samchain/econo-pairs-v1 huggingface dataset:
We see opportunities at each of the three stages of the supervisory process: 1. Rule-setting and reporting;  2. Analysis and monitoring; and  3. Setting and communicating a supervisory strategy to mitigate identified risks. Consider rule setting and reporting compliance. At over 638,000 words, the PRA Rule Book is longer than War and Peace. It is also somewhat less interesting and infinitely more complex. We are currently using advanced analytics to understand that complexity and to simplify our rules in order to make compliance with them easier and less expensive. An even bigger opportunity lies in the Bank re-thinking completely how we collect, store and analyse data. We cannot do this in isolation but will engage with industry to explore a range of options. Our vision is that the Bank could be able to “pull the data on demand” from firms rather than “sit back and wait to receive data” from them. With the right API, Web Portal or Platform, manual interventions could become obsolete, making the process quicker, more efficient and hugely less expensive. It would free up resources for firms to focus on delivering a better service to their customers, and it could discipline us to take only the data that we need to use and have the capacity to review. 25  “McKinsey & Company research for the Future of Finance review”.

These consortia, such as USC, propose to issue digital tokens that are fully backed by central bank money, allowing instant settlement. This could also plug into ‘tokenised assets’ – conventional securities also represented on blockchain—and smart contracts. This can drive efficiency and resilience in operational processes and reduce counterparty risks in the system, unlocking billions of pounds in capital and liquidity that can be put to more productive uses.14 The potential transformation in retail payments is even more fundamental. Earlier this week, a cooperative of technology companies proposed a new payments infrastructure based on an international stablecoin – Libra. Libra would be backed by reserve assets in a basket of currencies including sterling. It could be exchanged between users on messaging platforms and with participating  12  Currently, the criteria for access to our balance sheet, defined at the time of the Winters Review, are three-fold: firms should be inherently exposed to overnight liquidity risk, they should be systemically important, and they should be regulated to the same standard as UK banks. In practice, that means banks, CCPs and broker-dealers are eligible for access, but other firms are not. The Bank will reach out to firms and to users of payments services to understand the needs of participants in this market and the barriers that still exist to competition and innovation. This dialogue will allow us to consult on the appropriate level of access to the Bank’s infrastructure.
As an example, take lending to the real economy – for example, to finance infrastructure, SMEs or trade. These asset choices are likely to be positive for medium-term growth and hence, indirectly, for credit risk in the financial system. In other words, this portfolio allocation is likely to deliver positive externalities for the wider economy. By contrast, lending within the financial system may have the opposite effect. It raises interconnectivity in the system, thereby amplifying systemic risk (Haldane (2009)). In other words, this portfolio choice may drive negative externalities for the financial system and wider economy. In an ideal world, these risk externalities would be taken into account in the setting of risk weights – for example, by raising risk weights on intra-financial system lending and lowering it on growth-positive lending. In practice, there is scant evidence of this having happened. Indeed, if anything the current risk-weighting system appears to generate the opposite set of incentives. Chart 7 looks at the average risk weight assigned by UK banks to different counter-parties, some in the financial system, others in the wider economy. The differences are stark. Mortgage risk weights are double those on lending to financial institutions. For large companies, risk weights are treble those on lending within the financial system. For SMEs, they are quadruple. Those are probably not the risk weights a benevolent dictator, charged with supporting the economy and armed with a PhD in welfare economics, would choose.

The aim is twofold: First, banks with more equity are better equipped to absorb losses that can arise as a result of excessive lending growth. Second, costs for mortgage lending rise, counteracting the build-up of imbalances in this segment. The buffer is called countercyclical because capital requirements increase when the mortgage market is on the rise. This dampens the upswing and strengthens the safety buffer of banks and of the financial system. The requirements are reduced in a downturn when banks have more capital available to absorb potential losses on loans. This mitigates the likelihood of systemic risk materialising and leading to a downwards spiral of emergency sales and loan defaults. Acting on proposals by the SNB, the Federal Council activated the sectoral CCyB in 2013 and, in 2014, increased it to 2% of risk-weighted mortgage loans for residential property in Switzerland. In addition to the sectoral CCyB, there are two measures in particular which the industry introduced in 2012 in the form of self-regulation. These measures address the demand for loans: First, the obligation that mortgage borrowers have to supply a minimum amount of own funds. Second, the obligation that part of the loan has to be repaid within a set period if the loaned amount constitutes more than two-thirds of the property value. 24  Cf. Smets (2014).
With a few taps on the keyboard, people can make home equity withdrawals that are deposited in an online bank and are used to finance new purchases and current consumption. During a downturn bank earnings fall, losses rise and banks tighten lending. This can trigger several rounds of decline. This is the mechanism whereby fluctuations in the economy are amplified. The global banking crisis shows that credit cycles and property market bubbles that burst represent one of the greatest challenges to economic policy. They can build up over a long period. They are difficult to identify in real time and even after they burst there is doubt as to the causes. The fall in prices is abrupt and costly. It is particularly important to develop structures and mechanisms that better enable the economy to regulate itself. New equity capital and liquidity requirements for banks can promote financial stability. The requirements should probably be tighter in Norway than the minimum requirements that are likely to be agreed internationally. Norway’s economy is small, with concentrated risk for the banks. It is also important to cooperate with the other Nordic countries to avoid a situation where more lightly regulated banks aggressively market loans in Norway. Owing to flaws and major shortcomings, the tax treatment of capital and property in Norway amplifies credit cycles and house price fluctuations. The 1992 reform resulted in a tax system for Norway that is based on sound principles.

Another recent factor that has served to ease inflationary pressures is that rapid growth in national expenditure  BIS Review 18/2004  5  has primarily been channelled into increased imports. It has therefore exerted less pressure on domestic factors of production than otherwise, but is reflected in a widening current account deficit, as I have discussed. In the long run, an excessive current account deficit could undermine the exchange rate and fuel inflation, although this does not appear to be much of a threat within the horizon of the latest forecast. The Bank’s macroeconomic forecast now assumes that the Norðurál aluminium smelter expansion will go ahead, which raises projected output growth to 3½% in 2004 and 4½% in 2005. The appreciation of the króna, strong increase in productivity in 2003 and large share of foreign labour employed on hydropower and aluminium projects will result in less pressure on domestic factors of production and prices than would otherwise be the case. As I mentioned earlier, it is likely that some of the appreciation of the króna in the first half of last year was connected with planned investments in aluminium and hydropower projects. Had these plans not materialised, it is almost certain that the Central Bank’s policy rate would be lower today. Due to the strengthening of the króna in 2003 and the proposed tightening of the fiscal stance implied by the budget for this year, the Central Bank’s policy interest rate has remained unchanged since February last year.
Crucially, they are ex officio members of the Alternative Reference Rates Committee (ARRC), the private sector group convened to guide the transition away from LIBOR. And of course the Secured Overnight Financing Rate (SOFR), the ARRC’s selected replacement for U.S. dollar LIBOR, reflects transactions that finance U.S. Treasury securities. Before I go any further, I need to give the standard Fed disclaimer that the views I express today are mine alone and do not necessarily reflect those of the Federal Open Market Committee or others in the Federal Reserve System. Market Conditions I’ll start with recent developments in money markets. Conditions in funding markets became highly volatile early last week, with secured lending rates moving higher on Monday and rising sharply on Tuesday. We had expected a number of factors—including quarterly corporate tax payments and the settlement of Treasury auctions—to put upward pressure on funding rates. However, the size of the reaction in repo rates, the spillover to unsecured markets such as federal funds, and the emergence of strains in market functioning were outside of recent experience. For example, in April and June of this year, sizable payment flows led to relatively muted movements in secured lending rates and small movements in unsecured rates. As had been done ahead of prior dates with anticipated significant funding pressures, on Friday, September 13, the Markets team at the New York Fed, and others in the Federal Reserve System put in place a plan for increased monitoring of money markets.

–  We are also exploring an “all-in-one” addressing system, that will enable us to pay someone electronically using the payee’s mobile number, email address, social network account, or other proxies. No need to know the payee’s bank account number. Two, seamless data sharing through publication of open Application Programming Interfaces, or APIs. –  We just had a two-day API conference earlier this week, where industry players shared their views on how we can take the API strategy forward. –  MAS is working with FIs to leverage on new technologies to share aggregated data to improve market and risk analyses, forecasts and projections. We are committed to building a Smart Financial Centre, where innovation is pervasive and technology is used widely to: •  Increase efficiency  •  Manage risks better  •  Create new opportunities  •  Improve people’s lives. 4  BIS central bankers’ speeches
In the area of financial stability at least, there appears to be some merit in Sam Goldwyn's admonition that one should 'never make forecasts, particularly about the future'. So whilst we may be able to ensure that the banking system is protected against the normal ups and downs of a developed economy, more extreme events will continue to require tailored solutions. Changing composition of bond markets I have speculated on the possible long-term effect of the new Basel framework on securities markets. I want briefly to touch on a third topic and that is the significant change that the markets seem likely to face in the composition of the bonds being issued. A recent BIS report on trends in collateral in wholesale financial markets shows that the share of US government bonds within the dollar bond markets decreased from over 44% to under 29% between March 1994 and September 2000, with the increase mainly in bonds issued by financial institutions and government sponsored agencies. Worldwide, the share of government bonds decline from 53% to under 45%. Of the G10 countries, only in Japan is the share of government bonds on the increase. In the US, the Congressional Budget Office recently projected that the government debt might be repaid as early as 2006. From a macro-economic perspective, sound government finances are clearly desirable. Smaller government borrowing requirements can also encourage private sector issuance or "crowding in" to revert to the terminology of a similar debate from the early 1980s.

And, in turn, it could mean a reduction in the costs of risk transfer through securitisation or credit derivatives, with beneficial effects on banks' balance sheets and liquidity. However for this to happen, banks' internal ratings will need to carry credibility in the market and, for this, transparency is essential. The transparency proposals from the Basel Committee have come under a certain amount of fire for their volume and detail. But I would like the critics to dwell for a  BIS Review 15/2001  3  moment on the alternative: a world in which banks effectively set their own capital, with no assurance of consistency or comparability from one bank to another. This is an important debate and we are keen to listen to others' views before the proposals are finalised. Turning to the possible effect of Basel on capital flows more generally, including bank lending, undoubtedly the new risk sensitivity will tend towards changing conditions for certain borrowers and issuers. This is particularly marked in the sovereign context, where, based on current ratings, approximately twenty seven sovereign borrowers will incur a lower bank capital charge versus eleven incurring a higher one. Again I would stress that the cushion of capital which most banks maintain over and above their regulatory minimum will blur the impact of the Basel changes, since in these circumstances banks' lending and pricing decisions will not be constrained by the regulatory standard.
What role was played by the supervisory authorities and the design of regulatory systems in preventing serious effects on the real economy from asset price bubbles? Share prices have now fallen considerably since the middle of 2000. Recently the very inflated dollar rate has weakened considerably. Contrary to what many analysts feared earlier, the repercussions on the real economy nevertheless appear to be slight. Most economic analysts believe in a normal rate of recovery, after only one year of weak growth. Why has the fall in share prices had so little effect on the real economy? And what are the risks of lasting financial imbalances creating problems in the future? These are questions I intend to discuss in my speech. Why worry about asset prices? A fundamental issue is why fluctuations in asset prices should comprise cause for concern. In a market economy the prices of both financial assets and goods and services have the role of providing information. They shall give signals regarding the distribution of resources in the economy. This means that fluctuations in share prices and exchange rates are useful as long as they reflect changes in expectations regarding the fundamental development of the economy. Optimistic expectations of future growth in the entire economy or in a particular industry can be expressed, for instance, in the form of rising share prices, as there are then expectations of a strong development in profits and a  BIS Review 43/2002  1  high real return on investment.

When economic activity took a downturn, inflation fell, the tax system was altered so that interest costs after tax rose and interest rates were increased to defend the fixed exchange rate, the bank crisis was triggered. The central government debt, which was high at the start of the economic slowdown, soared even further. The fixed exchange rate policy had to be abandoned and was replaced by inflation targeting. A tough period followed, when confidence in the low inflation policy had to be established. This required a consolidation of central government finances, high real interest rates and at the same time, the capital supply from the banks did not function fully as a result of their consolidation requirements. There are many lessons to be learned here. However, to sum up, one can say that the game rules need to be as predictable as possible to reduce the risk of imbalances accumulating over a long period of time. Balanced central government finances and price stability reduce uncertainty regarding  4  BIS Review 43/2002  the future. At the same time, the regulatory system must be designed to prevent overly large differences between what is profitable for society and what is profitable for the private sector. This creates good conditions to make realistic assessments of the future and to take the right decisions regarding investment, consumption and financial investments.
The recent European Council meetings in Stockholm in March 2001 and Gothenburg in June 2001 confirmed these guidelines and even added a number of important issues such as the consequences of the ageing population in the European Union, the role of biotechnologies in economic growth, and the environment. The European Heads of State and Government, meeting in Ghent a couple of weeks ago, called for an acceleration of the whole process. All European countries must resolutely pursue the reforms they have already initiated. It must be acknowledged that much has already been done, in particular with the implementation of the single market. However, continental Europe is still experiencing levels of unemployment that are too high, despite the fact that the unemployment rate has been declining significantly in most of its economies for the past three years. According to the IMF, the OECD and central banks, 75% of unemployment is of a structural nature, i.e. generated by an environment which handicaps job creation. There is no doubt that EMU stimulates structural reforms on the labour market. With increased capital mobility and the smooth functioning of the single market, firms will become increasingly sensitive to the general environment in terms of their competitiveness when choosing a particular location in the euro area. The actual process of selecting an investment location within the euro area will be a major incentive for undertaking the necessary reforms. b)  Besides structural reforms, a strong emphasis must be placed on competitiveness.

When liquidity was abundant, asset values were high and marked-to-market profits were high. Now that liquidity is scarce and asset values lower, mark-to-market losses and write-downs are high. The widespread use of credit ratings in valuing assets and managing counterparty credit risk has also had an impact. Credit rating agencies try to rate through the cycle. And for corporate ratings they may well succeed. But for some structured finance products, such as re-securitisations of sub-prime backed securities they (like many others) misjudged the impact of a downturn in the cycle and the non linearity of returns. As a result, there have been wholesale downgrades of the credit ratings of structured securities over the past 12 months. The problem for the financial system is that these ratings are often hard-wired into decision making. Certain classes of investors are forced to sell assets when they lose a AAA or investment grade rating. Remuneration structures have also amplified risk taking in the upswing. Two features of remuneration in the financial industry are that they are asymmetric (there is unlimited upside for high performance but a floor on the downside) and tend to be based on short-term targets. The asymmetry in reward creates an incentive to gamble and short-term performance targets encourage traders to follow rather than counter a deviation from longrun fundamentals. Even where the incentives were paid in options linked to the medium-term performance of the employer, the apparent rewards have been highly cyclical.
The pace of innovation in U.S. financial markets has continued to be robust. The explosive growth in the volume and type of credit derivatives is only one example of the overall creativity and dynamism of U.S. financial markets in recent years. This suggests that the incentives and opportunities for innovation in our markets remain powerful despite concerns about the impact of changes in the overall regulatory environment. And confidence in the integrity of U.S. financial markets seems to be strong today - integrity in the sense of reduced vulnerability to illicit activity and improvements in the reliability of public disclosure. We can see evidence of this confidence in the apparent willingness of the world’s savers to invest in the United States and in the scale of capital formation in our markets. The apparent robustness of market activity and innovation in the face of fairly substantial changes in the legal, supervisory and enforcement environment is encouraging. But the cumulate effects may take years to manifest themselves fully. Therefore, the official community has to be very attentive to the risk that we have the balance wrong. BIS Review 54/2006  1  I thought I might outline some broad principles that should guide the official community as we apply the existing body of regulation and supervisory guidance, as we refine current proposals, and as we design future changes. It is imperative that we get it right. The efficiency, dynamism and resilience of the financial system are strategic assets for U.S. economy.

Those charged with managing the major financial institutions need to continue to make the investments necessary to stay abreast of change and to get as close to the frontier as possible. This reality makes it even more important that we in the supervisory community continue to look for ways to address aspects of the existing supervisory regime that impose unnecessary costs and burdens or that pull resources and attention away from potential sources of risk to the financial system. Thank you. 4  BIS Review 54/2006