samchain/econo-pairs-v1 huggingface dataset:
Several insurers and FA firms recognise the risks of associating with representatives who may be distracted by other commitments and remuneration opportunities outside the realm of financial advisory services. These companies accept only representatives who are fully dedicated and committed to providing quality financial advice to their customers. This is how it should be. But practices vary across financial institutions, and it may not be practical to ban representatives from undertaking other activities that earn an income. MAS will work with the industry to push for a consistent industry-wide approach to representatives who engage in multiple activities. Role of introducers FAIR will also review the current practice of FA firms and their representatives making use of “introducers” to reach out to customers. An introducer may be another representative, but may also be any man-on-the-street. Introducers are typically paid a fee to refer customers to financial advisers, or they get a cut of the commissions generated from sales to the customers. The use of introducers means customers risk dealing with individuals whose credentials have not been vouched for by any financial institution. It also means that customers may not receive proper advice when introducers go beyond introducing and pressure customers to buy products. Financial advisory activities in insurance broking firms Making sure that the financial advisory role is the primary focus of FA representatives is only one side of the coin. The other aspect to ensure, is that firms whose primary activity is not financial advisory services, are fully capable of managing this part of their business.

This was why MAS introduced the Financial Advisers Act, or FAA, ten years ago. The FAA was a landmark regulatory reform, providing for consistency in the regulation of persons engaged in advisory activities:   across sectors: in insurance companies, banks, stockbrokers, and financial advisory firms; and    across products: life insurance, securities, futures, and unit trusts. Two years before the FA Act, an industry-led committee, the Committee for the Efficient Distribution of Life Insurance, or CEDLI, made far-reaching recommendations on minimum standards for the advisory process, and the competency of insurance agents. The FAA and CEDLI together helped transform the landscape for financial advisory services in Singapore. They have contributed to greater consistency and better quality in the advisory services provided on both life insurance and investment products. Disclosure practices have also improved. Life insurance coverage and financial investments among Singaporeans have grown over the last decade.   Life insurance as a percentage of the total assets of Singaporeans has nearly doubled from about 4% in 2000 to 7% in 2011.   Financial investments as a percentage of the total assets of Singaporeans has increased from about 14% in 2000 to 17% in 2011. But there are important gaps to fill. BIS central bankers’ speeches  1  We need to do better We have a large protection gap. The average Singaporean is still grossly underinsured.
By and large, we would like to avoid a situation in which competition for the benefit of a customer in the form of the state or a public company, is undermined by such lists or unreasonable criteria. Therefore we suggest a course of action wherein only limited supervisory information is disclosed to a potential customer, with the bank’s consent, if that customer is seeking to raise public funds. We believe that this approach may help to ensure a competitive environment for banks of different size. I am certain that banks convinced of their own stability will give us permission for such a disclosure. We suggested this approach to the government for the funding of agricultural companies, among other things, and the Chairman gave the command to do so. Therefore, I hope we will be able to work on this, bearing in mind large customers’ concerns about the possibility of money loss. Coming back to the banking resolution, I would like to emphasise that we intend to complete clearing in the upcoming years. We estimate that this process will take two to three years. I hope that a bank’s financial fragility leading to the revocation of its licence will have become an extraordinary event by that time. However, it does not mean that today we should not try to keep a troubled credit institution afloat. If a bank does not conceal difficulties or produce inaccurate reports, we let it remedy the situation.

We have already discussed these in detail on many occasions, therefore today I will dwell only on the amendments introduced to the bills to be considered by the State Duma in the second reading. As regards proportional regulation, I would like to return to the promotion of competition. When we first proposed the concept, many small banks voiced concerns that they might face tougher competition. We took this concern very seriously and have held many discussions on the matter. However, we do not think that the three-tier system disrupts competition. Instead, it will boost the stability of banks - irrespective of their size - and result in more realistic business models in the future. In addition, the system not only imposes restrictions on operations, but also considerably eases regulatory burden for banks holding basic licences. Banks holding basic licences will have to comply with only five required ratios and will not have to meet new highly technical standards. Along with two capital adequacy ratios, one current liquidity ratio and two credit concentration ratios will be applied. The current version of the bill, though aiming to focus small banks on servicing small businesses and individuals, provides a more flexible mechanism and allows lending to larger borrowers if they comply with both a more strictly concentrated ratio of credit risk per borrower and the related party risk ratio. We took these comments into account after the dialogue and discussion with the banking community. We believe that the niche we are establishing for banking will be popular among investors.
We believe that countries should adopt the options and approaches that are most appropriate for the state of their markets, their banking systems, and their supervisory structures. Basel II is not a “one size fits all” framework. Supervisors can adopt the framework on an evolutionary basis and use elements of national discretion to adapt it to their needs. For any country that is considering adopting Basel II but may not yet be ready, I like to suggest a three-stage approach towards building a foundation for the new framework: (1) strengthening the supervisory infrastructure; (2) introducing or reinforcing the three pillars; and then (3) making the transition from the 1988 Accord to Basel II. The first stage is strengthening the supervisory infrastructure. Basel II is not intended simply to ensure compliance with a new set of capital rules. Rather, it is intended to enhance the quality of risk management and supervision. One of the things that I strongly encourage for all countries is a review of implementation of the Basel Committee’s Core Principles for Effective Banking Supervision. These principles are key to laying a successful supervisory foundation. Likewise, sound accounting and provisioning standards are critical to ensuring that the capital ratios, however calculated, meaningfully reflect the bank’s ability to absorb losses. The second stage, then, is to consider how the second and third pillars of the new framework can be implemented. Supervisors do not need to wait for the formal adoption of Basel II to start introducing or using the principles of the three pillars.

However, in recent years, we have learned more about the concurrent need for macroeconomic stability and a stable financial system. That concept includes the need for businesses and consumers to have access to credit on fair and reasonable terms through all stages of the business cycle so that they can build and grow. We need an efficient and resilient payments system to maintain the flow of funds through the economy at all times. We need financial markets that remain active, liquid, and trusted regardless of events in the economy. The challenge for supervisors is to promote the health of the banking sector with a broad range of tools. We have certainly found that problems in the banking sector tend to have a “ripple effect” across the wider economy. Therefore, it is in everyone’s interest that a country’s banks should be able to manage their risks today and respond to challenges tomorrow. This is first and foremost the responsibility of the banks themselves, but supervisors also have an important role to play in ensuring that banks are prudently managed and capitalised. Banking is fundamentally about trust. Banks are charged with a special public trust to safeguard customers’ wealth. We have all seen what happens when customers lose trust in the ability of individual banks or the banking system as a whole to protect their savings. This puts a special onus on banking supervisors to ensure that banks operate soundly.
The domestic financial safety net  Before turning to the global safety net, let me first say a few words about how the financial regulatory reform agenda in the UK has enabled the strengthening of the domestic safety net – the provision of liquidity insurance to the financial system by the central bank. Since the onset of the financial crisis, to keep the financial system open for business, central banks have used their balance sheets as never before. At the Bank of England, for example, new published liquidity facilities have been introduced that extend liquidity for longer durations against expanded sets of collateral to new counterparties. 5 As with any kind of insurance, however, liquidity insurance creates incentives to take more of the insured risk. The extent of this moral hazard and how best to tackle it was a key concern for the Bank of England when making these changes – it is not the role of the central bank to lend to insolvent institutions. 6 To that extent, the expansion of the provision of liquidity insurance was enabled by reform to the regulatory framework for banks, including: (i)  Micro prudential supervision that raised the levels and quality of capital and liquidity banks are required to hold;  (ii)  Regular, transparent stress testing to ensure an ongoing assessment of solvency under different scenarios;  (iii)  A credible resolution regime for insolvent banks that reduces contagion to the wider system and the need for taxpayer support.

Several key initiatives contribute to this Financing Union and already exist: (i) the Capital Markets Union, which promotes the diversification of private financing; (ii) the Juncker Investment Plan, which mixes public and private investment towards the real economy; and (iii) the Banking Union, which addresses persistent financial fragmentation. These initiatives, however, lack the unified governance of a Financing Union, which would help circumvent bureaucratic barriers and foster synergies. In addition, progress towards a Financing Union is still needed in four key areas: First, providing incentives for cross-border investments – mainly in equity – through accounting, taxes and insolvency laws. Strengthening the free movement of capital within the EU requires overcoming a wide range of legal obstacles. We should improve the 2/5  BIS central bankers' speeches  predictability of insolvency frameworks, eliminate tax-related biases that penalise equity and harmonise the accounting rules for small businesses; Second, developing pan-European savings products more oriented towards long-term investment. This could be done through a variety of savings vehicles: the creation of European venture capital funds, new market initiatives for green bonds, securitised portfolios that are diversified across member states, and so on and so forth; Third, completing the Banking Union; Fourth, controlling financial activities and risks that are of vital importance for the euro area, such as supersystemic CCPs. Improvements in these four areas are needed so as to reach significant gains for digitalisation, SME’s scaling-up or energy transition. In each of these fields we have significant investment needs.
33 Because of improved prepayment characteristics, agency MBS that have been outstanding for a number of years  are often more valuable than newly issued securities that are otherwise similar. Therefore, these securities tend to trade at a higher market price than TBA, making them unsuitable for trading through the TBA market. 34 Selling SOMA’s agency MBS holdings as specified pools may have a liquidity disadvantage compared to TBA. However, this may be mitigated by the fact that a substantial portion of the SOMA portfolio is in very large securities. Owing to the use of CUSIP aggregation, a process which allows multiple securities to be combined into a single larger security, more than 25 percent of the SOMA agency MBS portfolio is in 20 individual securities. 10 / 10  BIS central bankers' speeches

However, since the beginning the annual excess return on equities has been close to ½ percentage point. We have  2  BIS Review 53/2009  established an equity management strategy that seems to be fairly robust to market fluctuations and that has, as we have seen, generated solid returns viewed over a longer period. Developments in the Fund’s fixed income portfolio have followed a different path. The annual return on the actual portfolio was ½ percentage point lower than the return on the benchmark portfolio. The results were not due to investment in high-risk fixed income instruments. At the end of 2008, as much as 64 per cent of the bonds in the Fund’s fixed income portfolio had the best credit rating, AAA, 20 per cent had the second best, AA, while ten per cent were rated A. Five per cent of bonds were rated BBB, which is the rating the credit rating agency Standard & Poor’s has assigned companies such as Telenor and Statkraft. Only one per cent of the fixed income portfolio has a lower credit rating. Realised losses as a result of bankruptcies have been low. The following table provides a static situation report. As the recession follows its course, and the credit rating agencies continue to respond positively to criticism, ratings will probably be adjusted to a certain extent. The emphasis will nevertheless be on high-quality paper. How then can an excess return become negative from one year to the next?
We allow third country branching, under certain conditions outlined in our 2014 Supervisory Statement. 11  The key factors which have determined the  PRA’s stance towards non-EEA branches are the equivalence of the supervisory regime of the home state, and arrangements for resolution. Second, information sharing is fundamental. Even if two countries have exactly the same set of rules, if they cannot share information on the financial positions of different entities within a global financial group, they cannot clearly gauge and manage the risks that the firm may be running on a consolidated basis. We have seen a few examples of the value of such cooperation in recent years. The FSB and Basel Committee have developed a number of guidelines on information sharing, which have helped foster trust, cooperation and enhanced dialogue between international regulators. These include supervisory and crisis management colleges and supervisory assessments. The EU has further enshrined  10  A global code for the foreign exchange market, put together with support from central banks, will be launched in May as the first globally consistent code of conduct for these markets. 11 ‘Supervising international banks: the Prudential Regulation Authority’s approach to branch supervision’, SS10/14, available at http://www.bankofengland.co.uk/pra/Documents/publications/ss/2014/ss1014.pdf. 7  All speeches are available online at www.bankofengland.co.uk/speeches  7  these practices through legislative requirements in the CRR and BRRD for supervisors and resolution authorities respectively. The Bank is a staunch supporter of these mechanisms.

Sources of finance are increasingly diversified between banks and markets, helping to keep the cost of finance low. And the system is demonstrating an ability to dampen shocks rather than amplify them. Despite this transformation, there are nascent risks that, if left unchecked, could reverse the progress made and ultimately undermine the G20’s objective of strong, stable and balanced growth. Indeed, the global financial system is at a fork in the road. On one path, we can build a more effective, resilient system on the new pillars of responsible financial globalisation. On the other, countries could turn inwards and reduce reliance on each other’s financial systems. That would, in turn, fragment pools of funding and liquidity, reduce competition and impede cross-border investment. The net result would be less reliable and more expensive financing for households and businesses, and very likely lower growth and higher risks in all our economies. 3  The British Social Attitudes Survey (2013) reported that only 20% of UK citizens now think banks are well-run, down from 90% in the late 1980s. 3  All speeches are available online at www.bankofengland.co.uk/speeches  3  The outcome of the Brexit negotiations could prove highly influential in determining which path the global financial system takes.
In connection with the outbreak of the crisis, China stopped the appreciation of the renminbi that had been going on for several years and instead pegged the renminbi to the dollar until June last year. This meant that China’s currency followed the depreciation of the dollar that came when the worst of the crisis was over and investors once again began to turn to higher-risk assets, for example by investing in assets in the emerging economies (Figure 3). 14  My own calculations in accordance with the method used by the IMF to identify major falls in house prices in WEO in October 2009 (a fall in house prices is defined as major if a four-quarterly moving average of the annual growth in real house prices falls below –5 per cent) shows that 2/3 of the countries that experienced falls in house prices had large current account deficits while only ¼ those that did not experience price falls had deficits. 6  BIS central bankers’ speeches  Figure 3 China’s nominal exchange rate against the dollar and real and nominal effective exchange rate indices USD/CNY and index 2005=100 10  90 Exchange rate USD/ CNY (left) Real effective exchange rate (right) Nominal effective exchange rate (right, inverted)  9  100  8  110  7  120  6  130 05  06  07  08  09  10  11  Note.

It appeared probable that the dollar would depreciate as it was difficult to believe that the United States would be able to maintain its deficit indefinitely, 2 and the real exchange rate normally weakens when a current account deficit needs to be corrected. And the dollar’s status as a reserve currency throughout the world made the entire global economy sensitive to rapid changes in the dollar rate. Although a dollar crisis did not occur, the analysis was reasonable. Substantial and persistent current account surpluses or deficits may be a sign of an underlying weakness or imbalance in the economy. Even though global imbalances have subsequently declined, this is due more to cyclical factors than to structural factors. They have also increased again recently in pace with the recovery of the global economy. The International Monetary Fund (IMF) continues to monitor the development of global imbalances and says that an adjustment of these imbalances is necessary if the recovery is to rest on stable foundations. 3 The association of developed countries and emerging economies that goes under the name G20 has therefore decided to perform thorough analyses when surpluses or deficits become substantial, in order to determine whether the country concerned should take measures. In the risk survey conducted by the Riksbank in May this year, in which participants on the Swedish fixed-income and foreign-exchange markets were asked to assess the risks to the Swedish financial system, global imbalances were seen as the greatest risk.
Following the examples of other central banks, we are also in the process of creating an innovation hub for closely monitoring of fintech developments, interacting with institutions that plan to launch new services, which will help them better understand the regulatory environment, but it will also help us adequately comprehend the fintech developments, assessing the risks and possibly recalibrating the regulatory framework. To sum up, innovation in digital finance, underpinning the nexus between digitalization and finance, offers wide-ranging opportunities, which authorities are keen to foster. It holds the promise of reducing costs and frictions, increasing efficiency and competition, narrowing information asymmetry, and broadening access to financial services – especially in low-income 3/4  BIS central bankers' speeches  countries and for underserved populations. Ongoing innovations and technological advances support broader economic development and inclusive growth, facilitate international payments and remittances, and simplify and strengthen regulatory compliance and supervisory processes. At the same time, authorities are concerned about potential risks posed to the financial system and to its customers. Moreover, the adoption process may also pose transition challenges, and policy vigilance will be needed to make economies resilient and inclusive, so as to capture the full benefits. In response, policymaking will need to be nimble, innovative, and cooperative and importantly will need to strike the right balance between enabling financial innovation on the one hand and addressing challenges to market and financial integrity, consumer protection, and financial stability on the other.

The capital savings are even more dramatic for SME loans that qualify for retail treatment: participating banks from Basel Committee member countries reported that their capital requirements on SME exposures qualifying for retail treatment would decline by an average of 12-13% under the standardised approach and up to 31% under the IRB approach. Similar conclusions can be drawn for those European banks participating in this study. Actually, EU banks in general reduce their capital charges for loans to SMEs compared to the current rules, and this decline is slightly stronger than the average of all banks providing data. I should note that QIS 3 did not fully recognise the risk-mitigating effects of collateral and guarantees, so we expect that, in some cases, banks may experience even larger “savings” when the New Accord comes into force. Other studies concur. For example, researchers at my home institution, the Bank of Spain, combed through a database covering almost every loan made by a Spanish bank to evaluate the potential effects of the New Accord on SME lending. Their findings, which, if you are interested, I can share in written form with you, agree that the New Accord will not create tougher capital requirements for loans to Spanish SMEs and may, indeed, reduce them. We are extremely pleased now to have tangible evidence that the New Accord will not create burdens for banks that lend to SMEs.