samchain/econo-pairs-v1 huggingface dataset:
In addition, under the EBA's Interest Rate Risk of the Banking Book (IRRBB) guidelines - as part of the rigorous application of the Pillar 2 provisions - published in 2018 and enhanced in 2022, European banks are required to conduct regular prudential stress tests to measure the impact of interest rate changes on their interest margins and the economic value of their capital; US regional banks such as SVB are not subject to this requirement. As regards the regulations of insurers, the general approach adopted in June 2022 by the European Council on amendments to the Solvency II Directive is in line with several of the ACPR's objectives: overall neutrality of quantitative requirements on the French market, support for long-term investment with more stringent requirements in terms of sustainable finance, better rules for crossborder transactions and better application of the principle of proportionality. It is now very important that the European Parliament adopt this directive as soon as possible, so that it can be implemented quickly and without being diluted. III. Areas to be enhanced in the short and medium term Resolution is another cornerstone of the Banking Union. However, the fact that the Swiss authorities opted for a merger in the case of Credit Suisse raised new questions about how to make resolution more operational and reliable. Let me share just two thoughts at this point. The first concerns the resolution of large or even systemically important banks.

European DORA regulation published at the end of 2022, whose implementing decrees are currently being drafted, will allow for a better management of cyber risk, which has been particularly significant in recent months. Page 8 of 9  France was ranked first in the fight against money laundering and terrorist financing by the FATF in its May 2022 assessment report. We must pursue our efforts to remain exemplary and play a leading role at international and European level, in particular in connection with the French bid to host the new European authority (AMLA) in in this area. As regards climate risk, despite major advances in terms of transparency and disclosure standards, the first dedicated stress tests - including the one pioneered by the ACPR - showed that preparation for physical and transitional risks could still be improved. As regards the insurance sector, EIOPA has conducted a first stress test on European supplementary occupational pension schemes. The ACPR has continued its work with insurers to prepare for the next exercise, which will take place in 2023 and whose results will be published in the first half of 2024. Lastly, and perhaps most importantly, as a number of recent episodes of market volatility have shown, non-bank finance poses an increasingly important systemic risk and needs to be better regulated, both at the microprudential and macroprudential levels, in order to control leverage and contain liquidity risk.
BIS Review 95/2008  5  I hope that this gives you a sense of the use we make of business surveys, and business intelligence more generally, in making our regular assessment of the state of the economy each month, before taking our decision on the appropriate level of Bank Rate. The timeliness of this information is particularly important at the current juncture, when the economic climate is changing rapidly. The global and UK economies have been subject to two large shocks of uncertain magnitude, duration and impact. The first is the continuing de-leveraging in the banking system and the attendant squeeze on the terms and availability of credit. The second is the fairly relentless rise in commodity prices, especially that of oil, driven in part by the robust growth in demand in the emerging economies. These two shocks both depress output growth, though they have divergent effects on inflation. In our May Inflation Report, our central expectation was for four-quarter GDP growth to slow markedly through this year, reflecting both subdued real income growth and tighter credit supply (see Chart 7, which also includes the same backcast information as Chart 6). It was then expected to gradually recover through 2009 as credit conditions slowly improved. The corresponding projection for CPI inflation is shown in Chart 8 (note that no uncertainty is shown for the past, as the data for CPI inflation are rarely revised).

Despite all that, foreign exchange market participants and central banks in 1974 found Herstatt risk to be an intractable problem. All that was left to banks was to manage it. And so it went for 20 years. Then, in the mid-1990s, Bill McDonough, president of the New York Fed, identified the continued existence of Herstatt risk as a challenge to be met. As chairman of the Committee on Payments and Settlement Systems of the G-10 Central Bank Governors, he spurred the central bank community to take a fresh look. This time, the combination of new financial analysis and the rapidly expanding availability of raw computing power made the difference. •  In what today still stands as a landmark in analysis of the connection between operational and financial risk, the 1996 Allsopp report demonstrated in a straightforward manner just how much financial risk existed in the bilateral settlement of gross principal amounts of foreign exchange – an analysis that provided the insight into how a settlement facility could reduce that risk, and into understanding how settlement management could improve in the interim. •  Raw computing power was essential for the design and risk management of any proposed new settlement facility. Through scenario analysis and stress testing, CLS’s founders could determine the necessary capital and liquidity needs, default handling procedures, and the general benefits of multilateral vs. bilateral netting. The inherently multicurrency nature of foreign exchange settlement of course enhanced the challenge.
Interest rates were kept at a low level for a long period, but are now on the rise. The world economy is again expanding at a brisk pace. Over the past three years, global production has increased by about 14 per cent, which is the strongest upturn since the beginning of the 1970s. In the UK and US, interest rates have already moved up to a more normal level. In Sweden and the euro area, the central banks have started to raise interest rates. Over the next year, further interest rate increases are expected in the euro area, the UK, Sweden, Switzerland, the US, Canada, Japan and Australia. Norway has also experienced a fairly long period of falling and thereafter stable, low interest rates. Price inflation was subdued, and there was idle capacity in the economy. Real interest rates have been very low and markedly lower than a neutral level. In line with the prospects I presented to the Committee last year, we have started raising interest rates. To date, Norges Bank’s key rate has been increased by 0.75 percentage point. Consumer price inflation has edged up, but is still very low even close to three years after the start of the cyclical upturn. Consumer prices adjusted for tax changes and excluding energy products have risen by 1 per cent over the past twelve months1. Prices for imported consumer goods have fallen almost every year since the mid-1990s, reflecting freer trade and the shift towards imports from lowcost countries.

In a period of increasing cross-border labour flows, major technological advances, changes in competitive conditions and substantial changes in trade patterns, inflation will probably, with our very open economy, show somewhat wider variations, as witnessed over the past two to three years. The operational objective of monetary policy is low and stable consumer price inflation. Over time, the consumer price index will provide a guide for assessing monetary policy. Monthly variations in consumer prices reflect temporary conditions which monetary policy cannot control. According to Norges Bank’s remit, the Bank shall not normally take account of direct effects on consumer prices of changes in interest rate, excise duties and extraordinary, temporary disturbances. Energy prices have traditionally shown wide variations. Hence, a price index that is adjusted for variations in such prices as well as for indirect taxes can be a measure of underlying inflation in the economy. However, such a price index does not take account of that fact that the trend rise in energy prices has been higher than for other prices and is therefore not a perfect measure of underlying inflation. In the past 10-20 years, energy prices and taxes have pushed up consumer prices annually by an average 0.35 percentage point. Even when taking into account trend increases in energy prices, inflation is still moderate. Experience indicates that inflation expectations remain stable even if inflation varies somewhat, as long as the interest rate is used actively to curb the effects.
In the United States the real earnings trend since 1940 has been virtually constant between 2% and 3%, while - as I just mentioned - the real return on shares shows a trend break after 1982 (Fig. 3).2 Are present share prices fundamentally justifiable? I shall now use a simple model to examine whether the present level of share prices can be justified in fundamental terms.3 Simplifying somewhat, this model equates the value of a share with the present value of the future income the share is expected to generate. A valuation in P/E terms accordingly rests on the assumptions that are made about these future incomes - the future growth of the company’s earnings - and the factor by which these incomes are discounted - the stock market’s expected return. We can insert alternative values for these assumptions to find the combinations that might justify different P/E ratios (Fig. 4). It will be seen that a P/E ratio of 14 can be warranted if the expected real return is 6% and the real growth of earnings averages 2.5%. These figures are all approximately in line with the historical trends.

To keep things simple, we can assume that the labour and capital shares are constant in the longer run and concentrate on how the return to capital is affected by changes in total factor productivity (the overall efficiency with which labour and capital are utilised in production). A higher return to capital should imply a higher rate of increase in corporate earnings. Conversely, an accelerating growth of corporate earnings should show up as a rising return to capital at the macro level. 5  BIS Review 137/1999  Conclusions From what I have said this evening it is possible to draw two conclusions that at first sight may seem to be somewhat contradictory. On the one hand we have noted that stock market values are historically high and that in the past this has normally been followed by some form of correction. On the other hand, there may be some grounds for arguing that changes have occurred in expected stock market returns and/or the economy’s potential growth rate which could justify a stock market valuation above the historical level. In the United States there are at least signs that point in this direction. For Sweden, however, figures at macro level have not yet been discerned that would confirm such a change. But these two conclusions are not necessarily contradictory. Present stock market prices could mirror a combination of “irrational exuberance” and a change in the fundamental picture of the global economy. The impact of the new information technology may be leading to higher productivity growth.
Mervyn King: What fates impose - facing up to uncertainty Speech by Mr Mervyn King, Governor of the Bank of England, at the Eighth British Academy Annual Lecture 2004, London, 1 December 2004. The references can be found on the Bank of England’s website. I am indebted to David Aikman, Gertjan Vlieghe and Tony Yates who worked closely with me on the subject of this lecture over a long period. They should truly be regarded as co-authors. I am also very grateful to John Campbell, Gerd Gigerenzer, Robert May, Jim Poterba and many colleagues at the Bank for helpful comments and discussions. I would like to thank Tony Leandro (Actuarial Profession), the Met Office, Helen Bray and Adrian Gallup (both of the Government Actuary’s Department) for help in gathering and interpreting data used in this lecture. Kath Begley provided excellent research assistance. *  *  *  “What fates impose, that men must needs abide; It boots not to resist both wind and tide”. (William Shakespeare, Henry VI part 3, Act IV Scene 3)  1. Introduction  My subject tonight is risk: how we think about, how we talk about, and how we manage risk. So let me start by thanking all of you for coming and taking the risk of spending an hour with a central banker. Few writers have put central bankers in their place, but one of them was Nancy Mitford, whose centenary we celebrated last Sunday.

22  It is possible that families, or more accurately dynasties, can provide such insurance themselves through changes in the bequest which they make to their descendants: passing on a larger bequest if the current generation dies earlier than expected and a smaller bequest if it survives for longer than expected. But only a small proportion of bequests seems large enough to act as a buffer in this way. 23  As far as I am aware, the first instrument offering a return specifically to aggregate longevity was issued by Swiss Re, a large reinsurance company, in 2003. 24  To the extent that insurance companies offer both life insurance and annuities, they may be able partially to hedge the risks. 8  BIS Review 73/2004  There are two ways in which government involvement can, in principle, improve risksharing. First, collective schemes, whether compulsory or employer-based, avoid the costs of adverse selection associated with individual provision. Second, by combining taxes on current employees with deficit finance (i.e. taxes on future employees), statefunded pensions can transfer risks across generations in ways private markets cannot. Alternatively, the government could issue its own longevity bonds. Private annuity providers could use them to hedge aggregate longevity risk. By assuming longevity risk the government would make it possible for the private sector to purchase such bonds and in turn support a private market in annuities.
The first tells that an efficient monetary policy requires financial stability. The second that financial stability cannot be achieved irrespective of fiscal conditions. The third, that financial stability is contingent on a sound regulatory framework agreed upon at the internationally level and robust supervisory management at the domestic level. I. An effective monetary policy requires well-functioning financial systems  4. All the decisions taken by the European Central Bank during these last three years had the primary goal to secure the transmission of monetary policy. Three channels could affect these mechanisms through:   the price channel: the increase in government bonds yields may spill-over to the cost of financing of the private sector. Under normally functioning bond markets, sovereign bonds provide a floor for the funding conditions of the private sector.   the liquidity channel: government bonds are the primary collateral used by banks. Interruptions in the sovereign debt market reduce the function of government securities as liquidity buffers. This in turn impedes banks’ capacity to issue loans and refinance the real economy.   the balance sheet channel: falling bond prices induce valuation losses on assets and balance sheets of financial and non financial actors. For banks, these losses reduce their capital base, decreasing, hence, their supply of loans to the economy. BIS Review 113/2010  1  For borrowers, the losses on assets held, diminish their creditworthiness, affecting, thus, their capacity to borrow. 5.

… On the evidence of the previous six months, the MPC bears a closer resemblance to a post-graduate seminar than to a forum for strategic decision-making. …To put [several] economists in the same room is to invite what one commentator has called paralysis by analysis. As a result the Committee’s conclusions are entirely unpredictable.” Since the beginning of 1998, the Committee has been unanimous at only one out of sixteen meetings. That was in July of last year when the Committee voted to hold interest rates constant at 7.5%. Disagreements have become the norm, and are much less remarked upon by the press than they were before. Moreover, disagreement is now more widely accepted as natural. It would be strange if the uncertainties facing the Committee were not reflected in small differences of opinion. And views of the appropriate level of rates have never differed by more than 0.5 percentage points. Nor have these technical disagreements led to “paralysis by analysis”. Indeed, the Committee has reduced interest rates by 23 percentage points since October of last year. It was precisely the analysis that led to the action. The willingness of the MPC to change interest rates either up or down in order to meet the symmetric inflation target has altered commentator’s perceptions of the Committee itself. Early in its history, commentators were unable to resist labelling members of the Committee as either “hawks” or “doves”.
•  In the longer run, ageing and slower innovation may push up saving rates and bring down the return on capital. Therefore, the ultimate response to the risk of secular stagnation is to improve the return on investment, thus pushing the natural interest rate back into positive territory. Again, this is not only a European problem. But we do have difficulties in this regard. Structural reforms are not easy. Many, however, are currently being implemented. Italy is abolishing its provinces, generating savings that will allow for a reduction in taxes and liberalising its labour market. France is on the same track and has reduced taxes on its labour costs as well as improving labour market flexibility. III/- short-term policy challenges and responses The main challenge, of course, is low and declining inflation, with inflation expectations in the euro area drifting downward at short to medium-term horizons. This prevents adjustments in relative prices, – an important mechanism to eliminate gaps in competitiveness – and increases the risk of outright deflation, should a negative shock occur in the future. Strangely, in the euro area, growth and inflation are moving in opposite directions. As growth accelerates, inflation keeps going down. This “disconnect” in the Philips curve is puzzling. We must look, then, at the broader picture. Euro area economies have attracted strong capital inflows over the recent months, with two opposite effects on financial conditions: first, easing through lower long-term interest rates. And, second, an appreciation of the euro exchange rate.

Government has also set a financial access target of 50 percent by the end of 2009 under the Performance Assessment Framework (PAF). The holding of this Conference is therefore, consistent with our aspirations to increase levels of financial access in the country. As earlier alluded, the aim of this Forum was to bring together practitioners and regulators of microfinance to learn from each other in order deepen and broaden financial services provision. In this regard, the forum has a number of eminent persons who will share with us their unique experiences. 2  BIS Review 46/2009  Ladies and Gentlemen: This FIA programme is customized and among the issues that will be addressed include the following: 1. Emerging best practice in microfinance;  2. Self-help group models for microfinance, which may be viable for countries in our region;  3. Microfinance product development knowledge and risk management strategies; and  4. Specific micro-credit practices for agricultural-related businesses, which is relevant for most our countries’ strategies to diversify into agriculture. Distinguished Participants: We consider the timing of this workshop appropriate given the impact of the on-going global financial crises. I therefore, call upon all of you to take advantage of this unique opportunity to learn and share experiences, so that we can come up with efficient and effective ways of advancing financial inclusion in our respective countries.
26  See Rochet, J-C and Vives, X (2004), “Coordination failures and the lender of last resort: was Bagehot right after all?”, Journal of the European Economic Association, Vol. 2(6), pages 1116-47  27  See Adrian, T and Shin, HS (2008) “Liquidity and leverage”, Federal Reserve Bank of New York Staff Reports No 328, and Bernanke, Ben S., Mark Gertler, and Simon Gilchrist (1999). "The Financial Accelerator in a Quantitative Business Cycle Framework," in Handbook of Macroeconomics, Volume 1C, Handbooks in Economics, vol. 15. Amsterdam: Elsevier, pp. 1341-93. 28  I stress dynamic macro models because we do already have Arrow-Debreu type general equilibrium models in which default can occur; eg Tsomocos DP, Jackson P,and Catarineu-Rabell, E (2003), “Procyclicality and the new Basel Accord – bank’s choice of loan rating system”, Bank of England Working Paper 181, and Dubey, P, Geanakoplos, J and Shubik, M (2000) “Default in a general equilibrium model with incomplete markets”, Cowles Foundation DP 1247, Yale University. The difficulty with such models for a macro policymaker is that  BIS Review 112/2008  11  Overall, truly incorporating risk into our thinking has to be one of the last great frontiers for applied macroeconomics. For central banks, that would help to meet the challenge of integrating our monetary policy and financial stability missions, which cannot be separated in a monetary economy.

Ladies and gentlemen, Weaknesses in risk governance have been one of the major cause for the recent global financial crisis. Until now, risk governance remains a work in progress as evident from the recent money laundering control failures experienced by some big financial institutions in developed economies. The theme for this year’s conference, the “Risk, Governance & SelfRegulation: Within and Beyond”, is not only timely but also an ongoing self-reflection for all of us. The organisers have also impressed upon me that this year theme is a continuation of 2012 theme of “Compliance, Challenges and Effectiveness: The next level”. After the efforts in putting in place the appropriate risk management framework, it is time for us to ask ourselves the following questions: Have we done enough on risk and governance? And can we do it better? Sound risk management is fundamental to preserve the integrity of the financial system and there has been increased attention given to this area. In my remarks today, I intend to focus on the following key points and highlight initiatives undertaken by Bank Negara Malaysia to strategically support financial sectors’ governance and self-regulation in preventing the risks related to financial crime. Firstly, the risks and its importance in setting the context: Secondly, the governance and risk culture; and thirdly, self-regulation. Risks and its importance in setting the context In principle, money laundering and terrorism financing risks are no different than other type of risks facing businesses.