samchain/econo-pairs-v1 huggingface dataset:
For example, it is clear that the governance of risk at many financial firms was defective. Risk committees lacked clout. But underlying these high-level problems was a set of lower-level deficiencies in data and risk capture. IT infrastructure was often ill-suited to capturing these risks. As new products or business lines emerged, new bespoke systems were simply added to the legacy IT estate. A Tower of Babel was erected. Like product codes of the 1960s, or computer operating systems of the 1970s, banks’ data networks became fragmented and unable to communicate effectively with one another. A fragmented data infrastructure has a number of nasty side-effects. One is a reliance on manual intervention to operate data and risk management systems. Complete automation of business processes - second nature along the product supply chain – is a rare bird in banking. As well as improving efficiency, automation reduces the possibility of misreporting of exposures through human error. Piecemeal data capture also complicates aggregation of risk exposures. That in turn undermine effective consolidated risk management. In its 2010 report, the Senior Supervisors Group found that some firms could take weeks to aggregate exposures across their balance sheet.34 Even the best-run firms took several hours or days. This, too, contrasts starkly with the real-time inventory management systems operating along manufacturing supply chains, not only among the Wal-Marts but among the corner stores.

At the fringes of finance, there may already be encouraging signs of network technology reshaping some elements of banking. Max Levchin was not too-big-to-fail. Prior to founding Confinity Inc. in 1998 (with Peter Thiel), his previous three businesses had all failed. His new business provided a method of secure payments between Palm Pilots. By early 2000, however, it was clear that more people were using the website, rather than handheld devices, to make payments, in particular for purchases across auction websites. Confinity merged to create a new company – PayPal. Even as traffic across the site grew, the stage seemed set for Levchin to make it four failures in a row as two of the world’s biggest banks entered the market. Wells Fargo and eBay together launched a new venture, Billpoint, for web-based payments. Citibank, too, entered the market with c2it. But, remarkably, PayPal saw both off. The key was superior fraud detection technology developed by Levchin using the information embedded in the web. eBay acquired PayPal in 2002 for $ billion and closed Billpoint. Today, it processes over $ million in payments globally each working day. In large parts of Africa, a different type of payments technology has also disintermediated banks – mobile phones. In March 2007, the Kenyan mobile phone company Safaricom launched M-Pesa, a service for making payments between phones. Today, it has around 15 million users reaching over 60% of Kenya’s adult population. The model has spread to a number of countries including Bangladesh, Uganda and Nigeria.
TABLES: Table 1: Summary Statistics on the Global Financial Network  1985  1995  2005  Skewness  7.4  8.0  3.1  Kurtosis  71.3  80.6  14.3  Average path length  1.55  1.44  1.37  20  BIS Review 53/2009  Table 2: Climbing the Complexity Tree  Typical contract details(a) [1]  Pages in CDO^2 prospectus  300  [2]  Pages in ABS CDO prospectus  300  [3]  Pages in RMBS prospectus  200  [4]  Number of ABS CDO tranches in CDO^2  125  [5]  Number of RMBS in a typical CDO  150  [6]  Number of mortgages in typical RMBS  5,000  Metrics of complexity(a) [1] + [3]*[5]*[2]*[4] Pages to read for a CDO^2 investor  1,125,000,300  [2] + [3]*[5]  Pages to read for an ABS CDO investor  30,300  [4]*[5]*[6]  Max. number of mortgages in a CDO^2(b)  93,750,000  [5]*[6]  Max. number of mortgages in an ABS CDO(c)  750,000  Sources: Bloomberg, deal documents and Bank calculations  (a) CDO^2 is used as short-hand for CDO of ABS CDO. (b) Assuming there is no overlap in the composition of the RMBS pools that back the CDO or the CDO pools that back the CDO^2. (c) Assuming there is no overlap in the composition of the RMBS pools that back the CDO.

Chart 10 offers support for the latter hypothesis. It suggests a positive relationship between bank size and pre-crisis expectations of official sector support. 33 Size matters. Historically, the safety net was perceived to be fur-lined for those above a certain size. This evidence is discouraging from a systemic risk perspective. It suggests incentives to generate and propagate risks may have been strongest among those posing greatest systemic threat. Basel vaccinated the naturally immune at the expense of the contagious: the celebate were inoculated, the promiscuous intoxicated. Latterly, this defect has begun to be addressed. For example, the US and Swiss authorities have announced plans to introduce tighter regulatory requirements for systemic institutions. There is further to go internationally. Work is needed to give systemic regulation practical effect. A number of calibration devices have been proposed. 34 With richer data on network topology, calibrated simulation models could help gauge financial institutions’ marginal contribution to systemic risk. This is standard practice in management of the electricity grid and eco-systems. Finance needs to catch up. (c)  Restructuring the network  In Herbert Simon’s The Architecture of Complexity, he tells the parable of two watchmakers, Hora and Tempus. 35 Both produce watches composed of 1000 parts. Both watches are, in this sense, equally complex. They are also of equal quality and sell at the same price. But Hora’s business prospers, while Tempus’s founders. Why? 32  For example, Pikitch et al (2004). 33  Proxied by Fitch ratings agency’s support ratings for institutions.
The Rt Hon Sir Edward George: Challenges confronting central banks Speech by The Rt Hon Sir Edward George, Governor of the Bank of England, at the Centre for Financial Studies Seminar, Frankfurt, 13 September 2001. *  *  *  I thought that what I might do this evening is to talk about the challenges confronting central banks - in the US, Japan, the eurozone and the UK in particular - and what can and what can't realistically be expected of them in the face of those challenges. But I'd like to begin by discussing what it is that we are all trying to do. Let me start with our statutory mandates. The Federal Reserve's marching orders are to "maintain long-run growth of the monetary and credit aggregates commensurate with the economy's long-run potential to increase production, so as to promote effectively the goals of maximum employment, stable prices, and moderate long-term interest rates". The Bank of Japan Law prescribes that "currency and monetary control shall be aimed, through the pursuit of price stability, at contributing to the sound development of the national economy". The primary objective of the ESCB "shall be to maintain price stability"; but, without prejudice to that objective, the ESCB shall support the general economic policies in the Community, which, in turn are designed (inter alia) "to promote … sustainable and non-inflationary growth … and a high level of employment".

Mervyn King: Monetary policy developments Speech by Mr Mervyn King, Governor of the Bank of England, at the Best of the Black Country Awards, Wolverhampton, 16 November 2006. *  *  *  The Black Country is where it all began. It began here for me because Wolverhampton is where I grew up. As a boy, I remember the short train trip from Wolverhampton to Birmingham, through the heart of the Black Country, as a journey through manufacturing history. The flames from the blast furnaces lit up the grey sky on winter afternoons. “Black by day and red by night” as the American Consul in the Midlands once described it. Much has changed since then. It has been a difficult time for the Black Country. Many of the companies we visited from school have closed. And the blast furnaces no longer light up the night sky. But the character of the Black Country has enabled the region to come through and enter a new era of regeneration. So I am honoured, and proud, to have been invited to join you tonight. The Black Country is where it all began – not just for me, but for the British economy. This was a centre of the Industrial Revolution – the first blossoming of manufacturing industry in the world.
In addition, securities trading in most countries is reliant on the proper functioning of the respective exchanges, brokerage networks, or electronic trading systems and the national telecommunications infrastructure on which these all depend. Financial markets today are also highly dependent on the availability of real-time price and trade quotations provided by financial information services. For record-keeping, administration, and trade settlement purposes, our hypothetical mutual fund would also likely maintain a relationship with one or more global custodians (banks or brokerage firms), who themselves would typically maintain relationships with a network of sub-custodians located in various domestic markets around the world. Actual settlement of securities transactions typically occurs over the books of a domestic securities depository, such as the Depository Trust Company (“DTC”) or the Fedwire National Book-Entry System in the United States, or at one of the two major international securities depositories, Euroclear and Cedel. Additional clearing firms, such as the National Securities Clearing Corporation (“NSCC”) and the Government Securities Clearing Corporation (“GSCC”) in the United States, may also occupy central roles in the trade clearance and settlement process. Payments and foreign exchange transactions on behalf of the mutual fund would involve the use of correspondent banks, both for the US dollar and for other relevant currencies. These transactions would typically settle over the books of domestic wholesale payment systems, such as the Clearing House Interbank Payments System (“CHIPS”) or Fedwire in the United States, and the new TARGET system for the euro.

Many of those present agreed that greater disclosures would be helpful. However, there was skepticism that a standardized disclosure format would be effective in eliciting meaningful information for a wide class of financial firms, given the complexity and variety of Y2K issues facing these firms worldwide. It was also noted that disclosure which relies primarily on a firm’s own subjective assessments of its Y2K problems inevitably will suffer from an optimistic bias. In addition, most Y2K efforts will not reach the serious testing phase until 1999. The purpose of the testing will be to uncover areas where additional work is required, so that the first round of tests can be expected to encounter problems. In this environment, it may be difficult for firms themselves to assess the true state of their Y2K preparations. Also, firms who believe they are going to be ready will be directed by legal counsel not to make too strong a statement to avoid liability claims in case of unforeseen problems. On the other hand, firms that do not believe they can get ready in time will seek to avoid stating this clearly to protect their activities during 1999. For all of these reasons, I am doubtful that specific, reliable information on the state of Y2K preparations by individual firms worldwide will become publicly available. Finally, in the area of improving preparedness, I have saved the most important topic for last -- namely, testing.
First, calibrating the weights on current and permanent income (wealth), 𝛼 and 𝛽; second, determining which variables other than income and wealth affect well-being, 𝑋, and with what weight, 𝛾; and, third, calibrating the curvature of the utility function with respect to its arguments, ∅. That is a lot of free parameters. One approach to pinning down these parameters would be to calibrate them using past studies. This might be a decent approximation but is not ideal if past behaviour might be a poor guide to behaviour in today’s very different environment. This factor is likely to be relevant at times of financial crisis and exceptional movements in monetary policy, for which there is no precedent. While no approach can fully get around these problems, we use an approach that places fewer arbitrary restrictions on people’s preferences. Instead these preferences are revealed, courtesy of empirical estimation, and then used to parameterise a social welfare function. This involves direct estimation of the parameters in Equation (1) using our sample of households. 32  Estimating (1) requires a measure of household well-being. The Wealth and Asset Survey began asking households about their well-being or “happiness” from 2010-12. Specifically, households are asked to rate their well-being on a scale of 1-10, based on four questions based around satisfaction, happiness and 33  anxiety. We use an average of some of these well-being scores when estimating (1).

It also enables the regulator to focus supervisory attention on the areas and institutions that pose the greatest risk to financial system stability. BIS Review 159/2008  1  Thus, the supervisory authorities are in a position to identify systemic risk factors and devise intervention measures aimed at forestalling systemic failures. The added advantage of this approach is that it brings about optimal utilisation of supervisory resources. Ladies and Gentlemen, I am happy to inform you that following our initial efforts dating back to 1999 to introduce risk based supervision, the Bank of Zambia has this year fully adopted RBS. As a result it is expected that there will be enhanced supervision of banks and other financial institutions. Let me also state that the BoZ is committed to implementing the Basel II Capital Accord but stands ready to review this stance in the face of the ongoing global financial crisis. As you know Basel II is intended to make banks operate at capital levels which are commensurate with their risk profiles. To this end, the BoZ just issued risk management guidelines. Distinguished Workshop Participants As I conclude, I wish to urge the workshop participants to participate actively in the deliberations and use this opportunity to tap knowledge and skills from the vast experience of the resource persons. This workshop provides us with a unique opportunity to share our respective country experiences and challenges.
The real long-term interest rate is, of course, determined by structural features of the economy, not by central banks. Enduring changes in the level of real interest rates and in the cost of credit intermediation by lenders alter the sustainable level of debt service of borrowers. And changes in the interest rate also affect the net present value, and hence the price, of housing assets. All else equal, lower rates will increase both the price borrowers can afford to pay and the net present value of houses. There has been a substantial fall in the long-term real interest rates of around 4.5 percentage points over the past 30 years (Chart 4); this trend has occurred across countries. The structural decline in real rates pushed up on house prices in particular given the inelastic supply. It has also made a larger debt stock easier to service. This fall in real rates was clearly an important factor over the period in driving the high rate of credit growth relative to GDP and the consequent increase in the level of household debt to income. Looking forward, to the extent that the fall in interest rates was the result of structural factors that are likely to last for a long time, the increase in the level of household debt is more likely to be sustainable.

It should be a tool of last resort, to be used only when there is a clear risk of deflation. With a long-lasting, very accommodative monetary policy, side effects and risks emerge. And while pursuing price stability is the main objective, we also have to keep in mind the costs – and not only the benefits – of our monetary policy measures. What danger does the row between Rome and Brussels over the Italian budget present for the country’s banking system? As a banking supervisor it’s not our task to comment on political discussions or decisions with regard to the budgets and fiscal stances of individual countries. Banks have to acknowledge changes and risks in the macroeconomic environment they operate in. And if these changes are relevant, we as supervisors adapt our assessment of banks’ risk profiles, too. Overall, the Italian banking system has become more resilient and banks are better equipped to deal with uncertainties than they were before. What do you see as the top priority for banking supervision in the coming months and years, in Italy and elsewhere? Among other topics, there is still further work to do on non-performing loans. They will keep us busy for the coming years. The cleaning up of banks’ balance sheets should be pushed through as quickly as possible. This is not specific to Italy. All banks should do their utmost to improve their resilience in sunny times when the economic cycle is on the upside.
Ardian Fullani: Central banking in the time of integration Conclusions by Mr Ardian Fullani, Governor of the Bank of Albania, at the Fifth Conference of the Bank of Albania on “Central Banking in the Time of Integration”, Tirana, 25 March 2005. *  *  *  Dear friends! During two days of the Fifth Conference of the Bank of Albania on “Central Banking in time of integration”, having guests from the country and international institutions, personalities of academic and banking area, too many important ideas and suggestions emerged. The tight agenda did not allow detailed discussion on them; however, I hope that they will serve as starting points for further debates and analyses to sort out central bank challenges in the time of integration. It is somewhat difficult to make a concise summary of numerous papers presented in this conference. I would categorize the main conclusion into two large groups according to the main pillars of the central bank, that is the price stability and the financial sector stability. Concerning the first pillar, that of price stability, the discussions were focused mainly on the monetary policy effectiveness and central bank independence. To maintain stability is more difficult than to achieve it. Prof. Bolle indicated in a very excellent way that current price stability should be considered as fragile, which requires constant efforts, either by the BoA or by other institutions.

Therefore, in his discussion, Mr. Ibrahimi emphasized that the Bank of Albania is prudentially analyzing the risks that we may be faced with in the future on maintaining price stability. He came out with the proposal of adopting a new inflation targeting regime that may be better adjusted to the new reality that the Bank of Albania and the Albanian Economy will encounter. However, simply the mechanic implementation of this new regime is not a sufficient condition for price stability. A number of other criteria must be met to increase the chances of its success, without adding pressure at the Bank’s reputation. A lot of such challenges were treated in details in other presentations at the conference. Among the most important ones, I would mention: Issues on central bank independence, which were referred to by most presenters, but I would point out here those presented by Mr. S. Rossi and Mr. L. Papi. The significant role of independence, not only on monetary policy, but also, particularly on the second pillar, that of financial sector stability and development came out clearly in these presentations. The clarity of Monetary Policy channels and enhancement of the effectiveness of its instruments is another important issue that requires particular attention, notwithstanding the current regime applied. The presentations on this issue by Ms. M. Peeters yesterday and by the experiences of various countries during today’s panel of the conference were very useful.
Immediately prior to the Industrial Revolution and running chronologically, these included the th  th  th  windmill in the 12 century, the mechanical clock in the 13 , the cannon in the 14 , the printing press in the th  th  th 17  15 , the postal service in the 16 and the telescope and microscope in the 17 . It will surprise no-one that waves of innovation, big and small, have been lapping the shores of society for the entirety of human civilisation. In other words, while ideas and innovation may well be a necessary condition  14  Van Reenen et al (2010), for example, document the economic impact of ICT. See Bughin et al (2017) and Haldane (2018), for example. Flohr (2016), for example, discusses innovation in Roman society. 17 Clark (2009). 15 16  5  All speeches are available online at www.bankofengland.co.uk/speeches  5  for economic growth, the historical record suggests they may not themselves have been sufficient. Other forces appear to have been at play, translating these ideas into sustained growth in living standards. What might those forces be? I want to provide two different, but complementary, lenses on the growth story. The first focusses on a rather broader set of “capitals” – not just physical capital (plant and machines) but human (skills and expertise), intellectual (ideas and technologies), infrastructural (transport and legal systems), social (co-operation and trust) and institutional (national and civic, private and public) capital.

Thirdly, we are under no illusions about the limitations imposed by the Link. We agree that it rules out the possibility of using the exchange rate to help us adjust more quickly to sudden shocks. We agree that it ties Hong Kong to US monetary policy at times when the economic cycles of the Hong Kong and the US may not necessarily be moving in sync. We agree that it is a cause of asset price inflation in the nineties and deflation more recently. We agree, in short, that it is not a perfect system. But then, no exchange rate system is perfect. And the question to be asked, I would suggest, is not "Where is the exchange rate system that will remove these limitations?" It is "Are these limitations so severe, so constricting, so damaging as to outweigh the advantages that the Link brings to Hong Kong, or to outweigh the risks and uncertainties that would inevitably arise if we were to change or abandon the Link?" I think that the answer has to be no. Let us take the question of competitiveness first. The claim is made that, without exchange rate flexibility, our products, and Hong Kong generally, have become uncompetitive when compared with economies in the region that have devalued their currencies. Even ignoring the fallacy of competitive devaluation, this claim assumes that the nominal exchange rate on its own is a reliable measure of an economy's competitiveness.