samchain/econo-pairs-v1 huggingface dataset:
•  We read of traders in banks circumventing internal rules to make outsized market bets that subsequently resulted in large losses for these banks. •  And in financial centres across the world, including Singapore, regulators have uncovered attempts by traders at several major global banks to manipulate key financial benchmarks used to set rates for loans and foreign exchange contracts. Little wonder that global surveys show that levels of trust in the financial industry are lower than ever. •  According to Edelman, a public relations firm, banking and financial services ranked last among 15 industries that the public trusted “to do what is right”. 1  •  In countries most affected by the financial crisis and its aftermath, levels of trust are lower still – barely 30% of the public in Europe trust their banks. 1  Edelman Trust Barometer, 2013 and 2014. BIS central bankers’ speeches  1  Why trust is critical to finance Financial products and transactions can be quite complex and information asymmetries often place financial institutions in a more advantageous position compared to their customers. •  Trust that the bank is sound is critical for savers to keep their monies in bank accounts and for borrowers to make long term investment decisions. •  Trust that financial advisers and insurance agents are dealing fairly is important for consumers committing large portions of their savings for a long period of time.

A mechanistic compliance with rules cannot be an adequate substitute for an internalised sense of responsibility and basic morality that a finance professional owes to his client or counterparty. How can we build a culture of trust and strong values in the financial industry? We need an ecosystem to do so – with a role for regulators, the industry, and most important, the firm itself. What can regulators do? First, the role of regulators. The international regulatory community has been intensifying efforts to ensure that financial institutions foster a sound risk culture and conduct themselves in a prudent and socially responsible manner. But instituting a good risk culture is not merely about slapping on more rules or adopting a perfunctory, checkbox approach to compliance. MAS therefore takes an intensive supervisory approach to risk governance and culture in financial institutions. We prefer this to an overly prescriptive regulatory approach based on one-size-fits-all rules that may be less effective in addressing idiosyncratic risks. Financial firms differ widely in goals, activities, and culture. Instead, close supervision – consisting of both onsite inspections and offsite reviews – provides MAS with a good view of a firm’s risk governance and culture and practices on the ground. This allows us to assist the board and management in identifying emerging areas of vulnerabilities and to take pre-emptive corrective actions where necessary. Let me cite two areas we focus on: compensation and fair dealing. BIS central bankers’ speeches  3  Compensation is an important mechanism to shape incentives and behaviours.
BIS Review 14/2009  There are two primary factors 2 underlying the relative cost differences: 1)  the compensation investors require to hold a security that is less liquid than its nominal counterpart, termed the illiquidity premium, and  2)  the insurance value they attach to obtaining protection against inflation risk, known as the inflation risk premium. With regard to the first factor, when investors are worried about their ability to resell TIPS in a liquid secondary market, they require compensation for holding the securities compared with more liquid alternatives. This illiquidity premium tends to drive up TIPS yields and increase the Treasury’s borrowing costs. The second factor works in the opposite direction. To the extent that investors are willing to pay for inflation protection, they would purchase TIPS at a price above that implied by their expected payment stream. As such, inflation risk premiums result in lower expected borrowing costs for the government and savings for the TIPS program compared with nominal issuance. To determine which factor has been historically dominant, we conduct an ex-ante cost analysis: We compare the amount that the Treasury received for inflation compensation at auction with an observable measure of the inflation expectations of TIPS investors that is not contaminated by premiums for inflation risk or liquidity differentials. Unfortunately, we don’t have a perfect measure of expected inflation. Nevertheless, we may be able to get close.

We do have estimates of expected inflation from other sources – such as the Survey of Professional Forecasters (SPF) conducted by the Federal Reserve Bank of Philadelphia. If such measures do indeed reflect the inflation expectations of investors, then we can conduct a reasonably accurate ex-ante analysis. TIPS analysts often talk about a concept they call the breakeven inflation rate. Essentially, this is the realized inflation rate that would cause investors to come out the same in terms of total compensation regardless of whether they had bought TIPS or nominal Treasuries. The difference between the auction breakeven inflation rate and the SPF forecast yields a measure of the net savings or loss incurred by the Treasury that is independent of forecast errors. It is also equal to the net value of the illiquidity and inflation risk premiums associated with each TIPS. Our analysis, which covers TIPS auctions through April 2008, found that prior to 2004, the breakeven inflation rate was below the SPF. This indicates that the illiquidity premiums exceeded the inflation risk premium over this period. However, since 2004, we find that breakeven inflation rates were approximately equal to expected inflation, indicating that investors were roughly indifferent between the benefit of being protected against inflation risk versus the cost in terms of the greater illiquidity of TIPS relative to onthe-run nominal Treasuries. Thus, on an ex-ante basis, it appeared that the cost of issuing TIPS was about equal to the cost of issuing nominal Treasuries.
Opportunities are also being explored for the use of electronic identification and certificate-based solutions to meet the requirements for strong customer authentication at account login and initiation of payment transactions. Mobile technologies With the advancement of technologies, the smartphone is being established as an increasingly universal tool capable of combining a wide variety of functions. Nowadays the smartphone is also 1/3  BIS central bankers' speeches  becoming a tool for initiating payments. This is possible thanks to services like digitalisation of payment cards, the use of digital wallets, and mobile banking applications. In recent years, work has been done towards the potential use of smartphones as devices for receiving physical card payments. This has become possible due to technical 2 These standards1 developed by the Payment Card Industry Security Standards Council. standards allow the use of NFC-enabled mobile devices, such as smartphones and tablets, for accepting contactless payments and also for the payer to enter a PIN code on the screen of the mobile device. Thus, mobile devices are becoming a sort of software POS terminals capable of accepting payments with payment cards and other payment instruments integrated into the mobile phone. We also already have payment service providers that offer this software POS service. This will make contactless payments easier and more convenient to the customers and merchants in Bulgaria.

Conference on opportunities and challenges of the tokenisation of finance Paris, 27 September 2022 Anchors and catalysts: central banks’ dual role in innovation  Speech by François Villeroy de Galhau, Governor of the Banque de France  Press contact: Mark Deen (mark.deen@banque-france.fr), Déborah Guedj (deborah.guedj@banquefrance.fr)  Page 1 sur 5 Ladies and Gentlemen, It is a great pleasure to welcome you in the Louvre for this conference organised by the Banque de France. I am honoured by the presence of Commissioner Mairead McGuinness, of my most distinguished peers at central banks, and of prominent representatives of the public and private sectors. I trust this unique blend of skills will offer a comprehensive overview of the topic that will keep us busy: the tokenisation of finance, and the role of central banks in it. Let me just recall what I describe as the “triangle of disruptions”i: new players; new settlement assets based on blockchain; and new decentralised market infrastructures. These disruptions offer the potential for cheaper and faster services. However, they could also lead to fragmentation and to systemic risk. How can we collectively reap the “net benefits” from innovation? That will only be possible if we come out on top of two false contradictions. The first apparent oxymoron opposes stability and innovation. Financial stability implies that the financial system is capable of withstanding shocks, so as to avoid impacts on the real economy. But it does not mean stagnation or paralysis, and does not ban innovation in any way.
Left unchanged—without our tiering system—it would have severely impaired the bank channel in the transmission of our monetary policy. The return of policy rates to positive territory would this time provide a sizeable risk free income to the banking system, and a similar loss for the Eurosystem. The possible losses for central banks and the Eurosystem may draw public attention, but the primary objective of monetary policy is price stability, not central bank profitability; and the more relevant issue  Page 8 sur 8 in this regard, rather than our profit and loss statement, is the financial solidity of central banks’ balance sheets through their levels of capitalized reserves. The effect on banks’ net interest income nevertheless, if opposite in sign to the one under negative rates, could also distort the transmission of our monetary policy. Just as we did with the tiering scheme, we have to think about a reserve remuneration system adapted to this new context, as the ECB announced it in our July decisions. We will conduct this assessment in a swift and pragmatic way, looking at various options having existed across history and across jurisdictions. ** The high uncertainty in which we must at present navigate the normalization of monetary policy means that we will have to artfully deal with the unexpected. Perhaps however, accepting this uncertainty is, if not what science is typically associated with, at least what rationality commands. Voltaire said, “uncertainty is not a pleasant condition, but certainty is absurd”.

A lot of our exports are in sectors which have a large carbon footprint and will be susceptible to policy measures like the Carbon Border Adjustment Mechanism currently being put in place by the European Union (EU), as part of the EU green deal. So, what role can sustainable banking play in taking Thailand from where it is today to where it needs to be in terms of reducing its vulnerability to climate change? Banks in Thailand can play an important role in getting us to where we need to go. Banks play the predominant role in channeling credit to the private sector. Over 90 percent of private credit comes from the banking sector. So, banks will need to increasingly incorporate sustainability considerations into their lending decisions and increasingly need to improve disclosure on climate-related information. They will also need to improve their risk assessment tools. For all these to work, there needs to be a very clear tone from the top from these institutions. There has been progress to date. The Thai banking sector, including the Thai Bankers’ Association and the Association of International Banks in Thailand, have developed and adopted Sustainable Banking Guidelines in 2019. We have seen concrete steps taken by Thai Banks to incorporate sustainability into their business strategy. We have seen them setting up clear governance structure on sustainability issues such as dedicated sustainability committees, developing risk assessment tools, and disclosing ESG-related information.
Last autumn, for instance, the then SFBC issued decrees imposing tighter capital adequacy requirements on the big banks. In future, the capital base at these institutions will have to exceed, in good times, the minimum risk-weighted capital requirements by 100%. As a complement to this, FINMA has also introduced a “leverage ratio”, i.e. a limit to the banks’ leverage. The SNB considers that leverage of over 20 in the banking sector is not prudent and thus is undesirable in good times. In other words, we consider that, in good times, the capital base should account for at least 5% of the balance sheet total. This is in line with FINMA’s requirements. FINMA expects the big banks’ “leverage ratio” to be well over 3% at group level and well over 4% for individual institutions in good times. To prevent the capital requirements from having a procyclical impact, two steps have been taken. First, there will be a long time delay before they are implemented. The new FINMA targets will apply as of 2013 at the earliest, and an extension would be an option for the big banks if compliance becomes impossible due to the situation on the capital markets or the big banks’ individual earnings position. Second, an anticyclical element is explicitly built into the new Swiss regulations. In bad times, the big banks will be allowed to fall short of the new targets. In other words, a capital cushion will be built up in good times to absorb losses in crises.

Situation in the banking sector As our Financial Stability Report published today describes in detail, the situation in the Swiss banking sector deteriorated considerably in 2008. The turbulence in the money and credit markets that had erupted in mid-2007 worsened in 2008, also spilling over to other areas. The two big banks, in particular UBS, were hit hard by these negative developments. As you know, together the two institutions recorded a total loss of some CHF 30 billion in 2008. 1 They took extensive measures to strengthen their resilience. In addition to reducing risky positions, they raised sizeable amounts of private capital. The resilience of UBS was further strengthened by the package of government measures announced by the Federal Council, the SNB and the then Swiss Federal Banking Commission (SFBC, now FINMA or Swiss Financial Market Advisory Authority) in October 2008. Owing to all of these measures, the big banks’ capital situation at the end of 2008 improved slightly compared to the end of 2007, despite the massive losses incurred. However, our assessment is that, overall, risks in the big banks’ books are still material. This is all the more serious since, compared to the end of 2007, the profit potential of the big banks is lower. Banks with a domestic business focus, i.e. cantonal, regional and Raiffeisen banks, present a much more favourable picture. Although the overall profitability of these bank categories declined in 2008, it still remains above the long-term average.
To address this concern of the business community, the HKMA has been working very hard with banks and various stakeholders in tackling the issue. Our aim is to maintain a robust AML regime in Hong Kong while the system does not undermine access by legitimate businesses and ordinary citizens to basic banking services. So we require banks to apply a risk-based approach to the CDD process, and also emphasize the importance of banks’ engagement with customers to ensure that they are treated fairly. Since our sharing session last summer and the further guidance we provided to banks last September, it is now time to take stock of the latest developments. I will leave it to the banks to talk more about the improvement measures that they have pursued or are pursuing. They would also discuss the various practical aspects relating to account opening and account maintenance at the panel discussion later on. 4. While full efforts are being made to improve the situation, there is also feedback that some foreign companies are under the perception that Hong Kong is not a welcoming place for business, and have therefore turned to banks in other jurisdictions to open accounts. This is very bad for Hong Kong’s reputation. For those of us who know what is being done, Hong Kong is clearly and definitely not closed for business. One of the important points now is therefore : how can we turn around such a negative perception. 5.

It goes with the grain of how banks are resolved, reinforcing the continuity of services which are critical to the real economy. It is predictable, with a clear framework of rules. It is proportionate, applying only above a clear size threshold. And it is efficient, allowing wholesale and investment business to prosper at a safe distance from retail and SME customers. Ring-fencing is a very substantial undertaking for the PRA, the FCA and the affected banks – but we are on track for implementation by 1 January 2019. Stability begins at home  Once these reforms are up and running, the core deposit-taking and payments services that must be continuously supplied to UK households and small firms will be protected in ring-fenced banks (RFBs). Groups operating across borders will also include non-ring-fenced banks (NRFBs) and will need to be resilient according to their global footprint. Resilience requires systemic capital buffers both at the domestic and global level. The domestic buffer applies to the RFB whereas any global buffer applies to the whole group. The RFB and NRFB shares of capital should provide sufficient resilience for each. So if the size of the domestic buffer risks leaving the rest of the group with too small a share to be resilient against shocks, we will increase the group’s buffer to 2  prevent this from happening . These complexities do not just flow from ring-fencing but from the international reach of many UK banking groups. We set their consolidated requirements as home supervisor.
It is an idea that the ECB fully supports. The development of the market for simple and transparent Asset Backed Securities deserves particular support. Member States should consider the provision of public guarantees to support lending to small and medium sized enterprises. There also needs to be a consistent and credible application of the Stability and Growth Pact across time and across countries. Within the existing framework, countries should explore how to support productive investment. In monetary policy, we have deployed a number of non-standard tools to ensure our very accommodative monetary policy stance is transmitted to the real economy. Last week, the Governing Council decided to start the purchase of certain high-quality asset-backed securities and covered bonds in October. Senior tranches of such ABS have proven to be high quality assets. Alongside our Targeted Longer Term Refinancing Operations, we expect these measures will enhance the functioning of monetary policy transmission, provide further accommodation now that we are at the lower bound, and have a sizeable impact on our balance sheet. *** Ladies and gentlemen, It is a pleasure to be here tonight with you in Milan. In a recent speech in Jackson Hole, I spoke about the need for a policy mix involving monetary, fiscal and structural policies to jump-start the economic recovery in the euro area. We are currently facing a set of conditions – low growth and low inflation, high debt and high unemployment – that can only be addressed by concerted action on both the demand and supply sides of the economy.

There are thus a number of good reasons that explain why we use cash and why we will continue to do so for some time to come. For this reason alone there is a lower limit below which cash usage cannot fall. Where exactly this limit lies and how quickly we may reach it will largely depend on what other payment services are developed. For payments from private individuals to companies there are a number of competing services such as card payments, mobile payments, Internet transfers and so on. However, for payments between private individuals there are far fewer alternatives. Despite the rapid rate of technological development, no satisfactory replacement for cheques has emerged in this context. What is required to make new payment services successful? There are a number of fundamental characteristics of the payment system that affect the chances of successfully launching new substitutes for cash and other existing payment services. Some of these characteristics raise barriers to innovation and may thus help to protect the already established payment services. If we assume that, in one way or another, new payment services will be based on payment by electronic means between accounts in one or several custodial institutions, then there at least three problems that a payment service must overcome in order to succeed. First, launching a new payment system is in itself costly.
4  BIS Review 69/2007  Is there more to be done? Of course, but the challenge now is not so much the challenge of building stronger defenses against crisis, but rather the longer-term challenge of building a greater capacity to adapt to change in this increasingly integrated and rapidly evolving global economy. Thank you. BIS Review 69/2007  5

It is when an institution knows without doubt that its people will stay the course in these situations that it can truly claim to have achieved the ideal culture. 3/4  BIS - Central bankers' speeches  Before I end, I would like to congratulate AIBIM on the launch of Integrity Year 2023 and it is my sincere hope that all participants, whether in this room today or from your respective institutions, will benefit from a deeply beneficial and fulfilling programme planned for the rest of the year. Thank you and Assalamu'alaikum. 4/4  BIS - Central bankers' speeches