samchain/econo-pairs-v1 huggingface dataset:
This benefits not only the participants but the CCP and the system as a whole; with a larger and more diversified pool of participants, the impact on the CCP due to a default of any single particular participant would be reduced. Self-clearing can also widen CCP access on cost-effective terms and allow proprietary derivatives trading firms, such as buy-side players, to join CCPs as members and thereby reduce their counterparty and fellow customer risks. CCPs will have the flexibility to design suitable self-clearing models, taking into account the risks and needs of self-clearing members. We have seen recent innovations by Eurex and CME to allow certain market participants which are not allowed to take part in the CCP risk mutualisation as a result of their mandates, to selfclear on the CCP. Remote clearing will allow offshore participants, which do not currently have a presence in Singapore, to join our CCPs, thus bringing about new, additional liquidity to local markets. The increased breadth and depth of the markets in turn benefits onshore members which will continue to be key players in our domestic markets. At the same time, such memberships allow offshore firms to gain familiarity with the local market and to deepen their participation. There are some understandable concerns if remote or self-clearing can undermine financial stability in domestic markets. In Singapore, our regulatory standards and expectations will not change. We will only allow CCPs to admit self-clearing or remote clearing members if they have put in place adequate admission, ongoing monitoring and risk management frameworks.

Beyond equivalence assessments, we will consider the formation of supervisory colleges for our CCPs should they be deemed as internationally active. Putting recovery and resolution plans in place Allow me to share a final set of remarks on recovery and resolution plans. Even as we continue to strengthen the resilience and accessibility of CCPs, we must continue our efforts to ensure that recovery and resolution plans for CCPs are in place. There have been greater focus and thought given to arrangements to deal with default risks but it should also be recognised that other risks such as custody and investment risks can also pose a threat to a CCP's viability. Hence, in line with the CPMI-IOSCO report on Recovery of Financial Market Infrastructures, MAS expects and will place priority to ensure our CCPs have clear arrangements to enable custody and investment losses to be allocated in a way which allows CCPs to be solvent and can continue to provide its critical services. At the same time, there must be appropriate governance arrangements and incentive structures to promote prudent risk management on the part of the CCP. Such arrangements can include providing transparency to member firms, having “Skin-InThe-Game” (SITG) contributions from the CCP, and putting in place oversight structures to oversee such safeguards.
Third, technology has advanced enormously in terms of both the capacity as well as sophistication. Countries have benefited immensely from these developments and, as a result, wide choices are available to savers & investors, borrowers & lenders together with greater flexibility & efficiency in the allocation of capital. Many institutions have sprung up in both money and capital markets. Similarly, the financial world has become more complicated with closer interconnectedness within and between individual firms, institutions and markets. In the meantime, the regulatory authorities have begun to focus on the achievement of specific objectives and found that they have to react to action by the financial markets by putting breaks to halt the rapid expansion, which would otherwise threaten the stability objectives. So, they brought in financial regulations to deal with the situations. Unabated by the tightening of financial regulation, financial markets continued to grow rapidly and ended up in crises and the world has learnt many lessons from financial crises. The outcome of the Mexican crisis in 1994, the Russian crisis from 1992 to 1995 and the Asian crisis from 1997 to 1998 was the further tightening of financial regulations and introduction of new ones. They were more reactionary and intrusive after the Enron and World Com failures in the USA. The Sarbanes Oxley regulations, which are considered somewhat draconian have come to stay, but may be with modifications.

The balance financial intermediaries are regulated by various authorities while some are not regulated at all. Banking companies in Sri Lanka come under several jurisdictions, but the Banking Act is the centrepiece for financial regulations. It sets out all necessary regulatory provisions for capital requirements, shareholder limits, credit operations, provisioning requirements, consolidation, acquisition and mergers, suspension, winding up of banking companies, etc. Sri Lanka’s banking sector is currently operating on Basel I, but getting ready to implement Basel II Capital Adequacy Ratios from early 2008. Basel II is basically risk mitigation in banking operations and, it allows supervisors and regulators to encourage or require banks to build up capital buffers in good times. Financial regulations have thus been set taking into consideration the cyclical situation which banking firms face in home and host countries. In addition to the provisions in the Banking Act, the Monetary Law Act which governs the operations of the Central Bank, also provide for regulation of banking companies. However, in recent times, through various amendments, most of the provisions of the Monetary Law Act have been incorporated in the Banking Act. Their stock market operations come under the purview of the SEC Act. In addition to the banks, the Central Bank regulates the finance companies under Finance Companies Act and the leasing companies under the Leasing Act. The primary dealers who deal in the government securities market irrespective of whether they are banks or not, are under the supervision of the Central Bank.
Suppose that price and cost inflation in Norway were allowed to be higher than in the euro countries. The nominal exchange rate would then have to depreciate in order to keep the real exchange rate constant over time. Thus, stabilising inflation at around the level aimed at by the ECB is a means of achieving exchange rate stability against the euro. In a situation with the prospect of increased inflationary pressure and a depreciating exchange rate, an increase in the interest rate may at the same time bring the exchange rate back towards its initial range and reduce inflationary pressure through lower demand and lower imported goods inflation. This in turn will contribute to long-run stability in the exchange rate. Similarly, with an appreciating exchange rate and a low inflation and activity level in the economy, a lower interest rate will contribute to stabilising the exchange rate in both the short run and the long run through a stable inflation level. On the other hand, we can think of situations where we would need to set a high interest rate in order to keep the exchange rate close to the initial range in the short run, creating a deflationary recession in the economy. Normally, a deflationary recession will lead to a weakened krone exchange rate, which means that the high interest rate set to keep the level of the exchange rate unchanged in the short run in itself will induce exchange rate instability in the long run.

Chart 1  300  300 Projections  250  250  200  200  150  150  100  100  50  50  0  0  1970  1980 1990 2000 2010 2020  2030  Source: NB 2000 Legg inn filadresse her  Chart 2 Export value of oil as a share of total exports excluding ships and oil rigs. Per cent 50  50  40  40  30  30  20  20  10  10  0  0 73 75 77 79 81 83 85 87 89 91 93 95 97 99  Source: Norges Bank Legg inn filadresse her  BIS Review 121/1999  2  Chart 3 Government net cash flow from the petroleum sector as a share of GDP. Per cent 10  10  8  8 Projections  6  6  4  4  2  2  0  0  1980  1990  2000  2010  2020  2030  Source: NB 2000 and Norges Bank Legg inn filadresse her  Chart 4 Government budget surplus and Petroleum Fund surplus. In billions of NOK Ex.
But I would urge you instead to look at the reports of our annual medical check-ups conducted by the IMF since 1990 in the form of what are known as the Article IV Consultations. The IMF team was in fact in Hong Kong for this year’s Consultation in the second half of October, when the short-lived but somewhat intense attack on our currency occurred. It was the best time for any diagnosis of financial problems. But after observing us closely over the period the team again gave us a clean bill of health. Let me give you a few relevant quotes from the Concluding Statement of the Consultation, which has already been published.

The global financial crisis that erupted in late 2008 had its influence on our economy by stiffening this cooperation. On the one hand, the system found itself in a difficult liquidity situation, while on the other hand businesses found it difficult to access markets. With some additional subjective reasons, the outcome of this was a deterioration of the system’s loan portfolio and companies’ liquidating capacity. Consequently, 2009–2010 marked a slowdown of lending growth to the economy, reflecting the increased prudence, fully justified by the system, and  BIS central bankers’ speeches  1  business inability to earn a meritable new loan. The period coincided with a review of balances and portfolio restructuring, when possible with provisions, directly affecting the system’s financial performance. The Bank of Albania has played a major role as a guardian of the country’s macroeconomic and financial stability. Macroprudence has been the prevalent word in our communication with the market, authorities and the public. We have translated macroprudence as a need for more capital and liquidity, and increased banking system payment capacity. Consequently, the Albanian banking sector did not experience contracting. The Bank of Albania has provided and continues to provide the necessary liquidity to the banking system, to stimulate not only to the market but also to the entire economy. Prudent policies and timely legal regulations guaranteed effective banking supervision and enabled satisfactory businesses’ access to bank loans.
Within this range, the FPC judged that a structural level of capital requirements and buffers of 11% would allow it to meet its financial stability target, and maximise the longer-term level of expected GDP.25 Chart 17: FPC’s benchmark for optimal capital requirements is 11% Estimated cost/benefit of capital  11% optimum  Annual GDP cost of moving away from the appropriate capital ratio (in % of GDP) 0.02 0 -0.02 -0.04 -0.06 -0.08 -0.1  Optimal range -0.12 7  8  9  10  11 12 13 14 System capital ratio (% of RWAs)  15  16  17  In addition to this structural capital requirement, UK banks are required to hold a Countercyclical Capital Buffer (CCyB) that varies over the financial cycle, matching the level of banking system resilience to the level of risk. The CCyB was introduced internationally following the crisis, as part of the Basel III package of measures in 2011. It better optimises the balance between the primary macroprudential policy objective to reduce GDPat-risk, and the secondary objective to support economic growth, compared to a fixed capital requirement that does not vary with the level of risk.

Even in the USA after the FED lift-off, interest rates still qualify as historically low and the tightening cycle has been announced as “gradual”. Now why should we, as central bankers, care about ultra-low rates? For many reasons, notably because they can lead to a misallocation of resources or bubbles, and because they are currently associated with persistently low inflation or “lowflation” – shall I even say “noflation”? The latter is of particular concern given the costs resulting from price or wage rigidities and distortions, as well as the risk that we might fall into deflation. My role as “opening speaker” is modestly to stress some puzzles and challenges we face. You will then have the whole day to provide the best answers. To kick off, I’ll focus on where we stand, with two puzzles, and then on what monetary policy should/can do, with four challenges. I. Where do we stand? And to start with, what is ultra-low? A lot of what matters for CBs is low or ultra-low compared to history, notably in advanced economies (AEs): first, inflation, be it headline or core, realized or expected; second, interest rates on safe assets, whether short or long, nominal or real, ex post or ex ante; third, term premia in spite of measurement uncertainties. And all variables have been decreasing and are now low at the same time which is new.
MAS’ monetary policy stance since 2010 has underpinned the gradual improvement that we are seeing in Singapore’s inflation-growth trade-off. •  MAS is committed to ensuring that recent improvements in inflation are sustained. •  The current policy stance of modest appreciation of the Singapore dollar is appropriate in containing the re-emergence of strong cost and price pressures in a restructuring economy. Strong Singapore Dollar impacts MAS profits despite good investment returns Let me now move on to MAS’ financial results. MAS made investment gains of $ billion for the FY ended March 2013. •  This is lower than the $ billion earned in the previous FY, due primarily to lower interest income as interest rates continued to decline in FY 2012/13. 2  BIS central bankers’ speeches  But MAS recorded an overall loss of $ billion after taking into account translation effects from an appreciating Singapore dollar. •  In FY 2012/13, the Singapore dollar appreciated against all major currencies  •  In particular, the Singapore dollar strengthened 5% against the Euro, 6% against the Sterling, and 14% against the Yen during FY. •  It also appreciated against traditionally strong currencies like the Aussie Dollar and the Canadian Dollar. In short, we made good investment returns, but when measured in Singapore dollars, these gains more than offset by strength of the currency. •  This is an issue of reporting currency. If we had reported our profit and loss in international currency, it would show healthy profit.

As a result, dealers were, it is true, able to carry high levels of inventory and to accommodate easily shifts in the demand for market-making. But they were also vulnerable to falls in asset prices and tightening in wholesale markets conditions. When faced with severe stress, they were forced to withdraw from market-making altogether. In short, when conditions became really testing, market liquidity, like bank capital, proved to be an illusion. With regulation tighter, it may well be harder for market-makers to absorb inventory when end investors wish to off-load assets; market liquidity may start to fall away at an earlier point. The risk of another complete failure of market liquidity should be much reduced. But market participants will not always be able to sell what they want, where they want and when they want. BIS central bankers’ speeches  5  Investors need to recognize this change in market structure and adjust accordingly. In this respect it is perhaps worth observing that it is currently quite puzzling that, when market participants seem to be worried about market liquidity and the impact of regulation on market making, liquidity risk premia seem to be so compressed. It does raise questions over whether liquidity risks have been properly priced. Central bankers are, of course, supposed to worry about new risks. But I would not want to leave you with the impression that nothing has improved in the financial stability world.
But the crisis revealed something about the relationship between the state and industry at the end of the nineteenth century. Indeed, the institutional set-up explains quite a lot about the approach taken towards the oversight of financial institutions at this time. The Bank of England was still a private entity. The leading partners from each trading house sat on the Bank’s Court of Directors. This was a world of gentlemen’s agreements and moral suasion, or “what a later 6  generation would know by shorthand as the Governor of the day raising his eyebrows” . One reason the Bank developed a supervisory interest in the clearing banks was to protect its balance sheet given its role as banker to the banks but it was, at most, primus inter pares, and banks were largely self-regulating. Indeed, the crisis at Barings was ultimately one of solvency not liquidity and so the Bank would not devote its own resources to a recapitalisation. Instead, the rescue of Barings Bank relied on the collective action of its industry peers and some co-ordination by the Bank rather than any formal supervisory role. This is in contrast to later crises of liquidity during which, in line with Bagehot’s theory, the Bank extended credit at a penal rate to solvent but illiquid banks and became lender of last resort.

The Bank of England and Public Policy: 1941 -1958, Cambridge, Cambridge University Press, 1992, p.750 10 A short-term debt instrument issued by a company that is guaranteed by a commercial bank, often used to facilitate trade. 11 Fforde, p.755 8  5  All speeches are available online at www.bankofengland.co.uk/speeches  5  And yet, as in the 1890 Barings episode, you can see in this activity elements which persist in supervision today. For instance, while I do not wish to offer any formal comment on the state of Mark Carney’s eyebrows, in my experience a meeting with Mark is always a useful way to focus the mind. It is worth remarking that during this period there was a genuine window of opportunity to extend the 12  boundaries of banking supervision undertaken by the Bank and legislate accordingly . However, after a year’s negotiation, it came to nothing and instead of a Banking Act 1957, the banking sector would have to wait until 1979 before the Bank involved itself more formally in the affairs of firms and, crucially, on a statutory basis. In the period up to the 1970s, there had been ‘no recent case of depositors losing their money. There was little public interest in the subject and there had been no troubles that might have led to a demand for the 13  Bank’s help’ . This set of circumstances changed abruptly when the secondary banking crisis engulfed the City in the period 1973-5.
In a cash pre-funding world, settlement banks will only be able to accept further payment instructions if they have sufficient funds in their account with us. Given the changes coming to our retail systems, and recognising that a number of other central banks have moved away from a traditional daylight business day, we have recently decided to review the pros and cons of extending the operating hours for the RTGS infrastructure in the UK. This is not a review with a preferred end in sight: it is entirely plausible we will conclude that no changes are warranted, but we do want to understand if a longer RTGS hours would permit beneficial change in the various wholesale and retail payments systems which connect into it, and so to the wider financial system operating in the UK. The review is a form of sensible housekeeping, being an issue that the core infrastructure provider should periodically address. My presumption is that we will draw our initial conclusions within a year, with a further implementation lag following that, were we to conclude that significant change were appropriate. The final area of focus is country specific: last month, the UK government introduced draft legislation to create a new regulator for UK payments focused on competition, innovation, and the interests of end-users. This will replace the previous regime which had relied on a self-regulatory body, the Payments Council, to achieve these public policy goals.

The slowdown in global growth has been more pronounced and spanned a longer period than we had expected. The Norwegian economy has also felt the effects of this. Norges Bank has therefore lowered the sight deposit rate from 7 to 5.5 per cent since 11 December, most recently on 5 March. The interest rate differential has narrowed. Since mid-January, the krone has depreciated, partly reflecting expectations of lower interest rates. Monetary policy has been relaxed. There is uncertainty associated with developments in many of the factors that will influence inflation ahead, among others the exchange rate. This implies a gradual approach to the conduct of monetary policy. Increased spending of petroleum revenues will have implications for Norway’s industry structure. High demand for goods and services that require domestic resources, necessitates higher employment in the sheltered sector. This labour has to be recruited from the exposed sector, or through the natural increase in the labour force finding its way to the sheltered sector. Even if employment and output in Norwegian manufacturing industry fall, developments for Norwegian enterprises may not necessarily be only negative. Some enterprises may be at the cutting edge of technology, and increase their efficiency in pace with the rise in costs in Norway. Others may relocate labour-intensive activities abroad. The scaling back of manufacturing still involves a risk. It makes the economy more vulnerable; the foundation for learning, innovation and development may be undermined when a smaller share of the business sector is exposed to intense international competition.