samchain/econo-pairs-v1 huggingface dataset:
Being associated with money laundering can seriously undermine confidence in an individual financial institution and potentially in a financial system as a whole. We are presently seeing this demonstrated in the case of the Mexican banking system, which is embroiled in a money-laundering scandal. So what steps can a banking supervisor take to ensure that institutions are doing everything they can to protect themselves from being used for money laundering? The first thing is to make sure that the Guidelines issued to institutions are kept up-to-date as techniques and patterns of money laundering evolve, and to ensure that institutions revise their own internal guidelines accordingly. We have recently revised our Guidelines and issued them as a convenient booklet. I am pleased to say that demand for this has been high and we have issued over 5000 copies of the booklet. However, Guidelines need to be put into practice. To ensure that senior management are focused on the need for this, money-laundering controls are a regular agenda item for our prudential meetings with management. They are also a regular topic for our on-site examinations. During these examinations we review an institution’s policies and procedures, look at their records of suspicious transactions, and interview staff at random to check that they have been trained to identify suspicious transactions and to follow the appropriate procedures for account opening and customer identification. We may also commission external auditors’ reports if we think it necessary. So how do institutions in Hong Kong rate on combating money laundering?

As deposits are readily available to depositors and many deposits are covered by a deposit guarantee, depositors accept a relatively low interest rate. The insurance premium banks pay for the deposit guarantee bears little relation to the risk the bank takes. In addition, since investors can expect that the authorities will come to the aid of banks in distress, they  BIS central bankers’ speeches  1  may be satisfied with a lower return. The result is an underpricing of risk, potentially leading to excessive risk-taking. Low equity ratios reduce loss-absorbing capacity and, at the same time, strengthen the incentive to take risks. While owners cannot lose more than their equity stake, there is a potential for high returns on the equity they have invested. To avoid a situation where banks hold inadequate equity capital, banks are subject to capital requirements. Each bank should hold capital in proportion to its risk exposure. This is the basis of microprudential bank regulation. But even if banks appear to be solid individually, the banking system as a whole may be vulnerable. Banks are exposed to one another and can inflict losses on one another directly. Banks can also suffer substantial losses indirectly if they have shared exposures outside of the banking system. This was clearly evident during the financial crisis. When a bank is forced to sell off assets, they fall in value. This weakens the balance sheets of other banks holding the same type of assets.
So we would not expect the relationships embedded in those models necessarily to be invariant to a rise in market power and mark-ups. Nor do these models typically take into account any of the potentially macro-economic side-effects of a shift in market power – for example, on productivity. Market Power and the Macro-Economy – A Theoretical Approach  To explore those questions, we draw on the textbook New Keynesian model of the macro-economy, the type of which is often used to justify and assess the effects of flexible inflation targeting (Clarida et al (1999), Woodford (2003)). Specifically, we use the well-known textbook New Keynesian model in Galí (2008) to consider how changes in market power might affect the setting of monetary policy. We analyse the case where higher mark-ups are effectively the result of reduced competitive pressures, rather than the rise of highly productive ‘superstar’ firms. The model takes the following generic form: 𝜋𝑡 = 𝛽𝐸𝑡 𝜋𝑡+1 + 𝜅𝑥𝑡 + 𝑢𝑡  (1)  𝑥𝑡 = 𝐸𝑡 𝑥𝑡+1 − 𝜎(𝑖𝑡 − 𝐸𝑡 𝜋𝑡+1 − 𝑟𝑡∗ )  (2)  where 𝜋 is inflation, 𝑥 is the output gap, 𝑖 is the policy rate, while 𝑢 is a cost-push shock. The first equation is a New Keynesian Phillips curve, the second a forward-looking IS curve. This twoequation system contains three key structural parameters: the slope of the Phillips curve, 𝜅; the interest elasticity of demand, 𝜎; and the long-run neutral rate of interest, 𝑟 ∗ .

100, pp. 1169-1189. Rotemberg, J (1982), ‘Sticky Prices in the United States’, Journal of Political Economy, Vol. 90, No. 6, pp. 1187-1211. Schnabel, C (2013), ‘Union membership and density: Some (not so) stylized facts and challenges’, European Journal of Industrial Relations, Vol. 19, pp. 255-272. Smets, F and Wouters, R (2007), ‘Shocks and Frictions in US Business Cycles: A Bayesian DSGE Approach’, American Economic Review, Vol. 97, No. 3, pp. 586-606. Svensson, L (1997), ‘Inflation Forecast Targeting: Implementing and monitoring inflation targets’, European Economic Review, Vol. 41, No. 6, pp. 1111-1146. Taylor, J (1979), ‘Estimation and Control of a Macroeconomic Model with Rational Expectations’, Econometrica, Vol. 49, No. 5, pp. 1267-1286. Taylor, J (1993), ‘Discretion versus policy rules in practice’, Carnegie-Rochester Conference Series on Public Policy, Vol. 39, pp. 195-214. Taylor, M (2017), ‘Good work: the Taylor review of modern working practices’, Department for Business, Energy & Industrial Strategy. Tirole, J (1988), The Theory of Industrial Organization, MIT Press. Traina, J (2018), ‘Is Aggregate Market Power Increasing? Production Trends Using Financial Statements’, Stigler Centre New Working Paper Series, No. 17. Van Reenen, J (2018), ‘Increasing Differences between Firms: Market Power and the Macro-Economy’, Federal Reserve Bank of Kansas City Economic Policy Symposium, Jackson Hole. Woodford, M (2003), Interest and Prices: Foundations of a Theory of Monetary Policy, Princeton University Press. Yellen, J (2014), ‘Labor Market Dynamics and Monetary Policy’, speech at the Federal Reserve Bank of Kansas City Economic Symposium, Jackson Hole, Wyoming.
In the area of infrastructure development in Asia, the overall investment requirements for the next ten years are estimated to be about USD8 trillion. To support these developments, the regional financial integration process in Asia needs to be accelerated and deepened. Significant progress has already been achieved in strengthening cooperation and collaboration efforts amongst regional policymakers within the Asian region to ensure that financial stability in the region is preserved. Efforts have also been taken to develop the financial markets in Asia. In addition, after a decade of financial reforms, the financial systems in Asia have emerged resilient. While the financial systems in several of the advanced economies continue to be confronted by unresolved challenges, financial systems in the region have continued to function and perform well to support private sector economic activity. Financial institutions in Asia, have in fact, continued to expand their reach within the region during this period to support and facilitate the regional financial and economic integration. As regional financial integration accelerates moving forward, this would contribute towards sustaining the future prospects of the region as it increasingly becomes an important growth centre in the world economy. With China now becoming Malaysia’s largest trading partner, Bank Negara Malaysia and the People’s Bank of China have entered into a bilateral currency swap arrangement in 2009. This swap arrangement serves as a key platform to promote trade and investment linkages between both countries.

The repo market, conversely, in which money is lent against securities, has emerged as a crisis-resistant mainstay of the financial system. The efficient Swiss repo system – through which the SNB conducts its normal monetary policy transactions – has proved to be especially robust. BIS Review 167/2009  3  The SNB depends on a liquid Swiss franc money market for the efficient implementation of its monetary policy. This is why, in addition to domestic banks, foreign banks were admitted to the Swiss franc repo market as long as ten years ago. From 2010, the SNB will open the repo market to financial market participants in Switzerland (including Liechtenstein) that do not enjoy the status of banks. However, these new participants will have to be supervised by FINMA (or the regulatory authorities in Liechtenstein), and they must be genuinely active in the Swiss franc money market. Furthermore, they will have to guarantee that business will be transacted in a professional manner. The initial candidates are likely to be insurance companies with significant treasury activities in Swiss francs, and possibly managers of Swiss franc money market funds. In expanding participation in the repo market, the SNB is seeking to further increase the liquidity of the Swiss franc repo market. In this way we plan to further promote the secured money market and increase the stability and crisis resistance of the financial system. 4  BIS Review 167/2009  BIS Review 167/2009  5
As part of the Financing Union, completing the Banking Union Allow me now to dwell for a moment on the third area of progress, which is also my third concentric circle: completing the Banking Union. The Banking Union is a major step forward for the euro area and is now operational, based on the single rulebook and – already – two pillars: the Single Supervisory Mechanism (SSM) since end-2014; and the Single Resolution Mechanism (SRM) since the beginning of 2016. Those two pillars will have to be complemented by a third pillar: Deposit Insurance, where we could find practical and reasonable compromises. But there are two additional challenges that are less often mentioned: consistency, and consolidations. The first challenge in order to complete the Banking Union is to achieve better consistency between regulation, supervision and resolution, at three levels: First, in the concrete mechanisms: finalising and simplifying the resolution pillar should be a priority. The case of the Italian banks has illustrated just how complex it is to combine the resolution regime laid down in the Bank Recovery and Resolution Directive (BRRD) with the State aid framework for orderly liquidation. In addition, confidence in the Single Resolution Fund (SRF) and its capacity to intervene has to be bolstered. The setting-up of a common backstop, as mentioned in the European Commission’s communication of 11 October, is a promising avenue, which could take the form of a credit line granted by the ESM.

Over the next two days, we will cover subjects in the area of financial inclusion, Small and Medium Enterprises financing, climate-related risks and their implications for financial stability. These topics are relatively new. They were not on the agenda of macroprudential policymakers a decade ago. Nowadays, these subjects, along with fintech, aging or inequality are high on the agenda of policy discussions, not only in the financial stability fora, but also in monetary policy meetings. Therefore, we consider it worthwhile to dwell more on some of these topics during the seminar. I am confident the discussions will be very interesting, just by looking at the diversity of panelists: central bankers, representatives of the Bank for International Settlements, the European Commission, Bruegel or the Council for Economic and Policy Research. Not to mention our partners from the International Monetary Fund who will also provide their perspective. Lower financial inclusion is an increasing concern across countries, especially in emerging economies. The topic is linked with another concern represented by income inequality. The financial system can play an important role in amplifying or cutting down both. However, macroprudential authorities might not be among the best-suited institutions to deal with such phenomena. The evidence we have so far shows that, in the short term, macroprudential policies may reduce financial inclusion when implementing credit constraints, especially for borrowers that are more vulnerable to possible income or interest rate shocks (generally, lower-income individuals).
Close to half were related to climate change. These divestments reflect our desire to avoid for financial reasons companies whose business models are not sustainable. Risk-based divestments are active investment decisions that result in deviations from the benchmark index against which our performance is measured. Norges Bank will be accumulating detailed information about portfolio companies’ climate risk and climate plans. In this year’s white paper, the Ministry of Finance proposes to allow Norges Bank to make decisions on its own initiative regarding observation or exclusion of companies under the climate criterion without advice from the Council on Ethics. Up until now, the Bank’s right of initiative under the guidelines has been limited to the coal criterion. Exclusions have a different purpose from risk-based divestments. While risk-based divestments are based on financial considerations, the climate criterion is applied to fulfil an ethical obligation. Norges Bank manages substantial assets on behalf of the nation. High returns, responsible investments and transparency are key terms in the strategy adopted by the Executive Board for the Bank’s investment management. Our goals are ambitious, as they should and must be. I would now like to give the floor to the CEO of Norges Bank Investment Management Nicolai Tangen, who will report on investment management in more detail. 2/2  BIS central bankers' speeches

All this was made possible on account of efforts in recent decades to develop and strengthen the financial system. In the same way, the financial sector will continue to have a central role in providing solutions to the challenges ahead – be it in bringing about an orderly transition to a greener economy, or helping households and businesses become more resilient to financial shocks in an increasingly dynamic and fast changing economic environment. And so, while we have been busy directing our minds and energies dealing with the here and now of the pandemic, we have not stopped thinking about the future. 1/3  BIS central bankers' speeches  Today, we will be launching the Financial Sector Blueprint 2022–2026. It sets out Bank Negara Malaysia’s vision for financial sector development over the next five years, and our broad strategies for getting there. This includes the vision for the financial sector to be agile and resilient to support the transition of our nation to its next stage of development. We have identified five priorities that will anchor our efforts – working together with the government, industry, business and social enterprises and other stakeholders – to promote a financial system that will secure long term growth, planetary health and shared prosperity. The five priorities are: 1. First, funding Malaysia’s economic transformation; 2. Second, elevating the financial well-being of households and businesses; 3. Third, advancing digitalisation of the financial sector; 4. Fourth, positioning the financial system to facilitate and orderly transition to a greener economy; 5.
Obviously, a certain flexibility margin in its evolution is natural, but allow me to point out that it is not the exchange rate that should act as a correction tool for the external imbalance, which can be rather mitigated by way of structural reforms and fiscal adjustment. In this context, it is also worth underlining that it is important to avoid a significant appreciation of the leu, which might be induced by a too high interest rate differential versus peer countries. In Czechia, Poland and Hungary, the monetary policy rate is substantially lower than that of the NBR, which the Board meeting of May 2019 kept at 2.5 percent, along with tightening control over money market liquidity. A widening of the interest rate spread vis-à-vis these countries might attract volatile capital inflows, conducive to an excessive strengthening of the domestic currency. Let me also point out that, in all three countries mentioned above, policy rates stand below the inflation rate, the same as in Romania. And precisely because – as the business community knows too well – we are not cut off from what is going on around us, the NBR’s monetary policy stance should be assessed in a regional context as well. To sum up, it is essential to keep macroeconomic imbalances in check and promote structural reforms so that the Romanian economy does not witness major vulnerabilities in a global environment marked by so many uncertainties.

Compared to the start of the year, the expected timing of any further Fed interest rate hikes has been pushed back, and the expected upward trajectory of U.S. short-term rates is now much flatter. There are several reasons to explain these shifts. First, assessments of the neutral real shortterm interest rate have declined as economic growth has consistently fallen short of consensus forecasts. With the U.S. economy having grown at only a 2.1 percent annual rate over the past seven years, it has become harder to sustain the view that the neutral real short-term interest rate is close to, or will soon be close to, its historical level of around 2 percent. Estimates of the neutral real short-term interest rate obtained from many of the DSGE models used within the Federal Reserve System are currently clustered around zero, and this seems reasonable to me. An implication is that at present there is only a small gap between the actual real shortterm rate of about -1 percent and the neutral real short-term rate. In other words, U.S. monetary policy is accommodative, but only moderately so. In addition, I suspect that many have come to question the view that headwinds from the financial crisis are temporarily depressing the neutral short-term rate, and that the neutral short-term rate will significantly rise in the near-future as these headwinds dissipate.
Raddatz, C. (2003), “Liquidity Needs and Vulnerability to Financial Underdevelopment”, World Bank Policy Research Working Paper No. 3161, November. Rajan, R. (2004), “Why Are Structural Reforms So Difficult?” Finance and Development, June 2004, pp. 56-57. Reinhart, C. (2002), “Credit Ratings, Default and Financial Crises: Evidence from Emerging Markets”, World Bank Economic Review (forthcoming). Uribe, M. and V. Yue (2006), “Country spreads and emerging countries: Who drives whom?” Journal of International Economics, Vol. 69 pp. 6-36. World Bank (2005), Financial Sector Assessment: A Handbook, Washington D.C.  BIS Review 98/2008  11

These platforms have enabled a more direct and faster approach in seeking out sympathisers for donations. There is also evidence of the use of new financial products such as prepaid shopping gift cards and online game platform credits to transfer funds to finance terrorist and terrorist-related activities. A more dynamic and intelligent system, based on real-time data analytics supported by artificial intelligence and machine learning would be useful in detecting and halting such transactions. Importantly, we need to have the capability to detect the interconnectedness between terrorism financing and other crimes including robbery, fraud, kidnapping and drug trafficking. Threats of proliferation financing Every jurisdiction has a vital role to play in hindering the proliferation of weapons of mass destruction. We must be attentive to the various methods of circumventing sanctions relating to proliferation financing. Our monitoring and detection systems must be dynamic to incorporate changes in our environment. There are many documented cases of sanctions circumventions due to lapses in the system. This includes deficiencies in establishing beneficial owners which allows sanctions to be circumvented through conduits such as real estate firms and shell companies. Accounts opened with inadequate customer due diligence or transactions without appropriate screening are loopholes that can be exploited. These serve as important reminders that we must be wary and alert at all times in the daily operations. Responsibility Collectively, the roles and responsibilities that we have, extend beyond the scope of our individual organisations.
I believe that these positive factors will be sufficient to offset weakness in other areas, such as net exports and fixed business investment that will continue to be adversely impacted by the still-strong dollar, weak foreign growth, and low energy and commodity prices. Putting this all together, I expect real GDP growth of about 2 percent in 2016, slightly below the average pace of growth in this expansion, but a bit above my estimate of the potential growth of the U.S. economy. If this materializes, then we should see some further reduction in the unemployment rate to around 4¾ percent – my estimate of the rate that I view as consistent with stable inflation over the long term. Turning to the outlook for inflation, on a year-over-year basis, both headline and core inflation have recently risen above the low levels that prevailed through most of 2015. Nevertheless, inflation still remains below the Federal Reserve’s 2 percent objective. As the FOMC noted in its March statement, this continued low inflation is partly due to declines in energy prices and non-energy import prices. Although energy prices have stopped falling and the dollar has stopped appreciating, earlier movements in these factors still appear to be weighing on inflation. A concern with this long period of low inflation is that it has the potential to reduce inflation expectations, which, in turn, would tend to continue to hold down inflation.

There are still a sizable number of properties that are either in foreclosure or up for foreclosure sale, which has weighed down the local housing market. Yet, Fairfield County has not been the only place in the metro region to see a sluggish recovery – notably, both northern New Jersey and the Mid-Hudson Valley have yet to see employment return to their pre-recession peaks. This picture is in contrast with New York City’s economic performance, which has been exceptionally strong throughout this expansion, and has been a driver of growth for the whole tri-state region. Why is New York City seeing so much stronger job growth than Fairfield County? After all, it wasn’t so long ago that Stamford was attracting finance-sector jobs away from Manhattan. The answer lies in a mix of cyclical and secular trends. On the cyclical side, while finance employment has been sluggish in both New York City and Fairfield County, New York City is benefiting from strong employment gains in technology, construction, retailing and advertising – sectors that are not contributing to the same degree in Fairfield County. In addition, Stamford has had to deal with the relocations of UBS and RBS, while Fairfield faces the prospective relocation of GE. One potential long-term trend that is likely affecting the region is a renewed urbanization: that is, a gradual but broad-based shift of preferences to urban living, especially for younger generations. Throughout the second half of the 20th century, we saw a steady and widespread migration from cities to suburbs.