samchain/econo-pairs-v1 huggingface dataset:
17  Of course, this maturity distribution could change as part of the Committee’s ongoing assessment of the economic outlook and the efficacy and costs of asset purchases. 6  BIS central bankers’ speeches  issuance of coupon securities.18 We have a larger presence in the market for longer-term securities, with SOMA holdings making up about 35 percent of securities with four or more years to maturity. The Committee carefully assesses the total amount, pace and composition of its purchases in part because it is aware of the potential for large-scale asset purchases to contribute to financial market dysfunction. Some on the Committee have listed financial market disruptions among the potential risks that they will consider as they evaluate the current purchase program. There is a finite supply of Treasury securities and agency MBS available to purchase, in terms of both total outstanding amount and how much is available for purchase in the market at any given time. If the Federal Reserve were to become too dominant a buyer or holder, it could reduce the tradable supply of these securities and discourage trading among market participants, leading to diminished liquidity and price discovery. A significant deterioration in liquidity could lead investors to demand a premium for transacting in these markets, ultimately raising borrowing costs and undermining the program’s policy goal.19 With this concern in mind, the Desk closely monitors how our implementation of asset purchases impacts financial market functioning.

A key part of this is to make certain that banks and financial markets perform their functions efficiently, and that their business poses no systemic threat to the financial sector and the economy. Hence, for a long time now, the main focus of bank regulation and supervision have been to ensure that banks manage their exposure to risk effectively. These include exposure to credit risk, market risk, liquidity risk, and operational risk. Much progress has been made in honing the approach for a more accurate assessment and a more effective management of risk, culminating in the Basle II, which is a global standard for bank’s risk management. BIS Review 18/2008  1  But, in spite of what has been achieved, mishaps can and do happen. From time to time, we still read about banks suffering large losses that originate from the under-management of these risks. More often than not, the losses are linked to a breach of internal controls or systems that have been put in place to rein in excessive risk-taking in the first place. Ladies and gentlemen. On the security risk aspect, the growth of electronic banking and real-time funds transfer have made the challenge of risk management even greater, as the nature of security risk to banks has shifted considerably. Clearly, the main concern now is not so much about ensuring property security or preventing theft of physical assets, but about ensuring information security and preventing identity theft.
The general trend in the market has been to charge SMEs with high interest rates relative to the large scale corporate sector because of the perceived high risk they are supposed to present. Distinguished Invited Guests, my view is that this presumed high risk profile associated with SMEs can be effectively managed by banks if they make the necessary effort to understand the sector and build expertise in dealing with its unique characteristics. I trust that you will double up your effort in building the expertise necessary for your bank to be a major lender to the SME sector. The issue of interest rates is of particular concern to us at the central bank. In response to the current situation, the Bank of Zambia recently took measures aimed at facilitating the reduction in commercial banks’ lending rates with the view to increasing access to credit by private individuals and business entities. Some progress has been made in this area and we are monitoring the situation in the market to ensure that borrowers are enjoying a reduction in their effective lending rates. We do not want the reduction in the base lending rates to be cosmetic, but should be reflected in lower effective lending rates for measures taken so far to be meaningful. Furthermore, with the reduction in the corporate tax rate for banks recently announced by the Minister of Finance in his 2012 Budget, the expectation is for a further reduction in lending rates by commercial banks going forward.

Bwalya K E Ng’andu: Improving access to finance by the SMEs in Zambia Remarks by Dr Bwalya K E Ng’andu, Deputy Governor (Operations) of the Bank of Zambia, at the Signing Ceremony for a credit line of $ 5 million between NORFUND and BancABC Zambia, Lusaka, 1 December 2011. *  *  *  YOUR EXECELLENCY, THE NORWEGIAN AMBASSADOR, MR ARVE OFSTAD; MEMBERS OF THE DIPLOMATIC CORPS PRESENT; THE CHAIRMAN OF BANCABC ZAMBIA LIMITED, MR. CHANDA CHILESHE; THE MANAGING DIRECTOR OF BANCABC, MR. DANA BOTHA; HEAD OF THE NORFUND SOUTHERN AFRICAN OFFICE, Mr. DEEPAK MALIK; DISTINGUSIHED INVITED GUESTS; MEMBERS OF THE PRESS; LADIES AND GENTLEMEN. Let me begin by thanking BancABC for inviting me to be the guest of honour at this very important event, where we will witness the signing of a credit line worth US $ million between BancABC and the Norwegian Investment Fund for Developing Countries (NORFUND). It is pleasing to know that the credit line to be signed this morning is specifically tailored to provide financial support to Small and Medium scale enterprises (SMEs). The development of the SME sector and its potential to contribute to aggregate productivity growth, economic growth and development have been stifled by the generally limited access to finance. The credit line to be signed today is an important milestone in improving access to finance by the SMEs in the country. Equally as important as access to finance is the price of financing that is placed at the disposal of SMEs.
These measures should contribute to supporting the positive trend in private domestic and foreign investment in France. [Slide 12] All these reforms should be enhanced by further progresses made by the French government to improve the sustainability of public finances; I would also hope for an acceleration in this respect. Nevertheless, the present package is already impressive, and reinforces the attractiveness of France. As you know, France has many assets: it has many fast-growing techfirms. It offers high-quality infrastructures and a high-standard quality of life. But more importantly, its capital, Paris, besides being one of the most attractive cities in Europe, is in a strong position to become the main euro area centre for market activities, especially in the Brexit context. 3. Paris’ attractiveness as an integrated financial centre in a post-Brexit world Brexit was and remains bad news mostly for the United Kingdom but also for Europe. As for now, there is one principle which in our view is the corner stone of the future agreement between the European Union and the United Kingdom – preserving the integrity of our common good, the EU single market. In practice, it means that we cannot separate access and rules and that UK based entities cannot get a European passport and access the EU single market if they do not fully comply with the single market’s rules and do not recognise the authority of the European Court of Justice.

The City of London will of course remain a major global financial centre but will no longer be in the position to serve as the European financial hub. Against that backdrop, further integration of capital markets in the EU is all the more needed. Succeeding in that endeavour requires an integrated approach combining and coordinating the Juncker Investment Plan, the Banking Union and the Capital Markets Union to achieve a true “Financing Union for Investment and Innovation”. This Financing Union will be built on the EUR 390 billion in annual surplus savings in the euro area. Another consequence of Brexit is that a number of financial activities will be relocated within the EU 27. The competitive landscape between financial centres will therefore change even though we do not expect the emergence of a continental “City of London” but a more multipolar and specialised competitive structure. It is our collective responsibility to foster a competitive and fair ecosystem for international players; as we have a single rule book, this competition will exclude any regulatory or supervisory “race to the bottom”. Against this backdrop, the Paris financial centre has many assets. Paris hosts one of the most developed capital markets in continental Europe, the first asset management industry, a leading bond market, the largest commercial paper market with NEU-CP and the largest private equity investor in continental Europe. Moreover, Paris offers an attractive pool of highly skilled staff in financial services.
Chart 2 Highly indebted companies cut investment  Chart 3 UK current account balance as a  and employment more than unleveraged  percentage of GDP since 1955  companies in the global financial crisis Investment  Employment  Percentage change in crisis  % of GDP 6  15 10 5 0 -5 -10 -15 -20 -25 -30 -35 -40 No leverage  4 2 0 -2 -4 -6  High leverage  -8 1955  Sources: S&P Global Market Intelligence and Bank calculations. 65  75  85  95  05  15  Source: ONS  Notes: Change in investment and employment in the financial crisis for unleveraged companies and companies with high leverage ratios. Percentage change reflects the average log change in investment and employment between 2007 and 2009. High leverage companies are those with net debt/EBITDA ratio higher than four in 2006. See, for example, Olivier Blanchard and Gian Maria Milesi-Ferretti, ‘(Why) Should Current Account Balances Be Reduced?’, IMF Economic Review, April 2012 and Julián A. Caballero, ‘Do Surges in International Capital Inflows Influence the Likelihood of Banking Crises?’, Economic Journal, March 2016. 5  5  All speeches are available online at www.bankofengland.co.uk/news/speeches  5  Recent developments  What, then, has been happening in the UK to these drivers of underlying economic vulnerability? Developments are summarised in the ‘heat map’ below (Chart 4). The colours represent how high each indicator is relative to past outcomes.

The sectors trade with each other, and with the banking system, behaving in ways that we calibrate to known features of the system. That means behaviour in one part of the system affects decisions elsewhere. The system is more than the sum of its parts. The simulator, by its nature, does not capture the full diversity of the assets and participants in the system. It is a simplified version of reality, helping to guide us. Using it, we can begin to assess what different features of the system might matter for the resilience of corporate credit supply. In general, it highlights how financial institutions do not need to be at risk of failure for credit supply conditions to be fragile. I’ll highlight two features that stand out in the simulator, both centred on liquidity: cashflow pressures on leveraged investors like hedge funds, and redemption pressures on open-ended funds. Cashflow pressures on leveraged investors  Investment funds have grown in importance as holders of corporate debt in general, and they now hold around 25% of the global leveraged loan market – a quarter of which is in the form of CLOs, often the most risky slices. The relevant funds are not the super-financially-leveraged, dangerous institutions of some imaginations. 11 Even hedge funds take positions worth only about one and a half times net asset value – materially less than they did a decade ago.12 And financial leverage in funds other than hedge funds is generally limited.
Long-term interest rates are also very low, companies in general have very good liquidity and good profitability. It can also be noted that in connection with the Riksbank cutting its repo rate in June as a result of weaker economic growth than expected at the beginning of the year, some voices were raised warning that the low interest rates could lead to an excessive credit boom and overly high house prices. The consideration that has to be made between growth in demand over the coming two years and the risks linked to high indebtedness, for instance, are still relevant and current, and I will return to this shortly. Monetary policy, productivity and jobs One consequence of the high level of productivity is that employment has not improved very much, despite several years of good growth. It is not likely that the link between economic activity and employment has disappeared but - and this has been clear during the current economic upturn – the relationship may very well vary from one economic cycle to the next. We have produced larger quantities but using fewer employees. One possible reason for the high productivity growth is earlier investment in IT, in particular. Another is that the stiffer competitive pressure, which among other things originates from the internationalisation of the economy, has forced companies to make their production more efficient. This is essentially positive, as productivity gains contribute to increased income, investment and growth, which should in the long term lead to new job opportunities.

1/7  The new target for monetary policy, to aim for a low and stable inflation rate, was announced in January 1993 and applied in terms of the consumer price index (CPI) with effect from 1995. The fact that there was some delay was partly due to the economy having just been exposed to strong inflation impulses, mainly due to the weakening of the krona after the fixed exchange rate was abandoned. The target for monetary policy, which was further manifested by being written into the Sveriges Riksbank Act in 1999, is to “maintain price stability” and the Riksbank’s interpretation of this is that inflation should be retained around 2 per cent a year, measured as the annual change in the consumer price index (CPI). There is also a tolerance interval of plus/minus 1 percentage point around this target. Maintaining inflation at exactly 2 per cent all of the time would hardly be possible and constantly fine-tuning the rate for this purpose would probably risk reinforcing fluctuations in the economy rather than having a stabilising effect. When the Riksbank adjusts the key rate, its repo rate, this affects total demand and ultimately also inflation through various “channels” in the economy – the cost of borrowing, incentives to save and exports and imports, via exchange rate changes. It takes time for an interest rate change to have full effect via these channels; one usually estimates that it takes around 1-2 years. Monetary policy is therefore conducted on the basis of this time horizon.
Sharp decline in inflation arisen from deepened global financial turbulence-related developments allowed both developed and developing countries to make substantial cuts in policy rates (Figures 11 and 12). BIS Review 67/2009  7  Figure 11: Policy Rates in Developed Figure 12: Policy Rates in InflationCountries Targeting Developing Countries  14  5  13  4  12 3  11  2  10 9  1  8 0109  0808  0308  1007  0507  1206  0706  0206  0905  0405  1104  0104  Source: Bloomberg, CBT  0604  7  0109  0808  0308  1007  0507  1206  0706  0206  0905  0405  1104  0604  0104  0  Source: Bloomberg, CBT  Distinguished Guests, The financial crisis that erupted in the markets of developed countries deepened starting from September 2008, influencing the global financial system as a whole. This led to tremendous hikes in the risk premia of developing countries. In general, countries with low credit ratings end up with more apparent deterioration in risk premia, whereas the opposite applies to Turkey. In this period, being among developing countries having the lowest credit ranking, the decline in Turkey’s risk premium was somewhat limited. In other words, Turkey’s risk premium has resisted the deterioration in global risk perceptions more than is implied by her credit rating, thus clearly differing it from other developing countries in terms of the riskpremium-credit rating relationship (Figure 13).

To this end, we believe that it will be useful to exclude the quarterly additional contribution of public expenditures in the last quarter of 2008 and focus on other components. Firstly, excluding public sector demand, the difference in growth in the two periods compared exhibits a fairly unfavorable outlook for the last quarter of 2008. The relatively high depletion in inventories in this period compared to that in 2001 reveals the relative strength of the aggregate demand shock and the sharpness of the downturn in capacity utilization rates. Moreover, the differentiation in private consumption demand and net exports performance indicates a rather lower contraction of domestic demand besides the adverse effect of the global shock on net foreign demand in the current period (Figure 23). BIS Review 67/2009  13  Figure 22: Contribution to Growth by Figure 23: Contribution to Growth by Output Expenditures (Percentage Points) 1  (Percentage Points) 10  0,4  9,1  8  0  2001-2  -0,2 -1  -0,6  -0,7 -0,9  5,0  6 2008-4  -0,8 4  -2 -2,4 -2,6  -3  -2,5  2  -2,3  0,7  0,7  0  -4  -0,1  -2  -5  -2,1  2001-2  -4  2008-4  -6  -2,1  -3,2 -4,0  -6 -7  -6,3  -6,3 -6,2 GDP  -6,2  -5,7  -5,5  -5,4  -8  Agriculture  Source: TURKSTAT.
At a more general level, the lack of a level playing field in the enforcement of the new financial standards has a potential to fragment the global financial system and to lead to a suboptimal allocation of capital of liquidity and to overconsumption of scarce resources, such as the safe assets used as collateral by financial market participants. OTC derivatives are a case in point. I therefore strongly welcome the recent agreement reached between the European Commission and the US Commodity Futures Trading Commission (CFTC) on a common path forward regarding a number of measures on how to approach cross-border issues. In this context, the notion of substituted compliance is a useful tool, as it will help to reduce the risk of duplication and potential frictions of rules. Clearly, convergence at a very granular level may not be achieved. It may not even be desirable, as specific differences may reflect the specific institutional and regulatory frameworks in the jurisdictions concerned. Nevertheless, it needs to be ensured that the outcome in all material aspects is similar. A key objective of the G20 mandate for OTC derivatives reform was to ensure effective systemic risk reduction in these markets. It is unlikely that we will achieve this objective by converging on the lowest common denominator rather than by achieving common best practices. However, this may be the result if substantive regulatory differences are not addressed and consequently, opportunities for regulatory arbitrage open up.

The aim of the new  4  BIS central bankers’ speeches  financial regulatory framework is to reduce risk in the global financial system, not to turn it upside down. Furthermore, the measures adopted in this area are, in my view, not sufficient to capture the macro-prudential dimension of the problem. To this end it will be necessary to achieve, in addition to controlling the role of global dealers within each central counterparty, also a better understanding of the interdependencies between central counterparties. Indeed, even though OTC derivatives central counterparties are typically not interoperable, they are still closely linked owing to the fact that the major clearing banks typically participate in several of them at the same time. In order to be able to better identify and monitor the related contagion risks, we will need to significantly enhance information-sharing across central counterparties, including through access to relevant participant-level data, and conduct analytical work in this field. However, it is not clear at this stage to what extent this analysis can and will be carried out. For instance, the European Market Infrastructure Regulation (EMIR) colleges focus on individual central counterparties. While major central banks of issue, such as the Eurosystem, could in principle support a horizontal risk assessment across central counterparties, given our participation across several EMIR colleges, it is still unclear what type of information we will receive and, in particular, to what extent this will include participant-level data.
6  In the past 15 years, more than 20 central banks around the world changed their monetary policy framework in favour of inflation targeting strategies. By successfully bringing down inflation and by prioritising communication and transparency, most of these central banks have greatly increased their credibility. 4  BIS Review 30/2006  high level of transparency in conducting monetary policy means that the central bank has less work to do, because stating clear intentions will induce financial markets to do some of the work for the central banks. For example, a credible and transparent central bank might indicate that, on the basis of its assessment of available economic data, it intends to embark on a gradual tightening or easing cycle. Such a clearly stated policy intention could lead to changes in financial market prices – say long-term interest rates or the exchange rate – resulting in a change in the monetary policy stance without any formal change in the level of the official policy instrument. The idea here, as Kohn and Sack (2003, p 28) have stated, is that “statements and policy actions can serve as effective substitutes for one another, at least in the short run.” I would argue strongly that central bankers must not draw too much comfort from the notion that statements can substitute for policy actions beyond the very short run. As was pointed out by Blinder, credibility is ultimately premised on "matching deeds to words". If deeds systematically fail to match words, credibility will be at risk.

Allow me to take this opportunity to invite you to join this exchange of experiences in one of the aspects that is increasingly relevant to our institutions. The theme of this Conference, Economic Policies, Trade Integration and Sustainable Job Creation, is particularly timely at this current juncture of the world economy. The world remains in an expansionary phase although there are some signs pointing to a gradual change in the global economic landscape. Some of the risks that had been the focus of our attention are beginning to materialise. In particular, we are witnessing a re-emergence of protectionist measures with pernicious effects on international trade. Beyond the impact that this can have on growth in the short term, its potential impact on the diffusion of technological advances and on improving the welfare of individuals is more worrisome. In 3/4  order to preserve the benefits derived from globalisation and technological innovation, it is now more important than ever to work towards a fairer and stronger global trade system. To this end, it is necessary to work on the reform of the rules governing international trade to ensure that all countries compete on a level playing field. But also, and not least, domestic policy-makers have a responsibility to design the right policies for stimulating innovation and job creation, and creating opportunities for all.