges – are cheaper than they really should be economically.