samchain/econo-pairs-v1 huggingface dataset:
Along with the effect of the positive factors I mentioned earlier, we should also highlight euro area membership for what it has meant in terms of stability and reducing uncertainty, and the contribution of immigration, which has added notable flexibility to the Spanish economy. Unquestionably, though, a decisive factor in growth from 1999 to 2008 was the extraordinary increase in household and corporate debt. In that decade, Spanish domestic demand growth was double that of the European Union because private agents' debt rose twofold in the 1999-2007 period. As a proportion of gross disposable income, household debt climbed from little more than 60% to 130%, and corporate debt from 270% to almost 600% of the gross operating surplus. 2  BIS Review 18/2009  The problem facing us on emerging from the crisis is that although this swift indebtedness drove the increase in domestic demand and, therefore, in economic growth in recent years, the high level attained will prevent debt from growing in the future at a similar rate to what it did in the past. Moreover, for several years we may well witness a debt reduction or deleveraging process, meaning its effect on domestic demand will be the opposite of what it was in the past, reducing our growth rate. The Spanish economy's main problem, then, is that its future looks very different from its past since the two possibilities I mentioned – devaluation and increased debt – have disappeared.

But we require action on another front, even though the effects are longer-term. I refer to education. Undoubtedly, progress in education is Spain's most important outstanding task in respect of economic growth, enhanced productivity, fairer income distribution and also the attainment of low unemployment. True, Spain has advanced in some fields here, such as university education and business schools. But we continue to take up the rear as regards the average quality of our citizens’ educational attainment, with the serious consequences this entails. It is well known that countries with a better educated population are characterised by having higher wages, lower unemployment rates and a higher labour market participation rate. For example, both in Denmark and in the United Kingdom, more than two-thirds of the population have a post-compulsory education qualification, as against only 50% in the case of Spain. In both countries, the average worker has 30% higher spending power than Spanish workers, and their unemployment rates in 2007 were 3% and 5%, respectively, less than half the level in Spain. This relationship between training and wages is explained by the fact that more highly educated workers are more efficient, and therefore obtain higher wages, and by the fact that employers always prefer to fire the least productive workers.
Before I go through that list, I want to provide an overview on where we, at the Federal Reserve Bank of New York, are in our process. While cybersecurity has been on our agenda for quite some time, and we have been dedicating resources to assessing it in large complex firms and setting expectations for smaller firms, we have elevated our efforts in recent months and have formed a dedicated team focused on further strengthening our overall supervisory approach to cybersecurity. As I mentioned at the beginning, I think we’ve done a reasonable job in developing rules and regulations to ensure firms are prepared to withstand the other types of shocks we have experienced in the past. But, cyber adds an element to planning for the next crisis that goes beyond what additional capital and liquidity, for example, can provide to the system. The newly-formed team, led by Roy Thetford, the former Information Security Officer for the Bank, will be working with our examination teams to establish a new risk-based cybersecurity assessment framework, based on best practices in the field, as well as exploring additional standards that might be set out for supervised institutions. BIS central bankers’ speeches  3  In addition, to further strengthen and build out our program, we will be collaborating with critical stakeholders, including experts in security and cybersecurity; financial institutions, including both banks and non-banks; critical third-party service providers; domestic regulatory bodies; enforcement agencies; and international supervisors.

In fact, two areas that we recently reviewed that require attention include basic IT asset management and strengthening patch and vulnerability management practices. These are necessary hygiene steps and should be a fundamental for a sound cyber security defense program. As part of good risk management, firms also need to start considering how to assess the costs of cyber and connect the pricing of cyber risk to the businesses. You must ask yourself “what is my cyber exposure?” And, you need to think about how you should price it, because until cyber is priced, it may not get the attention it needs. 3. It’s not just the banks  Cyber isn’t just about the banks – it’s about the entire financial sector, as well as the connections between the financial sector and other sectors like the utilities, retail, and others. We know that every area of the industry is interconnected; and it’s not just financial firms. As the old saying goes, we are only as strong as the weakest link. In the financial system, that weak link could be a weak firm, a weak vendor, a weak point of vulnerability in a payments or clearing system, etc. A weakness in any of these areas exposes the entire system, because the interconnections mean that you are all linked to each other, to non-financial firms, and to every system that supports the operations and structure of the industry.
The correlation between Eurostoxx 50 and  BIS Review 71/2002  3  2  Financial stability  2.1  Like every modern and independent central bank, the Eurosystem and its individual components, the ECB and the national central banks of the euro area, have to fulfil two main functions: firstly, ensuring price stability, and secondly, preserving financial stability. Discussions about the role that central banks should play in circumstances of illiquidity or financial distress are as old as central banks themselves. The involvement of central banks in financial stability issues stems from the superiority of central bank money in the final settlement of transactions on financial markets. Central bank money enables market participants to have risk-free and low-cost working balances – risk-free because the counterpart risk on a central bank is assumed to be zero, low-cost because, in the TARGET system, the cost of intraday credit is limited to the opportunity cost of depositing the appropriate level of collateral. Therefore, central banks are concerned with the robustness of payment systems and the financial positions of banks participating in the money market, in order to prevent systemic risk that could stem, for instance, from the potential “domino effect” if a participant fails to meet its settlement obligations. Central banks are concerned also by financial stability from a monetary policy point of view. I would say that price stability can be regarded as the bedrock of financial stability, while financial stability is critical to the efficiency of monetary policy. Let me elaborate further on these two points.

Major changes have occurred since the crisis which have improved behaviour in firms, but public opinion broadly does not recognise these developments and tends to think that nothing has changed. Culture is an important part of demonstrating that change. Now, I do see evidence of that change happening, and a big challenge for all of us, regulated and regulator is to do all that we can to keep pushing that change forward. In some cases I think there should be greater clarity in terms of the outcomes that firms are seeking from the  2  BIS central bankers’ speeches  changes they make, how progress is assessed and whether there is sufficient consistency across the organisation. These are all points that I know from my discussions with them are in the sights of Colette Bowe and Alison Cottrell and their colleagues at the Banking Standards Board, and I welcome the work they are doing. It is of course very reasonable to ask what as regulators we can do to further the goal of restoring trust through strong culture. I have set out what I see as the important role of the Senior Managers Regime. Going beyond that, in the PRA from the outset we have emphasised that we are a forward-looking supervisor of firms, and at the heart of our approach is the application of judgement set against a framework of rules.
Muhammad bin Ibrahim: Public policy perspective - some thoughts and contemplations from a central banker Remarks by Mr Muhammad bin Ibrahim, Governor of the Central Bank of Malaysia (Bank Negara Malaysia), at the 40th Harvard Business School Alumni Club Malaysia Anniversary Dinner, Kuala Lumpur, 9 February 2018. * * * Thank you for the invitation to speak tonight, among such impressive luminaries. I would like to take this opportunity to share, reflect and learn from past experiences. Since my line of work relates to public policy, I would like to approach it from this perspective. The remarkable paradox of public policy Public policy has never been easy. It is deceivingly simple if we just think about the outcomes. For example, the country needs more public healthcare; or prices of goods need to be lower; or people should have more access to credit. In practice, the policymaker makes difficult decisions involving complicated trade-offs, competing objectives and priorities. Resources are limited and invariably, any allocation made will affect many persons in different ways. Public policy can never ever meet the needs of everyone all at the same time. Given these challenges, it stands to reason that there can be no set template or rules when it comes to executing public policies. From this perspective, it is therefore a remarkable paradox that policymaking at the international level is steeped in conventions, rules and norms that set out expectations on how policymakers should behave and conduct policies.

Within a short span of time, the popularity of this new framework spread widely in both the advanced and emerging economies. It is quite understandable. The framework is theoretically attractive, easily understood and simple to communicate. Deviating from the norm: Malaysia’s approach The theoretical elegance of inflation targeting appealed to many central banks to tread on the same path. In Malaysia we had considered this approach but decided to forge our own route. While the broad framework was appealing, we concluded that adopting an explicit inflation target would have the unintended effect of ‘straitjacketing’ our policy flexibility. We believed that the inflation targeting framework was not ideal for an open and small economy with a sizeable financial market like Malaysia. An economy such as ours is susceptible to real external shocks and could also face problems such as large and volatile capital flows and exchange rates. Therefore, we did not adopt the inflation targeting framework. We adopted what we characterised as ‘inflation anchoring'. The policy outcome is similar, stable inflation. But the process and focus are different. There are several reasons for this approach. First, we did not believe in confining ourselves to a single overarching target for price stability, especially not when the economy is complex and consists of many moving parts. We wanted to 2/7  BIS central bankers' speeches  avoid a situation where too much focus on achieving a single target could lead to potential blind spots.
In the post war economy with closed capital and current accounts the banking system was tightly controlled by government. It was an instrument of macroeconomic management and of financial repression in order to repay the national debt. As the Chairman of Lloyds Bank at the time described it, “It was like driving a powerful car at twenty miles an hour. The banks were anaesthetised – it was a kind of dream life”. But, from the beginning of the 1970s, as the financial sector was increasingly liberalised and globalised, the old risks returned. It became apparent by 1979 that the Governor’s eyebrows needed to be bolstered with statutory regulation and supervision of banks. As capital accounts were increasingly opened up and cross border competition grew, the need for a more level playing field between internationally active banks became more apparent. Liberalisation led to a shift towards more explicit prudential standards starting with the 1975 Basel Concordat – the forerunner of today’s Basel standards. The focus was very much on promoting the safety and soundness of individual firms. Much less attention was given to the fact that the risks in the financial system are greater than the sum of the risks in its parts. Central banks were no strangers to such systemic risks. Indeed, they were recognised at the time – the forerunner of today’s Basel Committee identified them and even coined the term “macro-prudential” risks to distinguish and separate them from “micro-prudential” or firm specific risks that were the subject of the Basel Accords.

A more restrained approach would be to use countercyclical policy not so much to lean against the cycle but to increase the resilience of the system further by putting in more protection as risks build up in exuberant times. Others remain unconvinced that there is much of a role for time-varying macroprudential policy at all and argue that it is better to bake all the necessary resilience into a very strong standing framework of standards and rules. There is certainly no easy way to estimate where we are in the credit cycle and the impact of macroprudential tools – while there are guides there are no simple rules. Against that background, I want to highlight some of the steps the FPC has taken in this area. First, using macroprudential policy to address changing risks depends upon a clear assessment of risks and of the action necessary to address them. The institutional incentives will inevitably tend to drive macroprudential authorities to the identification of all possible – and if we are not careful, some impossible – risks. Failure to spot a risk is worse than  BIS central bankers’ speeches  5  spotting one too many. The outcome of this dynamic, however, can too easily be a lack of clarity and focus: an assessment that identifies everything but actually identifies nothing. With this in mind, the FPC has changed the structure and content of its bi-annual Financial Stability Report (FSR).
For example, as expectations about productivity growth in the United States have changed, so have the composition of capital inflows. Equity inflows into the United States were twice as large as debt inflows in 2000. By 2004, debt flows were nearly four times as large as equity inflows. Second, balance sheets contain information about the potential speed of any likely adjustment. That speed is crucial in determining the intensity of the resulting changes in capital flows and hence, the costs associated with reallocating resources. For example, currency and maturity mismatches in the banking sector created the scope for a liquidity run on Korea in 1997. Third, balance sheets contain information about how changes in relative prices will affect the values of both assets and liabilities. For example, both Australia and the Philippines were affected by the crises in Thailand, Indonesia and Korea. Between 1996 and 1998, their exchange rates fell by 20% and 35% respectively. Both had high ratios of external liabilities to GDP. But whereas a significant proportion of Australia’s obligations were denominated in local rather than foreign currency, the obligations of the Philippines were largely in the form of foreign currency debt. Australia was able to cut official interest rates, run a larger current account deficit and grew faster in 1998 than 1997. The Philippines, on the other hand, could not and went into recession with its current account swinging by 7.5% of GDP, from deficit in 1997 to surplus in 1998.

To build a common analysis of balance sheet positions and a shared understanding of the implications of that analysis for the world economy, a trusted, independent and expert secretariat is needed to facilitate those discussions. Only if countries are willing to share confidences with each other - discuss their "policy reaction functions" - will international meetings justify their cost. Those three tasks do not exhaust the responsibilities of an international financial institution. From time to time, there may well be financial crises when it would be appropriate for the international community to provide temporary financial assistance to mitigate the costs of sharp adjustment in trade flows and output. But such a role should not be the principal focus of international monetary co-operation, and, as I have pointed out, it has not been the role for the IMF vis-a-vis any developed economy for many years. Moreover, nor is it likely to be true of many important emerging market economies in the future. As I argued in my K.B. Lall Lecture in 2001, following the Asian crisis of the late 1990s it was likely that countries might choose to build up large foreign exchange reserves in order to be able to act as a “do it yourself” lender of last resort in US dollars. It is now clear that this is exactly what many Asian countries have done. Nevertheless, it is sensible to provide the Fund with the capability to act when necessary. How should the IMF be reformed?
From Lender of Last Resort to Market Maker of Last Resort via the dash for cash: why central banks need new tools for dealing with market dysfunction Speech given by Andrew Hauser, Executive Director, Markets  Reuters, London 7 January 2021  I am grateful to Tim Taylor for his assistance in writing this speech; and to Andrew Bailey, Imane Bakkar, Yuliya Baranova, Charlotte Barton, Alex Brazier, Jon Bridges, Alice Carr, Geoff Coppins, Ed Denbee, Johnny Elliot, Gerardo Ferrara, Bernat Gual-Ricard, Jon Hall, Sarah Hall, Nicholas Jackson, Joshua Jones, Anil Kashyap, Nick McLaren, Ankita Mehta, Matt Roberts-Sklar and Andrea Rosen for their comments and guidance. 1  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  Introduction  Increasingly we look to financial markets, rather than banks, to care for our savings or provide credit. Millions save via pension, investment or exchange traded instruments. Companies and local authorities hold cash in money market funds. And firms, large and small, borrow from capital markets or non-bank lenders. Taken together, fully half of all financial assets are now held outside the banking system. These trends aren’t new – and to the extent that they bring broader access to cheaper, faster, and more diverse financial services, they’re good news. But they do pose novel challenges to financial stability. In particular, as its usage grows, market-based finance seems increasingly prone to liquidity shocks.

I thank you for your attention. BIS Review 77/2008  3
The past five years have seen a number of damaging financial crises that have afflicted emerging market economies. Sudden reversals of short-term capital flows to some of those economies resulted in crises that led not only to deep recessions and sometimes political crises, but also a renewed debate about the role of the IMF in providing bailouts to some of these countries. Despite this volatility in international economic conditions the British economy, to date, has experienced greater stability. At first sight, this is encouraging. The UK has weathered some of the recent international economic storms, and achieved a post-war record of uninterrupted economic growth, falling unemployment, and inflation lower and more stable than for a generation. But no two storms are ever the same. Do the clouds on the international economic horizon threaten our economic stability at home? We cannot know. Rest assured that the Monetary Policy Committee will always act to maintain stability by keeping inflation on track to meet the target of 2½%. But the recent stability of inflation owes a good deal to the fact that economic shocks from overseas have tended to offset rather than reinforce each other. It would be rash to assume that it will be at all easy to keep inflation over the next five years within the 2%-3% range within which it has largely moved over the past five years. What matters most, however, is that any such deviations from target are short-lived, and that inflation expectations generally are firmly anchored on the target.

My colleague Arthur first presented this vision at the Hong Kong Fintech Week last November. On that occasion, we also announced a series of activities to be launched these two years in pursuit of the vision. And today’s event is one of the many activities that we have planned for this year, 2021. 5. In practical terms, how should we go about bringing our Regtech vision into reality? We do recognise that we are starting from a position in which many banking practitioners remain quite unclear about the concept of Regtech. They may be uncertain about what values Regtech might bring, or exactly how they should leverage on Regtech in order to bring about measurable benefits. Here, we see four essential actions that are needed to transform bank attitudes and practices towards Regtech. Four actions towards Regtech 2025 6. The first action is that we at the HKMA mustunderstand the Regtech landscape evolution in Hong Kong. It’s no good launching initiatives that are out of touch with what’s actually happening on the ground. We need to be able to map our progress towards Regtech 2025, and understand where our banks and other ecosystem partners are at in that journey. 7. Our White Paper on Regtech published in November last year provided a very good starting point, supplemented by the Regtech Adoption Index that we have just launched recently. These have shown that most banks here are already using at least some form of Regtech in their operations, most commonly in preventing and detecting financial crimes.