samchain/econo-pairs-v1 huggingface dataset:
Cash cards have not been successful (fig. 6). Chip cards with e-money function may be used in transactions of low value and for acceptance at smaller points of sale. This, however, is the part of the market where cash is most appreciated. The national roll out of the so-called Cash card occurred in Sweden in the latter part of the 1990s. Three of the four largest banks in Sweden, that together comprise the lion share of the card payment market, stand behind a common technology. The introduction has not been a success. Up to now, the growth in the use of the new product has been very modest and recently even negative in terms of number of transactions. However, the development of card based e-money is still in a very embryonic stage of development. Caution ought to be applied in drawing too rapid conclusions on its future evolution. In conclusion, although the growth of the card payment market during the last decade has been large, there seems still to be considerable potential for expansion, mostly through displacement of cash payments, and most obviously in Sweden (fig. 7). Why are Swedes so suspicious of cards and such lovers of cash? We do not know for certain. I can just assure you that it is not due to successful marketing of cash by the Riksbank, even though we issue the currency and live on the seignorage. Cash has many advantages, no doubt about that.

Under these circumstances, the traditional pro-cyclicality of credit emerged once again, fuelling asset price inflation (particularly real estate prices in certain regions of the US and Europe) rather than consumer price inflation. In the past twelve months the scenario changed radically: a severe financial crisis, stemming from the US real estate sector, hit mature economies in general, whereas demand pressures over the availability of limited production factors led to mounting inflation in a global scale. Thus, central banks currently face a much more complex and challenging environment than during the years of the great moderation. Monetary responses have been initially diverse due to the nature of the problems that surfaced, but the priority on the need to preserve price stability prevails. Due to both increases in raw material prices and demand pressures, inflation accelerated sharply around the globe. In mature economies in general, marked by broader levels of idle capacity, higher commodity prices probably explain the bulk of the inflation upsurge. In emerging countries, including Brazil, domestic demand pressures have had a relatively more important role in stoking mounting inflation pressures. As a matter of fact, strong domestic demand in these economies created conditions that enabled initially isolated price pressures to become more widespread. Not surprisingly, monetary policy is currently more and more focused in moderating the pace of demand expansion and containing inflation pressures in the majority of the emerging world.
The Bank of Albania considers that the attraction of foreign investments as well as the support and stimulation of domestic investments should be at the focus of decision makers. Structural reforms should be accelerated and Albania’s competitive advantages should be enhanced further. In conclusion, I would like to once again thank the IMF Mission for the useful and constructive discussions. 2/2  BIS central bankers' speeches

Financial integration, together with technological advances in financial markets and financial market instruments, is benefiting the world at large by allowing capital to be invested where returns are higher. Where are the risks? But these benefits also entail new risks. Indeed, despite better institutions, better policies and better markets, we feel more vulnerable nowadays than we used to in the past. How can we reconcile this image of a more prosperous and safer world with our increased feeling of danger? To some extent, our sense of vulnerability simply reflects advances in telecommunications that have enhanced our awareness of the world. I am not a geologist and therefore I cannot tell you whether we are now experiencing more earthquakes than we did 30 or 40 years ago. However, I do know that nowadays I am informed within hours, if not minutes, of any earthquake, flood or terrorist attack that occurs, even in the remotest corner of the planet. Our sense of security is bound to be affected by this kind of information. But it is not just a matter of perceptions. Globalisation means that we in Switzerland are indeed affected by events occurring in India, Brazil, Australia, Japan, Argentina… To a certain extent, our perception of heightened vulnerability is justified. SARS (severe acute respiratory syndrome) or "bird flu" have the potential to become pandemics of unprecedented reach because we travel more than in the past. A terrorist attack in any city around the globe will be felt immediately by investors worldwide.
(a)  (b)  Out-of-sample performance is measured by the mean squared prediction error. A lower number implies better performance. 32  GARCH innovations are normally-distributed. BIS central bankers’ speeches  Charts 12–17: Mean Squared Prediction Errors (MSPE) and Decomposition(a)(b) Chart 12: Sample size = 20  Chart 13: Sample size = 500  Chart 14: Sample size = 2500  Chart 15: Sample size = 25,000  Chart 16: Sample size = 100,000  Chart 17: Sample size = 250,000  Source: Bank calculations. (a) MSPE equals the sum of the squared bias and variance. (b) Data generating process: GARCH (3,3) with normally-distributed innovations. BIS central bankers’ speeches  33  Chart 18: VaR violation ratios for portfolio of (a) commodities  Chart 19: VaR violation ratios for portfolios of (a) equities  Source: Global Financial Data and Bank calculations. Source: Global Financial Data and Bank calculations. (a)  Equally-weighted portfolio of silver, wheat and hogs. Validation period starts in 1970. 95% VaR using monthly returns. (a)  (b)  EWMA: lambda = 0.94. (b)  For each k-sized portfolio, the result shown is the average of 100 random k-sized combinations of equities out of a universe of 210 stocks in the S&P 500. Validation period starts in 2005. 95% VaR using daily returns. EWMA: lambda = 0.94. Chart 20: Evolution of bank price to book ratios, (a)(b) historical and present day  Source: Thomson Reuters Datastream, Calomiris and Wilson (2004) and Bank calculations.

The answer, as in many other areas of complex decision-making, is simple. Or rather, it is to keep it simple. For studies have shown that the frisbee-catching dog follows the simplest of rules of thumb: run at a speed so that the angle of gaze to the frisbee remains roughly constant. Humans follow an identical rule of thumb. Catching a crisis, like catching a frisbee, is difficult. Doing so requires the regulator to weigh a complex array of financial and psychological factors, among them innovation and risk appetite. Were an economist to write down crisis-catching as an optimal control problem, they would probably have to ask a physicist for help. Yet despite this complexity, efforts to catch the crisis frisbee have continued to escalate. Casual empiricism reveals an ever-growing number of regulators, some with a Doctorate in physics. Ever-larger litters have not, however, obviously improved watchdogs’ Frisbee-catching abilities. No regulator had the foresight to predict the financial crisis, although some have since exhibited supernatural powers of hindsight. So what is the secret of the watchdogs’ failure? The answer is simple. Or rather, it is complexity. For what this paper explores is why the type of complex regulation developed over recent decades might not just be costly and cumbersome but sub-optimal for crisis control. In financial regulation, less may be more. Section 2 sets out the reasons why that might be, drawing on examples from outside economics and finance. Section 3 contrasts that thinking with the rapidly rising-tide of financial regulation.
Monetary policy is important as a means of sustaining aggregate demand at a time that the deleveraging process is not yet fully complete and credit availability remains impaired. Sustained low interest rates help support financial asset and house prices, induce households and firms that do not have high debt to save less and spend more, and enable households that do have high levels of debt to refinance them at lower rates. This reduces the amount of deleveraging that has to take place. However, the ability of monetary policy to provide additional support is somewhat constrained by the zero bound – the fact that we cannot lower short-term interest rates below zero, and have to rely on other, less efficient means, to put further downward pressure on longer term borrowing costs. As a result, it becomes progressively more difficult to induce households with low-debt to bring forward consumption by buying motor vehicles or other consumer durables, and to provide further support for asset prices and household net worth. Finally, problems in housing mean that this sector is relatively unresponsive to the low level of interest rates. Despite this, we are not out of ammunition. Although short-term interest rates have been effectively at zero since December 2008, the Federal Reserve has used other tools – such as balance sheet expansion and communication policies to lower longer term rates and make financial conditions more supportive of growth. We could do more in both directions. For instance, we could elaborate on our forward commitment to keep short-term rates low.

Higher productivity leads to a bigger economy that can more easily support the ever increasing number of retired workers. As we take such steps to put our own house in order, we could reasonably look to other nations to take complementary steps to promote global economic rebalancing. By spurring domestic demand growth, emerging market economies could support global activity while enabling their own citizens to reap the full benefits of the remarkable increases in productivity and output they have achieved in recent years. If we were to take all the steps outlined above, then I think we will have a pretty good 2012, with even better prospects after that. If instead, it is all left to monetary policy, then the outlook will be much less satisfactory. My baseline forecast – absent the full suite of complementary policies to support growth – is that 2012 will not differ much from the second half of 2011: moderate growth, slightly stronger employment and some moderation of inflation. But I worry about the downside risks to this forecast especially if the stresses in Europe continue to escalate, or if little progress is made on housing, fiscal policy and global rebalancing. In particular, accommodative monetary policy becomes much less effective if the housing market remains in the doldrums. Conclusion I know that I have laid out here today a daunting set of policy objectives in an environment that is quite challenging.
Other value-add services for these bond investors would likely be launched in the months ahead. Mainland-Related Lending 10. The bread and butter of banks are of course their lending businesses. There is no point in collecting deposits from customers if the bank cannot find useful and hopefully profitable outlet for these funds. With the rapid development of the Mainland economy and the deepening of the Reform and Opening Programme, Hong Kong has become the most important financial intermediation hub for investments into and out of Mainland. The HKMA has been collecting statistics under the category of “Mainland-related lending” by banks in Hong Kong. This category includes lending to Hong Kong and foreign corporates investing in the Mainland and to Mainland corporates, mostly large state–owned enterprises. As Hong Kong is becoming an important source of funds for foreign direct investments into the Mainland and overseas direct investments from the Mainland to overseas markets, the size of Mainland-related lending has grown from a very small amount in 2009 to $ trillion now, which accounts for around 45% of the total bank loans in Hong Kong. This is a very significant component of our banking system and is of critical importance to the profitability as well as soundness of our banks. So clearly it is crucial that, in growing this lending business, banks must maintain a high standard of risk management in underwriting these 2/4  BIS central bankers' speeches  loans.

While this kind of booking businesses may inflate the size of Hong Kong’s banking system in terms of total assets, it does not, as we have learnt from the experience of the euro yen booking in the 1990s, bring about much real benefits to Hong Kong in terms of job creation or enhancement of the credit underwriting skills of the bank practitioners. The lending institutions did not perform any meaningful risk management functions in booking these euro yen businesses. As we all know, the euro yen business in Hong Kong, driven by tax reasons, faded away right after the Asian Financial Crisis. 4. That is why the HKMA has made it clear in the past 10 years that we do not welcome banks moving “pure” booking business to Hong Kong. Our position is that, in booking any loans or other assets in Hong Kong, the banks must demonstrate that they have the necessary capability and control process to prudently manage the risks of these assets, both at origination and on an ongoing basis. Then there is still the basic question: how do we attract financial flows to Hong Kong instead of to other financial centres? There is a bit of chicken and egg problem here. Unless restrained by capital controls, money is highly agile and risk sensitive and will migrate to centres that offer the greatest efficiency and safety. In other words, money tends to move through centres that provide a high standard of risk management.
One natural question raised by that episode, though, is whether the need for such a large scale intervention could be avoided by addressing the structural causes of the “dash for cash”, and if not whether central banks should have facilities to provide the necessary liquidity to the financial system more efficiently. Those are topics that I don’t have time to get into in detail today but they are hugely important questions for central banks and ones with which the FPC is actively engaging.12 In the meantime the MPC has made clear that it stands ready to respond to any re-emergence of market dysfunction, and so avoid any associated tightening in monetary and financial conditions, as appropriate. b. Forward guidance – a high bar to tightening The second tool I want to consider is forward guidance – in other words future commitments on interest rates and other policy tools. Like QE, forward guidance is a tool the MPC had used several times before this crisis. In its 2013 review of the MPC remit, HM Treasury explicitly clarified that the Committee had the ability to deploy forward guidance as a policy tool, including where appropriate making it conditional on future developments.

There are no definitive rules or prescriptions when it comes to monetary  5  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  5  policy tools, and no such thing as a manual for monetary policy makers.5 I’ll start by looking at QE, then come on to forward guidance, and finish with some thoughts on the possibility of negative Bank Rate.6 a. QE – plenty of headroom QE has been an effective tool for stimulating demand through the 11 years of its use in the UK. Even though we are well on the way to purchasing £ billion between March and December 2020, we have QE “headroom” remaining. And while it is increasingly clear its implementation and impact is state contingent7, to my mind it is a tried and tested tool and for me it is the MPC’s marginal policy tool at present. The headroom point is worth expanding on because it is one that isn’t always appreciated. There are £ of conventional gilts in “free float” by market value (as well as another £ of index-linked gilts which are out of scope)8. The Bank’s Asset Purchase Facility holds approximately £ of those9: so there is a further £ remaining in the market that could potentially be available for purchase. In practice the Bank does not buy very short maturity gilts. And to avoid distorting the market it avoids specific gilts where it holds more than 70% of the free float, and attempts to buy evenly across three maturity “buckets”.
Low bank profitability – which, in the case of many Spanish and European banks, stands below the cost of capital and hampers the shoring-up of solvency – is, without doubt, one of the main risk factors for financial stability. In this setting, banks should harness the levers for improvement available to them in the current macro-financial environment, including most notably: stepping up the granting of solvent credit; diversifying their fund-generating sources; reducing non-performing assets (NPLs and foreclosures); increasing their efficiency; and enhancing their reputation. On the other, this context of “low interest rates for longer” may generate greater incentives for risk-taking by economic agents. Spanish banks, it would appear, are not significantly increasing their risk profile, although there are some factors that require close monitoring. Prudence in extending credit should be maintained as a key element for increasing banks’ capacity to absorb aggregate negative GDP or interest rate shocks and for ensuring financial stability. In this connection, according to the latest stress test conducted by the Banco de España, the resilience of Spanish banks as a whole to potential shocks has improved on last year, though the heterogeneity across banks is high. In any event, the Banco de España constantly monitors the risks to financial stability associated with the banking sector. Were such risks to emerge, the new macroprudential policy instruments available to the Banco de España are specifically designed to mitigate a potential excessive build-up of risks and to increase banks’ loss-absorbing capacity should these risks materialise. Thank you for your attention. 29/29

And the rate of unemployment fell from a peak of over 10½% on the LFS measure to around 5% last summer; on the claimant count measure it fell from some 10% to just over 3%, which meant that the number of people claiming unemployment benefit, at under 950,000, was the lowest for 26 years. Short-term interest rates are at a 38-year low. All of that it seems to me gives the lie to a view that was quite widespread a decade ago, that sustained low inflation would inevitably mean continuous suppression of the real economy. I'd go further myself and suggest that it provides considerable positive support for the central bankers' credo. Now some of you - given what's been happening to your own businesses, to certain particular business sectors, and in regions of the country where those sectors are particularly heavily concentrated - may think that I've been living on a different planet. The problem is - and it is a real problem - that with the best will in the world macro-economic stability, the stability of the economy as a whole, cannot guarantee stability at the more micro-economic level: it can not guarantee the prosperity of every individual business or even of whole business sectors or geographic regions.
I urge the industry to come together and focus on the long term benefits, and give its full support to initiatives such as ISM’s Fraud Intelligence System, and collaborate on other innovations such as the electronic reporting of motor accidents to bring the cost of insurance closer to its “true cost”. Such collective effort is critical to make insurance and takaful accessible to many, and to promote its sustainability over the long term. Individual insurers should also adopt the longer term view and invest in innovation. Much more can still be done by insurers that are part of global insurance groups to bring new technologies, product designs and process improvements into the Malaysian market. The undue focus on short term profitability driven at the group level have often come at the expense of certain market segments being underserved and customers being denied best value for money. Foreign insurers need to contribute more to justify their presence in the Malaysian market. Thirdly, insurers and takaful operators need to cultivate and continuously affirm society’s trust in the industry. Insurance and takaful products have become more complex with the result that most consumers do not fully understand what they have purchased. A larger number of players chasing the same pool of customers, result in intense competition that gives rise to poor sales practices. Pressure to improve underwriting results by controlling claims costs can also have unintended effects on the consumer experience.

New products and delivery channels that enhance outreach ultimately contribute towards expansion of a larger industry, and pool of customers for all participants in the insurance sector as a whole. In other words, it is not a zero sum game. Everybody will gain. Insurance agents and financial advisers will continue to provide a valuable service as households and businesses move up the income ladder and require more personalised advice on product options. It is important that this evolution is accompanied by a strong focus on raising standards of professional competence. Increasing the proportion of full time agents from the current 40% in the life sector and 30% in the general sector will be a vital component of this agenda. Equally important is ensuring that remuneration structures are aligned with the  BIS central bankers’ speeches  3  interests of consumers. The implementation of the balanced scorecard is an important step in this direction and should not be further delayed or diluted. There is no question that the potential for growth in the insurance and takaful industry is significant, with estimates placing the life and medical insurance protection gap alone in Malaysia at between RM550,000 and RM723,000 per household. Closing this protection gap is ultimately the moral responsibility of the industry. Microinsurance and microtakaful should be further developed to improve access to the underserved segment of society.