samchain/econo-pairs-v1 huggingface dataset:
They are associated with the fact that expanding demand in many industries exceeds their potential to ramp up output and imports. This accelerates price growth as well. As to the product groups where prices rose the most in the second quarter, these are construction materials, furniture, and cars. When people expect prices to rise faster, they decide to make large purchases earlier. To do this, they use both savings and borrowings. Growth in consumer lending again sped up to a quite high rate, which was driven by accommodative monetary policy, among other things. On the other hand, accommodative policy lowered the demand for bank deposits, especially given accelerated inflation. There are also other markets where price growth was rather caused by one-off factors and limited supply. This is tourism, for instance. Only a part of foreign destinations have been reopened, whereas Russian resorts’ infrastructure is still insufficient to accept the entire tourist flow. As a result, prices for tourism services soared, which also sped up inflation in June. Furthermore, May—June recorded a surge in prices for such vegetables as cabbage, potato, carrot and beetroot, which was because 2020 harvest stocks started to end before the new harvest supply. However, the contribution of such one-off factors to overall inflation is smaller than that of steady factors. The increase in prices for these everyday products is very noticeable and significantly impacts inflation expectations.

Therefore, legislative action in targeted areas is warranted. While bold action towards the completion of the single rulebook for capital markets will be beneficial, a gradual approach to harmonization could be envisaged in those areas where political sensitivities prevent action at EU level in the short term. 4. Sufficient attention should be devoted to safeguarding financial stability, such as in the area of shadow banking. 5. A single rulebook for EU capital markets needs to be complemented with strengthened supervisory convergence, delivering a common implementation and enforcement of rules. 6. Further reducing still existing fragmentation in financial market infrastructures should be at the core of CMU. It needs to be recognized that banks will continue to play an important role for the financing of the real economy and in providing access to capital markets. BIS central bankers’ speeches  1
Even countries that have not experienced a financial crisis at first hand are now spending more time on stability work. Although financial stability issues have always been important to central banks, the speeches made by my colleagues at other central banks more often take up these questions now. These issues also appear more often on the agenda of the international meetings I participate in. The increased complexity of the financial markets with new operators and new instruments and the fact that connections between the countries have increased have contributed to added emphasis on stability work. Why is financial stability important? Why should the authorities spend time and energy on this? The primary reason is the important role played by the financial system. Every day each of us sitting here uses the financial system in some way; either to make payments, to save or borrow money or to obtain help with some form of risk management. A huge amount of payments flows through the system. The Swedish payment system has a daily turnover of around SEK 500 billion. This means that in less than a week the turnover corresponds to the entire annual Swedish GDP! While the importance of the financial system has increased, the number of crises in different countries’ systems has also increased. The crises that break out are proving more costly.

Peter Praet: It is urgent to agree on an ambitious timetable for completing the Banking Union Contribution of Mr Peter Praet, Member of the Executive Board of the European Central Bank, for the magazine of the Eurofi conference in Malta (5-7 April 2017), 4 April 2017. * * * In less than half a decade, the EU moved from decentralized banking supervision and resolution to the Single Supervisory Mechanism and the Single Resolution Mechanism, based on the Single Rulebook. This is part of an overarching effort to create a sound institutional framework for financial integration in Europe. There still are a number of legal, institutional and political problems to overcome before a European bank can operate in the Banking Union as it operates in its domestic market. Several dimensions need to be taken into account in institutional design. First, private risksharing. The financial system is a private risk sharing device, but we have learned the lessons from the financial crisis in terms of budgetary costs, when excessive risk-taking by the private sector was eventually borne by the public sector. Not to revert to the old world of implicit government guarantees for risky behaviour of financial institutions entails making banks equally liable across countries for the amount of risk they want to take into their respective balance sheet. The general principle of the new European rules such as the Bank Recovery and Resolution Directive is to absorb bank losses by bailing-in shareholders and uninsured creditors.
As creativity dissipates, so does the ability to connect related occurrences. In the next 20 years, we will need simultaneously to perform repeatable processes and to think innovatively. We will need to continue to build the routines and repeatable processes. Yet, we will also need to be sufficiently flexible to see around corners, to where new problems are  3  Remarks of the Honorable Edward M. Kennedy, U.S. Sentencing Commission, Symposium Proceedings: “Corporate Crime in America: Strengthening the ‘Good Citizen’ Corporation,” at 120 (1995). 4  George Bernard Shaw, Back to Methuselah: In the Beginning, act 1, Selected Plays with Prefaces, vol. 2, at 7 (1949). 5  A survey sponsored by the Ethics Resource Center from 2011 “shows that employees in companies with effective, meaningful codes of conduct and programs... witness fewer incidents of misconduct, and are far more likely to report misconduct when observed.” Ethics Resource Center, supra note 2, at 2. 4  BIS central bankers’ speeches  emerging, and new risks to our franchises are developing. This is what it will take to be successful at the next level. 5. Attention at the top – developing protocols for escalation  I commend Fordham for focusing this symposium on compliance and governance. They are related and intertwined. The four items discussed all relate to compliance. My last item touches on governance. As I speak with chief ethics and compliance officers, a regular topic of conversation is conflict with the business leaders who own the risk.

Let me elaborate on these two themes: why liberalise the financial sector, and why liberalise at a measured pace. In doing so, I will draw partly from Singapore’s experience. Singapore and Myanmar are two very different economies and it would be unwise to apply Singapore’s experience directly to Myanmar. But I think the overall lesson is relevant: It is critical to open up, but open up at a measured pace. Why financial liberalisation is important A well-developed financial sector can be a catalyst to spur and sustain economic growth. It will lead to more effective mobilisation of domestic savings, help to harness foreign savings, and improve the efficiency of investment allocation. And opening up the financial sector to foreign participation can play a critical role in catalysing the sector’s growth and development. A basic purpose of banking is the provision of credit for economic and social development. Large segments of the Myanmese economy and population do not have access to affordable funding. Foreign financial institutions can complement the local banks in effective credit intermediation. It will deepen the financial sector, thereby helping to raise household savings and divert funds away from the shadow financial system. Foreign financial institutions can provide a channel for Myanmar to tap into foreign savings to drive its growth, even as the country ramps up the mobilisation of domestic savings. This is  BIS central bankers’ speeches  1  particularly relevant for financing infrastructure development, which is critical to drive Myanmar’s economic growth.
  Second, because banks are in the risk business it should be no surprise that the run-up to crisis was hallmarked by imaginative ways of manufacturing this commodity, with a view to boosting returns to labour and capital. Risk illusion is no accident; it is there by design. It is in bank managers’ interest to make mirages seem like miracles. Regulatory measures are being put in place to block off last time’s risk strategies, including through re-calibrated leverage and capital ratios. But risk migrates to where regulation is weakest, so there are natural limits to what regulatory strategies can reasonably achieve. At the height of a boom, both regulators and the regulated are prone to believe in miracles. That is why the debate about potential structural reform of finance is important – to lessen the burden on regulation and reverse its descent into ever-greater intrusiveness and complexity. At the same time, regulators need also to be mindful of risk migrating outside the perimeter of regulation, where it will almost certainly not be measured.   Third, finance is anything but monolithic. But understanding of these different business lines is complicated by the absence of reliable data on many of these activities. There are several open questions about the some of these activities, not least those for which returns appear to be high. This includes questions about the risks they embody and about the competitive structure of the markets in which they are traded.

One potential explanation is that high fees on underwriting and advisory activities are sustained as a reputational equilibrium. In effect, clients are willing to pay a premium to have bonds or equity underwritten by a recognised name, as this is a signal of quality to endinvestors. A similar phenomenon might explain the “2 and 20” fee structure of hedge funds. The OFT has recently announced an investigation into underwriting fees in the UK market. 6  CHAPS is the same-day electronic funds transfer system, operated by the bank-owned CHAPS Clearing Company, that is used for high-value/wholesale payments but also for other time-critical lower value payments (such as house purchase). BIS Review 95/2010  13  Another part of the puzzle was banks’ approach to managing risk across these business lines. For example, treasury functions are designed to help a firm as a whole manage its balance sheet, with internal transfer pricing for liquidity services to business lines. By acting in that way, the risk-taking incentives of each business unit can be aligned with the business as a whole, thereby complementing firms’ internal risk management. In practice, during the run-up to crisis, treasury functions were often run as a profit centre. That would tend to encourage two sets of risk-taking behaviour. First, it may have encouraged banks to take risks in balance sheet management – for example, by seeking out cheaper sources of capital (for example, hybrids over pure equity) or liquidity (shorter-term unsecured borrowing over long-term secured funding).
Unlike with bonds, equities still tend to be traded most actively in the exchanges where they have primary listings, either their home countries or nowadays perhaps NASDAQ. The NYSE lists many foreign companies as secondary listings, but these foreign shares are much less liquid than US shares. SGX should also seek alliances with other exchanges, both in the region and globally. Exchanges worldwide are transforming themselves and consolidating, even faster than anyone expected just a few months ago. So SGX must forge these links quickly, and position itself to collaborate with other major players. On the futures side, the SGX-DT (formerly SIMEX) linkup with CME, and now as part of the Globex alliance, was a vital strategic move. On our part, MAS will help to facilitate such alliances, by continuing to seek agreements for regulatory cooperation with foreign regulators. SGX will face competition as an exchange, just like the brokers. In the US, ECNs pose a significant challenge to NYSE and NASDAQ. This is partly because NYSE and NASDAQ are less efficient than  7  BIS Review 30/2000  ECNs, and partly the result of regulatory arbitrage. If SGX is to hold its own against competition, it must not leave openings for ECNs to exploit. MAS will develop appropriate supervisory oversight over SGX, as a profit-oriented exchange. We are also looking to further improve disclosure standards of listed companies. For individual brokerage firms, we are taking measures to help them improve their competitiveness.

Singapore can offer Asian borrowers a venue to raise capital, not necessarily in $ by reaching out to Asian-based investors who will be more familiar with their businesses, and will view their risks with less apprehension than investors outside Asia. We recognise that the liquidity of the $ market, and MAS rules to discourage the internationalisation of the $ constrain the growth of the bond market. We are not likely to change our basic stance against $ internationalisation. But we have relaxed the specific restrictions, and will continue to review regularly how much further we can safely go. International bond markets are rapidly moving towards electronic trading, as equity markets have long done. This will tend to concentrate bond trading in a few centres around the world - London, New York, and perhaps one Asian centre. Singapore will contend to be that Asian centre. But trading alone is insufficient to make us a major hub for capital markets in Asia. We must attract and develop expertise in originating and structuring debt issues and products, areas where we have traditionally lagged behind Hong Kong and the more developed markets. Fund management The Government will continue to put out more money for the fund managers to manage. We will also encourage individuals to be more active in managing their own retirement savings. Retirement funds should earn higher returns than the risk-free interest rate offered by the CPF Board. Some have suggested that the CPF should therefore raise its interest rate, but that would be the wrong approach.
This enabled them to support mortgage and corporate lending growth to a slightly greater extent, as can be seen in the last two columns of Table 1, though these differences in lending outcomes are not statistically significant. Taken together, these international and UK results are striking. 13 Table 6, Basel report on “Early lessons from the Covid-19 pandemic on the Basel reforms”. 14 Record of the Financial Policy Committee - 13 December 2019 (bankofengland.co.uk) (pg. 4) 15 The UK CCyB rate is set with respect to banks’ UK credit exposures and therefore has a greater quantitative impact  when raised and reduced for banks with a high proportion of UK credit risk-weighted assets relative to total riskweighted assets. 16 The analysis was carried out by a team including Aakriti Mathur, Matthew Naylor, Aniruddha Rajan, Katie Low, and Damien Lynch. 9  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  9  The fact that the release of the CCyB has such a positive effect globally, and to a degree in the UK, seems like good news. But recall that the CCyB is itself an extension of the Capital Conservation Buffer. So when we take a step back it suggests something less positive about the non-releasable Capital Conservation Buffer: it indicates that, to be treated as practically useable, regulatory capital buffers may first need to be released into management buffers; and suggests that, despite their purpose, non-releasable regulatory buffers such as the Capital Conservation Buffer may well be unusable in practice.

These results suggest that firms which were closer to their regulatory buffers were more likely to constrain lending during the Covid stress. The implication must be that they did not act as if regulatory buffers were practically usable. The effect of headroom in the UK Turning to the analysis the Bank team carried out on UK data. The team used data on 158 PRA-regulated firms and separated them into two groups: those with low and high pre-pandemic headroom. Their approach  17 Two regressions were used here: one looking at how the cumulative change in bank loans relative to Q1 2019  depended on headroom while controlling for country-time and bank fixed effects; the other looking at quarterly lending growth in relation to capital headroom in the preceding quarter. Table 5, Basel report on “Early lessons from the Covid-19 pandemic on the Basel reforms”. 18 See Section 5.1 of the ECB May 2021 Financial Stability Review 10  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  10  was to compare how these two groups of firms behaved to understand whether headroom was a factor in different behaviour.19 In absolute terms, capital surpluses increased by similar amounts for both of these groups – by about 1 percentage point of risk-weighted assets on average. However, for low surplus banks, this amounted to growth of over 80% compared to pre-Covid surplus levels, and only around 30% for high surplus banks (Chart 4). This additional capital could have supported more lending.
New market segments can be created if the risk-return trade-off is appropriate. The new issues (Credit Suisse and Rabobank), have so far been very well received and we are aware of plans for funds being created to invest in these instruments. We see every reason to believe that new vehicles for owning contingent capital instruments can be created and existing mandates modified to allow them, as long as the market sees these securities as an asset class that will stay and reach critical scale, and subject to the normal market discipline of risk and return. This plays into a second lesson from the crisis. It is obviously crucial from a financial stability standpoint that contingent capital securities do not end up largely in the hands of other highly leveraged financial institutions, where losses could cause further spill-overs and thus generate financial instability. We believe that regulators could play a constructive role in allowing a broad range of “real money” investors to own sensible amounts of this systemic risk. Conclusion In this paper, we have given a number of examples taken from the financial crisis, where financial contracts undertaken for hedging purposes, or with optional features designed to protect the issuer or the investor, have not had the value expected at precisely the time when they needed to. These now look like classic time inconsistency problems coupled with partial equilibrium analysis. To avoid these pitfalls, a more extensive use of extreme and holistic stress tests could be used to assess individual counterparties as well as systemic risks.

An additional concern is that many of the transactions suffering from this risk may have been entered into for portfolio management reasons (such as the pension fund example) or regulatory capital relief and other “window dressing” purposes rather than genuinely to protect against default. Net exposure numbers quoted on earnings calls, or stress losses reported to regulators, can all be made to look more palatable if the insurance is apparently in place, while the true risks in the event of default may not have changed much. These issues raise general questions for market structure with tradeoffs that are far from trivial. Is it beneficial for, say, banks to lay off sovereign risk with other banks and other leveraged financial institutions such as hedge funds, or does the ensuing web of contingent exposures across leveraged institutions increase the systemic risks? It seems that many of these arrangements increase diversification in the case of small and medium size stress scenarios, but may actually exacerbate the systemic implications in the case of very large shocks7. These arrangements also highlight the delicacy of the appropriate regulatory structure. In many instances, subject to sufficient diversification, these tail risks might be better borne by so-called “real money” investors, i.e. insurance companies, pension funds and traditional long-only bond and equity funds, as these investor categories operate with little or no leverage.
The public deficit of the euro area has shrunk from 6.3% in 2009 to 4.1% in 2011. At the current juncture, this is clearly an asset for us and an element of confidence both for the markets and  BIS central bankers’ speeches  1  economic agents, and needs to be further enhanced. In addition to these efforts at the national level, a much stronger framework for common discipline has been put in place, which represents a major step forward towards a more integrated economic union. It is crucial that all of the efforts in this area are pursued with determination. Now turning to competitiveness, here too the progress already made in terms of structural reforms and the adjustment of unit production costs in many countries is very encouraging. Never in the recent past have the European economies been reformed so much in such a short space of time. I could cite many examples, in Spain (labour market and financial sector reforms), Italy (pension and services market reforms) and in France, where an important pension reform was made in 2010 and where structural reforms on the labour market and on the goods and services market are in preparation. These structural reforms constitute the necessary foundation for dynamic and sustainable growth in the future and they must be vigorously pursued. Furthermore, at the European level, the new Stability Pact includes a surveillance mechanism for macroeconomic imbalances, which had been missing up till now.

For this mediumterm consolidation programme to be credible it must include the timeframe considered, the proposed objectives and the key measures to achieve these. As I have pointed out on several occasions, defining and announcing this plan in good time would help boost its credibility. It would also lay the foundations for implementing a gradual adjustment process, thereby minimising the possibility of abrupt changes in the budgetary policy stance that may hamper the recovery under way. The preparation of Spain's Stability Programme Update, to be submitted next spring, may be a good time to do so thoroughly. Lastly, we should not forget that the reduction of the high level of public debt we reached after the pandemic ought to rest partly, as an additional lever, on increasing the economy’s potential output. As we know, this requires the implementation of a comprehensive range of reforms to address our structural problems. The use of NGEU funds may also be particularly useful in facilitating these reforms and making the necessary investments to support these transformations. Moreover, as I stressed earlier, the increase in the price of energy commodities, most of which we import from abroad, represents a clear negative shock to our terms of trade 7  and will therefore weaken our economy. This has been compounded in recent weeks by the war in Ukraine.