samchain/econo-pairs-v1 huggingface dataset:
Last Orders: Calling Time on LIBOR Speech given by Dave Ramsden, Deputy Governor for Markets & Banking Bank of England “Last Orders: Calling Time on LIBOR” event 5 June 2019  1  All speeches are available online at www.bankofengland.co.uk/news/speeches  Authorities, internationally, led by Andrew Bailey, have been calling time on Libor for a while. Panel banks have agreed to continue to submit to Libor until end 2021 securing its future until then, but not beyond. This event focusses on the transition to our future without Libor, and the critical point we find ourselves at today – what we refer to in the conference title as ‘last orders’ for new exposures to Libor. This is a global issue – affecting multiple currencies. However, as you may expect and consistent with the UK origins of the phrase “last orders”, I’m going to choose to focus on sterling Libor and its successor, SONIA, in my remarks today. First, before turning to that transition, a reminder of why, informed by our recent Dear CEO exercise and with 30 months to go, time is being called on Libor. Libor prices in fluctuations in the perceived credit quality of banks, whereas for many users, alternative risk free reference rates are better reflections of the general level of interest rates. Beyond this, although Libor’s methodology and governance has been reformed and improved, an underlying issue remains – the way banks fund themselves has changed. There are very few transactions in the markets that Libor purports to measure.

And it is key to the  1 2  www.bankofengland.co.uk/-/media/boe/files/record/2017/financial-policy-committee-meeting-september-2017.pdf www.bankofengland.co.uk/financial-stability-report/2018/june-2018 2  All speeches are available online at www.bankofengland.co.uk/news/speeches  2  Bank’s objectives – risk free rate transition is a core part of the Bank’s strategic goal to catalyse reforms in financial markets to make them fairer and more effective. The good news is, transition is happening. There has been real progress in establishing SONIA as the successor to sterling Libor. In the past 6 months there have been a number of positive developments in the sterling cash market. From a zero base this time last year, SONIA linked floating rate note (‘FRN’) issuance now dominates sterling floating rate financials issuance and there is clear momentum towards using the compounded SONIA rate across bond markets. The first 5 months of 2019, have seen 21 different banks, sovereigns, and supranationals issue FRNs referencing compounded SONIA, with a total value of about £ We’ve also now seen the first move by a bond issuer to switch their outstanding Libor linked bond to reference compounded SONIA instead. They are currently going through a bondholder Consent Solicitation process, with the deadline next week. This is a development which is being closely watched. We have also seen the first SONIA linked securitisations issued. In other areas, we are seeing progress. One UK firm has announced it has switched the basis of its balance sheet over to SONIA.
Financial institutions which book prescribed OTC derivatives in Singapore are required to report such trades to a trade repository licensed by MAS. The reporting framework will be up and running next month, starting with interest rate and credit derivatives. The degree of standardisation of contracts in these asset classes is higher, so starting with these contracts will provide for a smoother phase-in. We have received feedback from the industry on operational difficulties in obtaining customer consent in order to report counterparty information to trade repositories. We are looking to amending legislation to address this issue. Ending too-big-to-fail The high-profile, public rescue of many large, systemically important financial institutions in the last crisis has galvanised a powerful resolve to end the “too-big-to-fail” problem. But this has proven to be one of the most challenging tasks facing global regulators. To be sure, the FSB and Basel Committee have made good progress on several fronts. •  First, they have identified a list of global systemically important banks (G-SIBs). •  Second, they have set out additional loss absorbency requirements for G-SIBs to reduce the probability of these institutions failing. •  Third, there is ongoing work on a resolution framework to minimise the cross-border negative externalities that can be created by their failure. At the same time, major jurisdictions are embarking on plans to reform banking structures in a bid to end “too-big-to-fail”.

Chart 30: Simulation of Bank rate and CPI inflation, if the starting level of slack is 2% Path for Bank rate  Per cent 1.5  Per cent 3  CPI inflation  2.5 1 2 1.5  0.5  1 0 0.5 2013  2014  2015  2016  2017  -0.5 2013 2018  February IR Simulation with a lower bound at 0% Simulation with a lower bound at 0.5%  2014  2015  2016  2017  0 2018  February IR Simulation with a lower bound at 0% Simulation with a lower bound at 0.5%  Source: ONS and Bank Calculations. Simulations show optimal policy under full commitment. Of course, there are good reasons why monetary policy is not set by algorithm. These simulations ignore a number of important practical uncertainties. For example, they assume that this policy path is fully credible and effective in stimulating demand and inflation expectations. In practice, the effects of a policy easing cannot be known with certainty and 18  BIS central bankers’ speeches  policy credibility cannot be guaranteed. Moreover, there are upside as well as downside risks to the inflation outlook. Nonetheless, these experiments are in my view the right baseline when assessing the appropriate policy stance today. Conclusion Inflation has dropped like a stone over the past year, to close to zero. This largely, but not wholly, reflects external forces.
Like households, companies repaired their balance sheets following the crisis but unlike households, corporates then went back to the well. Relative to earnings, aggregate corporate debt in the US and UK is 16  Germany, France, Italy, Spain and the Netherlands. Household credit growth has been subdued, rising at an annual rate of less than 5% in each of the UK, US and euro area for the past decade, compared to rates of over 12% in the US and UK pre-crisis. 18 Highly indebted households are defined as those with debt servicing ratios of more than 40%. 17  10  All speeches are available online at www.bankofengland.co.uk/speeches  10  nearing pre-crisis peaks,19 and the distribution is worsening. In the UK, the share of highly levered companies is above pre-crisis levels. This is despite the very modest growth in investment. Globally, the average quality of corporate borrowers has deteriorated materially. The share of lower-rated debt in global corporate bond markets has increased significantly over the last 10 years, with BBB-rated bonds now about half of the market compared to just a quarter in 2007. The global leveraged lending market grew by 21% in 2018, faster than the rate of growth in US subprime mortgages in the run up to the crisis. At $ trillion, the stock of outstanding leveraged loans is double that of subprime in 2007. Leverage of the most indebted issuers has been increasing rapidly (Chart 8).

The Financial Cycle The global financial crisis was a painful reminder that the business cycle is not the only source of imbalances. Indeed, imbalances at the heart of the financial cycle have been the best predictors of downturns in recent decades. The financial cycle tracks the rise and fall in leverage and financial conditions around their sustainable levels. Compared to the business cycle, the financial cycle is greater in amplitude, slower moving and longer lasting, sometimes taking up to 20 years between peaks. As an economy expands, risk taking increases and lending constraints are relaxed. Debt and asset prices rise, reinforcing each other. Towards the top of the cycle balance sheets appear strong but are increasingly fragile. Equity and asset valuations are flattered by mark-to-market profits. Debt sustainability is vulnerable to shocks. At the very top irrationality sets in. Current conditions are assumed to continue forever. “House prices can only go up.” “Financial innovation reduces risk.” “Markets always clear.” People fall for the old lies and unknowingly take great risks secure in the belief that this time is different. To find a silver lining in the storm clouds of the financial crisis, there has been an explosion of work into how best to track the financial cycle and avoid its damaging extremes. 8  All speeches are available online at www.bankofengland.co.uk/speeches  8  A range of indicators are now monitored routinely by bodies, such as the Financial Policy Committee (FPC), tasked with maintaining financial stability.
31.10.2019  Opening address Decarbonising the Economy Forum/El Confidencial Margarita Delgado Deputy Governor  Good morning. Let me thank the digital daily newspaper El Confidencial and Acciona for its kind invitation to me to open this forum on decarbonising the economy. Introduction Evidently, the consequences arising from climate change, associated with global warming, have in recent years come to the forefront of society’s main concerns. It is a transversal concern that is translating into initiatives ranging from the most supranational scope possible down to the most local level. To offer a specific example, we can see every day in the newspaper headlines how matters such as the quality of the air we breathe in cities are polarising much of the political debate, mainly at the municipal level but also regionally and even nationwide. If we raise our sights a little it is clear that these air quality policies are also in response to various European regulations, at least since 1996.1 In turn, the European regulations are part of a more global response to pollution, which is reflected in various international agreements. The general public also share this concern. Testifying to this is a recent survey by the Real Instituto Elcano2 in which 97% of Spaniards agree that climate change is a reality and 92% believe that humans are chiefly responsible. This movement is underpinned by a wealth of scientific evidence. It shows that global warming is associated with economic (and therefore human) activity and, more specifically, with the emission of greenhouse gases.

But at the same time, there is on the other hand, a need to be clear and transparent with regard to the objective for monetary policy. I have shown obvious examples of this conflict from recent years. Another thing that it is important to realise is that what I have presented here are different types of decomposition of the development of inflation. Decomposition can occur in different ways, I have talked about two main methods here, but they both concern decomposition. It is not a question of basic explanations of the development of inflation. Inflation is the result of a very large number of economic agents’ individual 16 [19]  decisions to change prices. This can be a businessman altering a price list, or negotiation between a buyer and a seller, it can be a public procurement, it can be an employee setting prices with the aid of software that compares competitors’ prices on-line, etc. Exactly what lies behind these decisions, what explains them, is not something we can learn from decomposition. 17 [19]  References Apel, M and Jansson, P (1999), “A parametric approach for estimating core inflation and interpreting the inflation process,” Working Paper No. 80, Sveriges Riksbank, April. Andersson, K and Berg, C (1995), ”The Inflation Target in Sweden”, in Haldane, A G (red), Targeting Inflation, Bank of England, pp. 207–223.
Ong Chong Tee: Combating financial crime – international and national efforts Keynote address by Mr Ong Chong Tee, Deputy Managing Director (Financial Supervision) of the Monetary Authority of Singapore, at the ABS Financial Crime Seminar, Singapore, 2 July 2014. *  *  *  1 Distinguished guests, ladies and gentlemen, thank you for inviting me here this morning. The annual ABS Financial Crime Seminar has become a key event on Singapore’s antimoney laundering and counter-terrorism financing (AML/CFT) calendar. It is a good opportunity for our banking industry at large to take stock of the current challenges and trends, as well as to discuss priorities. As the diverse programme of this conference shows, money laundering and terrorist financing (ML/TF) is a complex global issue, and I am heartened to see the number of experienced professionals and experts gathered here today to share perspectives and insights. The international environment 2 Financial crime is a serious global threat. According to some UN estimates, the amount of money laundered globally is between 2% and 5% of global GDP annually, or to put this in US dollar terms, between $ billion and $ trillion a year. The challenge before us – as is often noted – is that the fight against money laundering and financing of terrorism is never done.

I understand that attendance at this seminar and related AML/CFT courses has been growing each year, and I hope this positive trend continues. Attention to AML/CFT has certainly been increasing, with certification providers like the International Compliance Training Academy and the Association of Certified Anti-Money Laundering Specialists (ACAMS) seeing more sign-ups. ACAMS had also set up a Singapore Chapter late last year. In all, the resources and training avenues are there, so it is for all of you to tap on them. An effective culture of AML/CFT cannot be created by hiring a few experts from elsewhere. Instead, it is about raising awareness throughout the firm; so do focus on “growing your own timber” alongside importing relevant expertise. Strengthening the framework further 23 Before I close this morning, I would like to announce two further measures that MAS will undertake to strengthen our AML/CFT regime: a. First, MAS has been progressively increasing the level of disclosure on supervisory actions taken for breaches of AML/CFT requirements. At this seminar last year, we disclosed aggregated figures of sanctions imposed for the preceding three years. While a gross picture can give an indication of how well the industry has implemented AML/CFT measures, they do not sufficiently highlight any common or severe issue. Building on this, MAS will be looking to publish details of more severe penalties imposed on financial institutions for such breaches.
4/7  BIS central bankers' speeches  MAS’ view is that early readiness is an essential ingredient in achieving a smooth transition. Early readiness on the part of the banking industry and markets will in turn encourage early readiness from their customers. A bank that adopts a “wait and see” attitude and leaves things till next year, is likely to find itself with too much on its plate before the end-2021 deadline. This is something which we must avoid. Banks that do not keep pace with industry transition timelines potentially expose themselves to additional market, liquidity, operational, technology and legal risk, and can expect to have more intensive supervisory engagement at the senior management level. 17 Second, at the industry-level, the focus must be on achieving a smooth and wellcoordinated transition. The key challenge, is how to encourage market participants to shift from a SOR-based market which is still deep and liquid, to the nascent but developing SORAbased market. 18 We need to take deliberate steps to catalyse additional liquidity in SORA derivatives market, and engineer early and progressive shifts of activity from SOR to SORA to achieve greater transition momentum. We will address this in two ways:  Following the strong market response to MAS’ inaugural $ million SORA FRN issuance, we will expand this programme, through increasing the issuance sizes and lengthening the range of tenors. We will announce more details before the end of this year.

One of the distinguishing features of the Brazilian economy is its prudential regulatory framework. The vigilant stance of the Central Bank prevented the development of  1  2  See http://www.oecd.org/document/59/0,3343,en_2649_34349_41966331_1_1_1_1,00.html, 2009. January  12,  BIS Review 8/2009  disequilibria and excesses that emerged in several other economies. We did not let the markets adopt risk taking attitudes that led to the losses and problems that many countries are facing today. In fact, the Brazilian framework is considered a model for prudential regulation and regarded as an example to be followed by other regulatory authorities. That does not mean that Brazil is not being hit or suffering the impacts of the financial turmoil. But the Brazilian government is prepared to react and take all the necessary measures to tackle the crisis. In conclusion, a floating exchange rate is no cure-all remedy for all economic ills. But it is certainly the best regime for a large, relatively closed, economy like ours. If Brazil had not floated the BRL in 1999, it would surely have done so since then, and possibly in more adverse conditions. For all the above, this 10th anniversary is worth celebrating. Thank you very much. BIS Review 8/2009  3
But there are signs that the matching of job-seekers to vacancies is not working well. The decrease in unemployment in recent years has, above all, been among those born in Sweden. For this group, unemployment is now on a very low level. Unemployment among those born abroad, on the other hand, has not decreased to the same extent and is significantly higher to begin with. A greater supply of foreign-born labour creates the conditions for long-term higher employment, but it is important that the labour market functions efficiently so that the supply of labour can be fully utilised. With a greying population, this will also become increasingly urgent as the demand for labour in areas such as health and social care rises. Despite the economic situation continuing to be strong and both the labour force and employment being expected to increase further in the future, it is the Riksbank’s assessment that unemployment is not expected to fall much more in the years ahead. So, to keep unemployment down – and above all to bring it down significantly below its current level – measures are needed within policy areas other than monetary policy. I do not mean by this that monetary policy has been exhausted. There is scope to make it even more expansionary if need be. But monetary policy cannot be expected to be able to solve structural problems on the labour market.

We are encouraging innovative thinking through our Research Hub, where people have collaborated with colleagues across the Bank and externally on over 50 projects. Meanwhile, our Research Away Days and One Bank Flagship Seminar series expose policy and decision makers to different ideas; from sportspersons to philosophers, and economists to psychologists. Our seminars are broadcast externally so that others can benefit from this diverse knowledge. To empower colleagues, we have implemented an ‘author in the room’ policy so that expert staff can attend senior-level meetings and explain their papers in person and challenge conventional wisdom. Our Bank Underground blog, launched in 2015, enables colleagues to share their diverse opinions outside the Bank’s four walls. 400,000 people viewed the blog last year. Over the same period, its followers and subscribers increased by 60%. Our staff are reaping the benefits of these inclusion and transparency initiatives. Two thirds feel encouraged to try new ideas, three quarters believe that their manager acts on people’s suggestions and ideas, and 60% feel comfortable speaking up on important issues. We have improved on all of these measures since just a year ago. xxiii  But we also need to do more. To get the most out of a diverse workforce, we also need to ensure people can bring their best to work and feel supported. Our wellbeing programme promotes mental and physical wellbeing with staff counsellors, discounted gym-memberships, a Cycle to Work scheme, working life seminars and flexible leave options.
But the recent experience already provides us with important lessons both for banks and for public authorities and points to a clear need for action by both. 7  Basel Committee on Banking Supervision: “Liquidity Risk: Management and Supervisory Challenges”. February 2008. 8  Financial Services Authority: “Review of the liquidity requirements for banks and building societies” Discussion Paper 07/7. December 2007. BIS Review 50/2008  7  Chart 1: Major UK Banks Customer Chart 2: Decomposition of sterling high-yield Funding Gap(a) corporate bond spreads(a) R es id ual (includ ing co mp ens at io n fo r illiq uid it y)  Customer funding gap adjusted for securitisation(b)  Basis point s  C o mp ens at io n fo r uncert aint y ab o ut d efault lo s s es  £ billions 700  Customer funding gap  1,200  C o mp ens at io n fo r exp ect ed d efault lo s s es To t al  1,000  600 500  800  400  600  300  400  200  200 + 0 200  100 + 0 100 200 01  02  03  04  05  06  07  08  98  99  00  01  02  03  04  05  06  07  08  Sources: Dealogic, published accounts and Bank calculations. Sources: Bloomberg, Merrill Lynch, Thomson Datastream and Bank calculations. (a) Data exclude Nationwide.

Above all, the monetary policy models used must better capture the roles in the economy of credit markets and asset prices, so that the consequences of financial imbalances can be analysed. Not only the price, but also the availability of credit has been discovered to be relevant. However, these assertions do not mean that the present models need to be scrapped. They serve us well in periods in which financial imbalances are not a major problem and intensive work is currently under way around the world to develop these models to better incorporate financial factors. Neither can it be required that the models capture serious financial crises. This would probably require the development of special analytical tools and models. The role of monetary policy must be developed and clarified. Even if improved supervision and regulation enable us to reduce the risk of serious financial imbalances accumulating, monetary policy will still face difficult dilemmas. The financial markets have a remarkable capacity to develop continually and to find ways past regulation. Consequently, we cannot rely on supervision and regulation always succeeding in preventing financial imbalances from arising. In the future, we will certainly continue to see various forms of bubbles, in which asset prices increase in a manner that is not sustainable over the long term, together with a rapid growth in credit. In such cases, the central banks must take a position regarding whether and to which extent monetary policy should consider this phenomenon.