samchain/econo-pairs-v1 huggingface dataset:
Even if the borrowing firm ultimately turns out to be solvent, there may be a delay in a lender getting its funds back, and this delay may prove to be unacceptably costly to the lender. This second cause of liquidity runs – the risk of untimely repayment – is significant because it means that expectations about the behavior of others, or their “psychology”, can be important. This is a classic coordination problem. Even if a particular lender judges a firm to be solvent, it might decide not to lend to that firm for fear that others might not share the same assessment. The less certain any one lender is about the willingness of other lenders to provide liquidity to a firm, the greater the risk that too few loans will be extended to prevent liquidation. In that case, even if the lender turns out to be correct in its judgment of the firm’s solvency, there still will be a cost in terms of delay in receiving repayment. A few pictures can help to illustrate these concepts. Figure 1 illustrates what a creditor’s assessment of the net worth of a financial firm might look like in normal times. Creditors have uncertainty about what that value is, thus, the valuation is represented by a probability distribution. The higher the degree of uncertainty, the greater is the degree of dispersion in the probability distribution.

This hurt bank holding  3  One final factor that was important in exacerbating the funding crises was the novation of over-the-counter (OTC) derivative exposures away from a troubled dealer. In a novation, a customer asks a different dealer to stand in between the customer and the distressed dealer. This process results in the outflow of cash collateral from the distressed dealer. The novation of OTC derivatives was an important factor behind the liquidity crises at both Bear Stearns and Lehman Brothers. 4  There were funding strains prior to the Lehman Brothers failure and these were most apparent in the elevated spreads evident in term LIBOR funding compared with the federal funds rate. BIS Review 143/2009  3  companies and other large financial firms that depended on the commercial paper market for short-term funding. The result was a widespread loss of confidence throughout the money market and interbank funding market. Investors became unwilling to lend even to institutions that they perceived to be solvent because of worries that others might not share the same opinion. Rollover risk – the risk that an investor’s funds might not be repaid in a timely way – became extremely high. The extreme market illiquidity did not abate until a number of extraordinary actions were taken by the Federal Reserve and others.
BIS central bankers’ speeches  3  The fact that the U.S. economy has continued to grow at around a 2 percent pace in 2013 despite this quite intense fiscal restraint provides evidence to the second key point, which is that the private sector of the economy has largely completed its healing process and is now poised to ramp up its level of activity. Key measures of household leverage have declined and are now near the lowest levels they have been in well over a decade. Household net worth, expressed as a percent of disposable income, has increased back to its average of the previous decade, reflecting rising equity and home prices and declining debt. Recently, banks have eased credit standards somewhat after a prolonged period of tightness. As a result, we are now experiencing a fairly typical cyclical recovery of consumer spending on durable goods. For example, sales of light-weight motor vehicles have increased steadily over the past four years, reaching an annual rate of 15.7 million in the third quarter of 2013, though sales in September and October have been somewhat below that average. Similarly, after five years in which housing production was well below what is consistent with underlying demographic trends and the replacement demand for houses, it now appears that we have worked off the excess supply of housing built up during the boom years of the last decade.

However, the compound annual rate of growth over that period has only been around 2 ¼ percent, close to prevailing estimates of the economy’s potential growth rate. Thus, we have made limited progress in closing the substantial output gap that was created during the recession. A similar conclusion is drawn from an assessment of labor market conditions. Although the unemployment rate has declined by about 2 ¾ percentage points since peaking at 10 percent in October of 2009, a significant portion of that decline reflects the substantial decline of the labor force participation rate over that period. It should also be noted that since the previous business cycle peak at the end of 2007, the decline of the labor force participation rate has been more than accounted for by a decline in participation of people in the prime working age of 25 to 54. The inflation data are also consistent with this overall picture of an economy operating well below its full potential. Total inflation, as measured by the personal consumption expenditures (PCE) deflator, has been quite volatile in recent years due to sharp fluctuations in energy prices. Core inflation, which excludes the volatile food and energy components and thereby may be a better guide as to underlying inflation, slowed from around 2 percent in early 2012 to just above 1 percent in mid-2013. In recent months it has shown signs of stabilizing, but remains well below the FOMC’s expressed goal of 2 percent for total inflation.
Nor does it apply to the contributory role of the ECB with regard to financial stability under Article 127(5) of the Treaty, as the ECB is not the policymaker in this field. I will conclude my remarks at this point, and I am happy to turn the floor over to the workshop presenters and participants to further elaborate on these themes. [1]This correlation does not imply that independence is causal  for low inflation. In particular, societies with a high degree of inflation-aversion may find it more natural to grant their central bank a high degree of institutional independence. On this, Posen, A., “Why central bank independence does not cause low inflation: there is no institutional fix for politics”, in O’Brien, R. (1994) (ed), Finance and the International Economy: in memory of Robert Marjolin, Oxford University Press. Moreover, it should be borne in mind that the short historical sample reflects the fact that the notion of independent monetary policy is of limited interest in periods of fixed exchange rates regimes (as was the case during the gold standard or under the Bretton Woods regime). [2]Beyer, A., Gaspar, V., Gerberding, C., and Issing, O. (2013), “Opting Out of the Great Inflation: German Monetary Policy after the Break Down of Bretton Woods”, in Bordo, M. D., and Orphanides, A. (eds), The Great Inflation: The Rebirth of Modern Central Banking, University of Chicago Press. [3]Balls, E., Howat, J., and Stansbury, A.

[20]Padoa-Schioppa, T. “  An institutional glossary of the Eurosystem” presented at the conference on "The Constitution of the Eurosystem: the Views of the EP and the ECB", 8 March 2000, and “  Transparency in the monetary policy of the European Central Bank”, ECB Monthly Bulletin November 2002. [21]In particular, these are: the requirement to submit reports to the European Parliament, the EU Council and the Commission on an annual and quarterly basis (Article 284(3) TFEU and Article 15.1 of the Statute of the ESCB); the presentation of the annual report by the President of the ECB to the Council and the European Parliament which may hold a debate on the basis of it (Article 284(3) TFEU); and the publication of weekly financial statements (Article 15.2 of the Statute of the ESCB). Furthermore, at the request of the European Parliament, or at its own initiative, the President of the ECB and other members of the Executive Board may be heard by the competent parliamentary committees (Article 284(3) TFEU). The President of the ECB must also be invited to participate in Council meetings when the Council is discussing matters related to the objectives and tasks of the Eurosystem (Article 284(2) TFEU). The President of the ECB also answers a significant number of queries by members of the European Parliament.
Given this longer-term perspective, the Monetary Policy Committee concluded that capacity constraints in the labour market were threatening the attainment of the Government’s inflation target. Of course, since then, the earnings data have been successively revised, rebased and suspended – a piece of the jigsaw has temporarily gone missing. As you can see from chart 3, the profile of the old series showed a steady rise in earnings growth from around 33% in mid-1995 to nearly 52% or so by the spring of this year. In sharp contrast, the revised and rebased data (before they were suspended) followed roughly the shape of a slightly squashed capital N. From a trough of 3% at the end of 1995, earnings growth was estimated to have risen to a peak of over 53% in February and March 1997 before falling back below 4% in early 1998 and then bouncing back above 5% again by May. How would the MPC’s analysis of the labour market have changed if the revised (but now suspended) data had been available six months earlier? That question is not easy to answer. The quantity data would still have suggested that the labour market was both tightening and, by historical standards, tight. The MPC would therefore have had the unenviable task of trying to understand why the steady tightening in the quantity measures had produced a zigzag path for measured earnings growth.

With trust, we can have complex and farflung relationships and conduct such transactions in full confidence that these would be honoured and all liabilities or debts will be met. Without such trust, we need legal contracts and enforcement. We need money that provides finality to a transaction so parties can walk away afterwards. Unsurprisingly, money and even barter are mechanisms that allow us to do away with the need to trust. Though this can be expedient, it is not without a loss. What could have been an ongoing mutually beneficial business relationship is instead a series of individual and potentially costly transactions. Which is better? In a world without trust, we need the mechanisms to cope. In Islamic finance, with ethics as its core, such trust can be nurtured and sustained. We can thus rely less on the coping mechanisms which would merely serve as safeguards while focusing more on the business and activities that generate productive and impactful outcomes. Acting ethically should also involve embracing professionalism. Having qualified Islamic finance professionals will be a key differentiator. Professional credentials can be instrumental in strengthening the trust between financiers and customers. These qualities will anchor businesses and financial institutions towards sound and fair practices even in an environment that is rapidly changing and uncertain. In addition, continuing professional development, or CPD, will be crucial to ensure talents keep their knowledge and skills fresh, enabling them to respond to changing circumstances with agility and precision.
When the Great Financial Crisis of 2007–08 erupted with both economic growth and financial stability at stake, our decision not to raise interest rates was apt as it provided a much-needed buffer. We moved from being ‘behind the curve’ to ‘ahead of the curve’ when other countries began reversing their policies by cutting interest rates. Fast forward to the current environment, inflation is becoming even more complex with the influence of various factors such as globalisation, demographics and technology bearing on inflation outcomes in ways we do not yet fully understand. Because of these external factors, central banks in some economies have frequently missed their inflation targets over the past decade. These central banks have had to work extra hard to anchor inflation expectations while they continue to miss their targets. This has become a source of sizeable uncertainty and volatility. In Malaysia’s case, keeping a broader view has suited our needs and has given us policy 3/7  BIS central bankers' speeches  flexibility to respond to economic and financial shocks, as we are not unduly straitjacketed into meeting this explicit inflation target, which, under many circumstances, can prove to be very elusive. Third, as an open economy with flexible exchange rates, Malaysia is prone to large and volatile swings of capital flows which can lead to exchange rate overshooting. In fact, we just recovered from what was one of the sharpest ringgit depreciation periods since the Asian Financial Crisis. I am sure that this is still fresh in everyone’s mind.

The debate will be moderated by Mr. Valentin Lazea, the National Bank of Romania Chief Economist. Thank you for attending this conference, which I do hope will turn out to be a very successful one. 2  BIS central bankers’ speeches
Another subject for criticism has been the conditions attached to the loan programmes. This was the case not least in connection with the Asian crisis, when critics considered that the IMF’s economic policy stipulations were inappropriate and unduly harsh, being more likely to lessen instead of enhance the chances of a recovery. Once again, we can refer to Sweden’s problems in the early 1990s. When the fixed exchange rate had finally been abandoned in 1992, many argued that interest rates ought to be lowered both more quickly and further than was actually the case. I was one of them because I believed this was needed both for a quick end to the economic decline and to facilitate the consolidation of the government finances. In addition, it ought to aid a faster recovery in the banking sector. Others, including the Riksbank at that time, preferred a more cautious path in the hope that this would prevent a further weakening of the krona. Striking the right balance in these respects is difficult and even with hindsight we cannot be sure who was right. The problems in Asia were similar. Would it have been more appropriate to lower interest rates in order to avoid the failure of companies with loans in the domestic currency and the collapse of the banking system, or to stimulate demand to a greater extent so as to keep the economy going?

Before turning to the next issue — the problem of the poor countries’ large debts — let me summarise the discussion about the IMF, its lending operations and requirements. In my opinion, the criticism of the massive loans contains several grains of truth. Solutions are admittedly difficult to find when problems have already accumulated but a considerably stricter position at an earlier stage, together with greater transparency about the actual situation, could have resulted in a better policy. I am more hesitant about the criticism of conditions imposed on particular countries. There have certainly been mistakes — policy has, for instance, been constructed all too frequently on the premise of a fixed exchange rate — but even retrospectively, the answers are seldom as obvious as they are said to be. Macroeconomic policy in a crisis is almost always a question of arriving at the right balance between different alternatives. Poor-country debt A fourth area of problems in the debate on globalisation concerns the debts of the poorest countries. This is something that has not least engaged representatives of the Church, for instance in the context of the Jubilee 2000 campaign. It has been argued that the international community is not doing enough to tackle the debt problems of poor countries. I agree that the debt situation in many developing countries can hamper economic development, although a majority of the poorest countries also face problems of a more fundamental nature, for instance as regards internal institutional conditions.
The German government has announced a package of measures which aims to increase the share of renewable energy in Germany’s energy mix to 80% by 2030, up from an earlier target of 65%. Concerted action by policymakers, corporates, financial institutions, and individuals will be key in the drive to mitigate climate change. It is in the name of facilitating such concerted action, that we are gathered here today at the Green Swan Conference. The financial system can be a powerful lever to enable a credible and inclusive transition to net-zero. Central banks and financial regulators, whatever their mandates, have a role to play in greening the financial system to support the net-zero transition. It is this vision that led to the formation in 2017 of the Network of Central Banks and Regulators for Greening the Financial System, or NGFS. The NGFS has grown significantly, from 8 founding members to 114 today, representing a diverse group of advanced, emerging, and developing economies. The Network has accomplished much in the last four years, breaking new ground and providing valuable guidance on integrating climate and environmental risks into the work of supervisors and central banks. The integration of climate-related and environmental risks into financial stability monitoring and prudential supervision is becoming a reality. The next phase of the work of the NGFS is to move from awareness to action. The NGFS Glasgow Declaration, issued at COP26 in November last year, reiterated our commitment to expand and strengthen our collective efforts towards greening the financial system.

At the Green Swan Conference, we have a diverse and inclusive assembly comprising some of the best minds and influential figures. I am confident that the conversations we will have over these two days will add impetus to what we can do together in the fight against climate change during this “critical decade”. Thank you, and I wish you all a fruitful conference. [1] Examples include the Sustainable and Responsible Investment Guide for Central Banks’ Portfolio Management and the subsequent update in a progress report. [2] International Network for Sustainable Financial Policy Insights, Research and Exchange (INSPIRE). © 2022, Government of Singapore.
Housing – The Quiet Decade Speech given by Sir Jon Cunliffe, Deputy Governor Financial Stability, Member of the Financial Policy Committee, Member of the Monetary Policy Committee and Member of the Prudential Regulation Committee  The Law Society Property Section Convention, London Thursday 20 May 2021  I'm grateful to Kristina Bluwstein, Rand Fakhoury, Lewis Kirkham, Lisa Panigrahi, Sarah Venables and Matt Waldron for their assistance in preparing these remarks. I'd also like to thank Richard Donnell, Robert Gardner, Geoff Meen and Christine Whitehead for sharing some of their insights with me. All view represented here are my own. 1  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  One of the many unusual features of the Covid-driven economic contractions in advanced economies has been the behaviour of housing markets. Housing markets typically slow and house prices fall in severe economic contractions. But despite very adverse economic conditions after the initial Covid lockdown shock last spring, housing markets have been buoyant in many advanced economies and house prices have been rising. House prices grew by 5.7% on average across advanced economies in 2020, the sharpest increase since 20071. Of course, what we have experienced over the past 12 months or so has been very different to a ‘normal’ business cycle contraction or even to the more extreme contractions that follow financial busts.

Given the elevated level of prices relative to earnings at the start of the decade and the further sharp increase in the middle of the decade, constraints on the availability of credit, both lender-imposed and regulatory, are likely to have held back activity. Building a sufficient deposit is one of the biggest constraints facing most first-time buyers. Only 19% of renters across the UK have sufficient savings to afford a 5% deposit on the median first-time property in their region. In London and the South and East, high house prices relative to earnings mean that potential first-time buyers have to save even larger deposits in order to be able to afford their mortgages. For regions outside London and the South and East, first-time buyers’ deposits are typically 48% of their incomes. In London and across regions in the South and East on average, this is 121% and 80% respectively. 13  Since June 2014, the FPC has recommended a limit of 15% on the proportion of new mortgages extended at or above 4.5 times a borrower’s income. Building on the FCA’s rules, the FPC has also recommended that lenders assess whether borrowers could meet their mortgage payments if their mortgage interest rate switched to the contractual reversion rate and increased by 3 percentage points. 14  The FPC published its most recent review of the housing tools in the December 2019 Financial Stability Report.
In 2017, Shanghai-Singapore trade amounted to $ 17.5 billion1, an increase of 33.8% from 2016. On the investment front, Singapore has been China’s largest foreign investor for five consecutive years. Shanghai was Singapore’s second largest investment destination in China while Singapore was also Shanghai’s second largest foreign investor in 2017. With growing affluence of Shanghai’s resident population, Shanghai continues to be an attractive investment destination for Singapore companies. b. Similarly, Shanghai companies view Singapore as an important Asian commercial and financial hub as they expand internationally. As of end 2017, there were close to 110 Shanghai companies in Singapore, with more than $ 6 billion in investments2. c. Notably, Singapore Minister for Trade and Industry Chan Chun Sing visited Shanghai  from 4 to 6 November 2018 for the inaugural China International Import Expo (“CIIE”), which allowed Singapore companies to take part in business matching sessions and explore collaborations with Chinese partners to enter and expand into China. d . During Premier Li’s recent visit to Singapore, both sides welcomed the discussion  between Singapore and Shanghai to establish a comprehensive mechanism for cooperation. The new platform will focus on Belt and Road Initiative (“BRI”), modern and financial services, urbanisation and sustainable development, technology and innovation, and people-to-people exchange. This new strategic, progressive and comprehensive platform will expand and deepen China-Singapore engagements.

They must be able to set a strategy and risk appetite and oversee implementation, but they do not substitute for the role of the Executive. Likewise, supervisors challenge hard and can ask for changes, but they do not substitute for the Board or the Executive. The recent past has not been an easy story in this area. It is very understandable that in the wake of the financial crisis, there was hard questioning of the role of Senior Executives and of Boards. Change in the approach of supervision to approving senior managers was needed. It is perhaps natural given the scale of the shock, that some change went too far or not in the best direction. I think there was a rebound in the direction of wanting all Non-Executive Board members to have technical skills of a similar sort, and thus deeper technical knowledge of the business. But that is the job of an Executive. When I came back into supervision in 2011, a senior insurer told me that in the supervisory interview process at appointment all his prospective NEDs were being tested on whether they understood the mathematical underpinnings of a “Gaussian Copula”. I could not verify this story, but it would be a mistake to stock a Board full of people chosen for their expertise in probability theory and nor would that Board be diverse.