samchain/econo-pairs-v1 huggingface dataset:
In the United States, the risk-focused approach that the Federal Reserve and other bank supervisors have adopted over the past five years allows us to tailor a supervisory plan appropriate for each bank. This marks a radical shift in the way that we evaluate a bank’s condition in the United States. Rather than reviewing mainly the quality of individual loans and other items on a bank’s balance sheet, for example, our bank examiners now try to identify the most important risks to which each bank is exposed – and then determine whether bank management employs robust processes to control those risks. This is a much more "top-down" approach to supervision, as we are evaluating the integrity of the managerial process in a bank rather than only testing the strength and quality of individual transactions. This helps us to determine whether a bank that is healthy today will continue to be so in  2  BIS Review 35/2001  the future. I’m pleased to note that banks have welcomed this change in approach, as we have enhanced our ability to compare the quality of one bank’s control structure to those of other banks that face similar risks. We thus are better able to share our views of the "best practices" we see in industry risk management.

As a former commercial banker, I know that competent, capable leaders at the enterprise level, supported by a well-trained staff and a robust system of risk management processes and controls, make up the first line of defense against financial instability within an economy. As a supervisor, I believe that there should be sufficient market and supervisory incentives to encourage banks toward responsible behavior. •  The supervisor’s second duty is to assist in the resolution of problems when they do occur, so that banks can continue to serve as intermediaries of credit, the lifeline of an economy, to businesses and consumers. This represents the duty of action. From the experience of the savings and loans crisis in the United States, to more recent regional financial emergencies elsewhere, we’ve seen that when disaster looms, prompt and decisive supervisory action is imperative to containing the damage that severely troubled financial institutions can wreak on the economy. In those extreme circumstances, supervisors must restore confidence  BIS Review 35/2001  1  quickly so that consumers and businesses do not lose access to credit necessary for the economy to grow. How the delicate balance of responsibilities of bank management and supervisors is accomplished, particularly in a period of stress, is crucial to the outcome of country’s economic performance.
11  Chart 5: Securitisations relative to stock of M4 lending  Chart 6: UK household sector assetbacked security spreads Bas is points  Percentage of sectoral M4L stock 25  400  20  300  350  Basis points  Commercial mortgages Credit cards Prime mortgages Non-conforming mortgages (LHS)  150 120  250  Household secured 15  90  200 60  150  10  Household unsecurd  0 2002  0 98  99  00  01  02  03  04  05  06  07  0 2003  2004  2005  2006  2007  Source: LehmansLive Note: weighted averages of AAA, AA, A and BBB 5years spreads for prime and commercial mortgages and of AAA, A and BBB 5-year spreads fro credit cards and non-confirming mortgages.

In the UK, the starting point has been robust domestic demand; the leveraged-buyout sector aside, generally healthy corporate balance sheets; somewhat more vulnerable household balance sheets; 21 and potentially stretched commercial and residential property prices. At the Committee’s November meeting, I explored the case for an “insurance cut” addressed to the downside risks from tightening credit conditions. The case for such a cut was strengthened by Bank Rate, at 5¾%, standing at a level that was most probably mildly restrictive. But that had to be weighed against the upward pressures on inflation stemming largely from the rise in energy and other commodity prices. Our November projections seemed to me likely to validate the expectation already embodied in the money market curve that Bank Rate would over time be lowered, representing some offset to the tightening in liquidity and credit premia. That being so, on balance, I concluded that an immediate cut was not necessary; and that “no change” would give the Committee a valuable opportunity to explain in the Inflation Report the implications of both the credit and commodity shocks, underlining that the Committee remains focused on anchoring inflation expectations and so achieving the inflation target over the medium term. Looking ahead, I noted the importance of distinguishing between, on the one hand, the passing through into the macroeconomy of the shocks that had already occurred to credit conditions and to commodity prices; and, on the other hand, the possibility of new shocks on either or both fronts.
They are a conduit for other forms of serious crimes. Almost all forms of serious crimes, such as human trafficking, drug trade and organised syndicates fund their activities through some form of financial crime. As such, financial crimes are inherently complex, and often will involve multiple enforcement agencies, sometimes even across borders. This reinforces the call for greater shared responsibility to shine a light on these 1/5  BIS central bankers' speeches  dark areas of the financial system. One of the key ways to exercise this responsibility is through the sharing of information. More effectively, this means putting in place an effective and mutually reinforcing ecosystem or platform where the relevant parties are able to partner together to report and investigate financial crime. In Malaysia, this is a burgeoning area that we are looking to deepen. We are encouraged by the early results that explores adapting the public-private partnership model of other countries such as the United Kingdom and Australia. So far, partnerships between the Royal Malaysian Police, selected financial institutions and money services businesses have resulted in 9 successful cases being prosecuted in the area of terrorism and terrorism financing. The idea behind these partnerships is to make intelligence sharing more meaningful and create an ecosystem where various pieces of the ‘jigsaw puzzle’ can be put together. Different parties will have different access to information and different comparative advantages. Fusing and complementing them will add to the number of cases that can be detected and prosecuted.

Nor Shamsiah Mohd Yunus: Reshaping Malaysia's future - setting the goal for greater governance and transparency Keynote address by Ms Nor Shamsiah Mohd Yunus, Governor of the Central Bank of Malaysia (Bank Negara Malaysia), at the 10th International Conference on Financial Crime and Terrorism Financing "Reshaping Malaysia's Future – Setting the goal for greater governance and transparency", Kuala Lumpur, 30 October 2018. * * * A very good morning to all of you. It is my pleasure to address all of you today at this very important conference. Financial crime. Terrorism financing. Corruption and money laundering. These are heavy words that carry the feelings of outrage and displeasure, amongst others. The United Nations Office of Drugs and Crime estimates that every year globally, a staggering amount of USD2.6 trillion is stolen through corruption. Yet, I suspect, in reality, figures like these are so large that many may find it hard to relate to it. To put it in perspective, the figure is around eight times larger than the Malaysian economy. Let us also take the UN Sustainable Development Goals that aims to improve the lives of the poor, improve governance and address inequality. Some estimate that it will take around USD5-7 trillion to meet all the SDGs. This represents 2-3 years’ worth of money lost to corruption. In other words, the money lost through financial crimes is a devastating opportunity cost, draining the resources that could have been used to permanently uplift the lives of billions in this world.
In addition to these measures, the conditions for the Liquidity Support Facility offered to banks under extraordinary conditions were revised. Now, I would like to once more underline that if problems in international markets further deepen and adversely affect domestic financial markets, the Central Bank will continue to take additional measures and to employ other policy instruments. Esteemed Guests, Inflation expectations displayed a downward trend in the first quarter of 2009 in line with decelerating inflation. As the incoming information on inflation and economic activity confirmed our forecasts and vindicated the CBT’s monetary policy decisions, inflation expectations also responded favorably following a low course in the second quarter of 2009. BIS Review 67/2009  9  Though inflation expectations for every term fall compared to the previous Inflation Report period, the decline in short-term inflation expectations appears to be more evident since April 2009 (Figures 15 and 16). Figure 15: 12 and 24-Month Ahead* CPI Figure 16: Inflation Expectations Curve* Expectations (Annual Percentage Change) (Annual Percentage Change) 10  10  9 8  6.86  7 6  8  7.55 6.71  7  6.45  5 12 Months  3  5  24 Months  4 01 04 07 10 01 04 07 10 01 04 07 10 01 04 06 06 06 06 07 07 07 07 08 08 08 08 09 09  * Second survey term expectations of the CBT Expectations Survey. Source: CBT.

Therefore, it is extremely important that the parties involved – particularly the social partners and the Government – make every effort to push matters in that direction. It is important that the decisions taken in wage negotiations over the next several months be based on correct information. The report published jointly by the social partners last month, entitled In the Prelude to Wage Negotiations, contains cogent information on wage developments in recent years. According to the report, the emphasis placed on the lowest wages in recent years has borne fruit, at least in part. For example, office workers’ and general labourers’ wages rose most during the period from 2006 through 2014, and they rose in excess of the general wage index. The report also confirms what has previously been reported, that wages and productivity per hour worked are relatively low in comparison with trading partner countries and that Icelandic workers compensate somewhat for this with longer working hours. This highlights the fact that, in the long run, increased productivity is the premise for higher real wages. In this context, the weak productivity growth in recent years could give some cause for concern. On the other hand, it also reflects the growth of labour-intensive sectors such as tourism, which have been supported by the low real exchange rate and have facilitated a more rapid decline in unemployment than would otherwise have been possible.
We, as the Central Bank, will continue to contribute with our assigned duty, that is, to safeguard the stability of our currency and the normal functioning of the internal and external payment system, to Chile’s development and welfare. Many thanks,  BIS central bankers’ speeches  7  Figure 1 GDP growth (annual change, percent) 12  12  8  8  4  4  0  0  -4  -4  -8  -8  -12  -12 07  08  09  10  Natural resources  11  12  13  All other sectors  Source: Central Bank of Chile. Figure 2 Private consumption and investment (annual change, percent) 25  25  20  20  15  15  10  10  5  5  0  0  -5  -5  -10  -10  -15  -15  -20  -20 07  08  09  10  Private consumption  11  12  13  Investment  Source: Central Bank of Chile.

Already, several factors, such as the search for yield driven by a low interest rate environment, new regulatory constraints on the banking system, and digitalisation, are changing the way in which financing is designed, produced, distributed and managed. This transformation is  leading to a more diversified financing structure for our economies. Is this diversification desirable? Is this diversification sufficient? 1. A desirable diversification of financing modes to spur growth and innovation, which must be further supported My answer to the first question is yes because too strong a reliance on bank financing may constitute a source of vulnerability for business development in the event of a shock affecting the banking system. However, the relatively slow pace of development of this diversification  shows that it is not so simple to achieve, and that it should be further encouraged. A. In the short term, the efforts made to adapt the regulatory framework and standardise the alternative sources of financing to bank lending should be pursued. In recent years, public authorities have made significant efforts to adapt the regulatory framework in order to support the development of alternative sources of financing to bank lending. These efforts must be pursued and matched by those of private players to standardise the market. Thus, since 2017, the European Union has established a set of new rules for the development of sound securitisation, i.e.
(*)  Significant at the 10% level  (**)  Significant at the 5% level  (***)  Significant at the 1% level  BIS central bankers’ speeches  25  Table 4: Horse-race between different indicators of bank solvency for major global banks(a) Model 1  Model 2  Model 3  Model 4  Model 5  –0.23 (0.20)  T1 Risk-based  –0.55 *** (0.18)  T1 Leverage  –0.44 * (0.25)  CT1 Risk-based  –0.70 *** (0.23)  CT1 Leverage  –0.08 (0.05)  Market risk-based Market leverage McFadden R2  Model 6  0.023  0.177  0.070  0.203  0.071  –0.20 *** (0.06) 0.216  Model 7 0.97 (1.47) –0.48 (2.04) –1.52 (1.36) 1.22 (1.99) 0.13 (0.11) –0.35 * (0.20) 0.317  (a) Regression based on a smaller sample (45 global banks). This is because of missing information on market capitalisation (where banks were not publicly listed) or on consistent pre-crisis estimates of Core Tier 1 capital. Notes:  For all models, the dependent variable is “failure”. Standard errors are shown in brackets. (*)  Significant at the 10% level  (**)  Significant at the 5% level  (***)  Significant at the 1% level  Table 5: Risk-based capital versus leverage, FDIC-insured banks(a) Variable  Model 1  Leverage ratio  –0.01 (0.01)  Risk-based capital ratio  Model 2  Model 3  –0.06*** (0.01)  0.27*** (0.03) –0.22*** (0.03)  (a) Sample excludes outlier banks with very large risk-based capital and leverage ratios.

These range from the complex (the multi-indicator CAMEL model) to the relatively simple (only one of each of the CAMEL indicators) to the very simple (a constant – similar to the 1/N rule). The out-of-sample predictive performance of these restricted-sample models can then be considered. Charts 8 and 9 show the performance of the different models estimated across two sample sizes (100 and 1000 banks). Lower values imply better model performance. With a sample of 100 banks, the complex model performs poorly. It is out-performed by every one of the single-indicator models. Indeed, it is even out-performed by the constant. The sample mean beats the CAMEL-estimated model as a bank failure predictor for a small-enough sample. Expanding the sample to 1000 banks, the complex model now out-performs the simplest rule. But it still falls short of the performance of a model which comprises a single liquidity indicator. Chart 10 summarises the performance of three of the models (complex CAMEL, single liquidity indicator and 1/N) for samples of varying sizes. The complex model performs worst of all for smallish samples. And even with 1000 banks, the complex CAMEL model under-performs the single liquidity indicator. This evidence suggests that, even among simple banks in a simple environment, imperfections in information can mean that less is more. As when tracking serial killers or serial shoppers, one good reason may be enough. (6)  Modelling financial risks – simple or complex? The final set of experiments looks at modelling risk in financial markets.
•  Only the financial sector has undergone substantial deleveraging to-date. Essentially, the process of deleveraging remains incomplete. The world as a whole has lived beyond its means. It must now work off these past excesses. The gradual unwinding of the debt build-up in both the private and public sectors will have a dampening effect on economic growth in the advanced economies for several years. The second driver of growth is demographics. Slowing population growth and rapid ageing are the most daunting headwinds buffeting the global economy over the next 10–20 years. In fact, demographic trends will negatively impact virtually all of the world’s major economies, both advanced and emerging. •  In the US, UK, and France, annualised labour force growth will be barely positive over the next two decades. •  In Japan and Germany, the labour force is expected to shrink, subtracting from GDP growth. •  The most dramatic decline will be in China. Labour force contribution to GDP growth will swing from a positive 1.5 percentage points over the last 20 years to virtually zero over the next 20 years, with much of the decline occurring in the immediate future. But demographic decline is not universal. Many emerging market economies – India and South-east Asia, for example – will continue to have favourable demographics that will support growth. Demographics is not destiny. This brings us to the third driver of growth – productivity. Human ingenuity to coax higher production out of scarce resources has overcome past demographic challenges.

Moreover, as loose or uneven fiscal moves or reckless legislative initiatives hindered the efficiency of the overall macroeconomic policy mix in Romania, the central bank openly voiced its concerns regarding the sustainability and impact on growth potential of such populist measures, triggering harsh criticism from their promoters. The global crisis proved once again that price stability cannot be achieved in the context of  financial instability, whose resolution calls for far more than monetary policy words and deeds and by far more knowledge and confidence. Austerity measures, the recession, slower-than-expected recovery, along with the view that the  banking sector alone is to be blamed for these misfortunes – even though in Romania, unlike elsewhere, no bail-outs were resorted to – created a mood that eroded the high prestige that the National Bank of Romania had enjoyed prior to the crisis. A reputation that had been earned thanks to a more transparent, flexible, effective policy and to a greater openness to the general public. We were not alone. That sentiment became mainstream across the globe, as well. Central bankers are nowadays cornered to deliver more in their countries, to actively punish the offenders of fiduciary and prove more empathic with debtors and, why not, more compliant and tolerant with populist measures that affect the financial sector and macroeconomic stability. Otherwise their independence would be put at risk, as it is already challenged by public representatives.
On that note, I wish you a successful Workshop and I look forward to meeting you in person soon in the APG future events. 3/3  BIS central bankers' speeches

Further, like the Federal Reserve and the Bank of England, it has pursued a very expansionary liquidity-provision policy, which can be measured by the sizeable increase of over 50% in its balance sheet since 2008. Among the extraordinary measures, I would highlight the long-term (as long as three years) refinancing operations; the extension of the list of assets accepted as collateral for the loans made to banks; and the launch of asset purchase programmes, such as the Securities Market Programme, the two Covered Bonds Purchase Programmes (including Spain's) and the announcement, in August 2012, of the Outright Monetary Transactions programme. More recently, in July this year, a policy of forward guidance has been adopted, involving the more accurate communication of the projected behaviour of official interest rates in the future. Yet we should remember that the capacity of monetary policy to resolve the problems at the root of this crisis is very limited. What it can do, and is doing, is making time so that other players who do have the proper tools to resolve the problems can adopt the measures needed, and so that such measures may take effect. The other European economic authorities, starting with the Commission, have – in close collaboration with national governments – taken significant steps towards correcting the weaknesses exposed in the euro's institutional arrangements. Thus, a permanent mechanism, the European Stability Mechanism, has been set up, with the capacity to provide funds to the Member States deprived of access to the capital markets.
Financial liberalization is now leading to banking internationalization where surplus funds flow crossborder to finance deficit units, i.e., international intermediation. In this background, it is now realized by Regulations that the high mobility of capital flows creates enormous risks to internationalized banks and to international systems, if the individual fund management systems of such banks are not sound. This requires Regulators to place even greater weight upon the efficacy of the governance systems since the failure of such institutions could be catastrophic to the well being of the entire global financial systems. In addition, the ill effects of money laundering, financing of illegal activities, and the financing of terrorism through the banking system are further risks that are faced by banks due to this growing internationalization. These too, need to be addressed by stakeholders who are involved in the development of the evolving systems. To deal with these challenges, Regulators now have to close ranks internationally as well, and attempt to harmonize prudential requirements to monitor risks of international financial conglomerates, and in this regard, we all must be somewhat relieved that the Basel capital accord has provided a clear framework for us to apply on the subject. As we all know, the Basel code of Corporate Governance for banks and financial institutions covers 8 principles. These are: •  Principle 1: Board members should be qualified for their positions, have a clear understanding of their role in Corporate Governance and be able to exercise sound judgment about the affairs of the bank.

The 12-month rate of change of the harmonised index of consumer prices (HICP) fell by 0.8% in September, and underlying inflation, which excludes energy and food prices, stood at 1%. In fact, since 2013, average euro area inflation has also been 1%, less than half the rate observed during the first 10 years of EMU (2.1%). This absence of inflationary pressures and the weakness of demand, along with the deteriorating global environment, led to a further downward revision to the Eurosystem inflation projections, to 1.2% in 2019 and 1% in 2020. In 2021, inflation is forecast to stand at 1.5%, clearly below the monetary policy objective. In turn, the long-term inflation expectations derived from financial markets are at historic lows. In short, the euro area macroeconomic setting is characterised, first, by a downward revision to growth forecasts that were already relatively weak and remain subject to downside risks, owing to the persistence of trade tensions and other geopolitical uncertainties, such as those relating to the final Brexit outcome, and which in some countries of the area, such as Germany, even point to a risk of imminent recession; and, second, by medium-term inflation projections that have also been revised downwards and are well below levels that could be considered compatible with the ECB’s price stability mandate. This is the background to the measures adopted by the Governing Council of the ECB at its September meeting.