samchain/econo-pairs-v1 huggingface dataset:
Reinhart, C M and K Rogoff (2009), This Time is Different: Eight Centuries of Financial Folly, Princeton University Press. Robinson, A (1934), “The Problem of Management and the Size of Firms”, The Economic Journal, vol. 44(174), p/242–257. Santomero, A M and D L Eckles (2000), “The Determinants of Success in the New Financial Services Environment: Now That Firms Can Do Everything, What Should They Do and Why Should Regulators Care?”, Federal Reserve Bank of New York Economic Policy Review (October), vol. 6(4), p.11–23. Saunders, A (1996), Financial Institutions Management: A Modern Perspective, Irwin Professional Publishing. Schmid, M M and I Walter (2009), “Do Financial Conglomerates Create or Destroy Economic Value?”, Journal of Financial Intermediation, vol. 18(2), p.193–216. Stern, N (2006), Stern Review on the Economics of Climate Change, Cabinet Office-HM Treasury, available at http://www.hm-treasury.gov.uk/sternreview_index.htm Stiroh, K and A Rumble (2006), “The Dark Side of Diversification: the Case of US Financial Holding Companies”, Journal of Banking and Finance, Vol.80, p.2131–2161. Tucker, P (2010), Resolution of Large and Complex Financial Institutions: The Big Issues, available at http://www.bankofengland.co.uk/publications/speeches/2010/speech431.pdf Weitzman, M L (1974), “Prices vs. Quantities”, Review of Economic Studies, vol. 41, p.477–91.

Table 2 looks at this average ratings difference for a sample of banks and building societies in the UK, and among a sample of global banks, between 2007 and 2009. Two features are striking. First, standalone ratings are materially below support ratings, by between 1.5 and 4 notches over the sample for UK and global banks. In other words, rating agencies explicitly factor in material government support to banks. Second, this ratings difference has increased over the sample, averaging over one notch in 2007 but over three notches by 2009. In other words, actions by government during the crisis have increased the value of government support to the banks. This should come as no surprise, given the scale of intervention. Indeed, there is evidence of an up-only escalator of state support to banks dating back over the past century. 5 Table 3 takes the same data and divides the sample of UK banks and building societies into “large” and “small” institutions. Unsurprisingly, the average rating difference is consistently higher for large than for small banks. The average ratings difference for large banks is up to 5 notches, for small banks up to 3 notches. This is pretty tangible evidence of a second recurring phenomenon in the financial system – the “too big to fail” problem. It is possible to go one step further and translate these average ratings differences into a monetary measure of the implied fiscal subsidy to banks.
Because the home is the primary source of collateral for most households, financial institutions are less willing to lend when house prices have declined substantially and could fall further. In addition, problems in the foreclosure process and obstacles to efficient modification of loans in securitizations, which I’ll describe in a moment, make a house of a given value less attractive as collateral to secure a loan. As a result, as home prices have fallen, financial institutions have tightened  3  FRBNY Quarterly Report on Household Debt and Credit 2011 Q3. 4  Because housing is such an important asset for many households, household expectations of future income may also be influenced by what they observe happening to house prices. 5  These households have particularly strong incentives to increase saving to recreate a buffer against adverse events and to enable them to move house. Source of data is CoreLogic. 2  BIS central bankers’ speeches  lending standards. This has reduced the amount of credit available for households, including for small business formation. Fourth, the big drop in house prices has made it more difficult for borrowers to refinance. This has undercut to a degree the ability of monetary policy to support demand. Traditionally, refinancing activity has been an important channel through which lower interest rates support spending and employment. Refinancing frees up borrower income. Because those who refinance tend to have a higher marginal propensity to consume from income than the investors receiving the mortgage payments, such refinancing activity increases overall demand.

Nonetheless, analysis by my staff that looks at likely borrower behavior over an extended time horizon suggests that without a significant turnaround in home prices and employment, a substantial proportion of those loans that are deeply underwater will ultimately default – absent an earned principal reduction program. One option developed by my staff is for Fannie Mae and Freddie Mac to give underwater borrowers on loans that they have guaranteed the right to pay off the loan at below par in the future under certain circumstances, including that the borrowers have continued to make timely payments. For instance, the borrower could be given an open-ended option to pay off the loan at an LTV of 125 percent, and the right to pay off the loan at an LTV of 95 percent after three years of timely payments. The borrower would be protected from further declines in home prices, but in return would give up a portion of any upside from future capital gains on the home via a shared appreciation agreement. Note that under this arrangement some of the reduction in the loan amount would be paid by the borrower as the outstanding balance was amortized by continued monthly payments. REO portfolio Even with aggressive policies to minimize the flow of loans into foreclosure, my staff estimates that large volumes of properties would still flow into lenders’ REO over the next few years. This growing overhang could continue to depress prices.
The Financial Policy Committee of the Bank has the statutory responsibility to identify, assess, monitor and take action in relation to financial stability risk across the whole financial system, including the non-bank financial system. It has the power to make recommendations to the Treasury on what activities should be regulated, as well as more general powers in respect of information gathering. It is not a trivial job. In the UK, the non-bank financial sector is almost as large as the banking system, at around £ trillion excluding derivatives. Nearly all of this represents assets under management, and within that the investment fund sector accounts for around one third and hedge funds a further 10–15%. Globally, the non-bank financial sector stands at more than $ trillion, roughly equivalent to global GDP. Within that, assets managed by investment funds and on behalf of non-bank financial clients like insurance groups and pension funds broadly doubled over the decade to 2012 to more than $ trillion, approaching 90% of global GDP. They are now equal to 70% of the commercial banking system. And management of these assets has become increasingly concentrated. Five firms now manage around $ trillion of assets, roughly one fifth of the total. It is not surprising that this has drawn the attention of commentators and regulators worldwide. 4  BIS central bankers’ speeches  There is nothing wrong with growing quickly.

But when a part of the financial system grows quickly to 90% of global GDP and much of its management is highly concentrated, then I think it is right for the regulatory community to look hard at the systemic risks this might pose. That is why the issue of systemic risks arising from investment and hedge funds and the firms that manage them are being looked at as part of the FSB’s work on systemically important financial institutions. In January, the FSB published a consultation paper on its proposed methodology for identifying such firms in these sectors. Based on the consultation results, the FSB will report to the G20 Leaders Summit in Brisbane in November this year. We need to recognise, of course, that investment funds face – and pose – very different risks to banks. They typically manage pools of assets on behalf of investors who bear the ultimate investment risk. They can operate with some leverage, but this is generally subject to restrictions. Asset managers act as agents to such funds, and make investment decisions on behalf of end investors that are consistent with their objectives and agreed mandates. However, despite their generally low-leverage, agency business model, investment funds can pose risks to financial stability. They often offer investors same or next-day redemptions, despite holding assets for which secondary market liquidity can be uncertain. In this way, like banks, they can face liquidity risks.
In some instances, the DFIs have widened and diversified their scope of activities, to cater to the financial needs of new growth areas, such as information and communication technology (ICT), and biotechnology. Many of them have expanded their financial products to include providing short-term working capital loans, equity participation and investment banking. While operating with the widened scope of activities, it is observed that the majority of DFIs continue to maintain the provision of medium to long-term finance and project finance as the core of their activities. At the same time, the DFIs still fundamentally remain complementary, especially in supporting strategic sectors such as the SMEs and agriculture. As reflected by the term, "development financial institution", DFIs are not only expected to provide development finance for nation building, but also to undertake a higher degree of developmental role to nurture and develop the targeted sectors. With regard to this, the DFIs have been demonstrating outstanding performance in their developmental role. For instance, the KfW Mittelstandbank, a prominent DFI in fostering SME development in Germany, is providing credit facilities to not only the established SMEs but also the new start-ups. Another example is the Organisation for SMEs and Regional Innovation of Japan which focuses on providing advisory and consultancy services, and training to nurture and develop the SMEs. Let's now look at the prospects and challenges for DFIs, i.e., the second part of this presentation.

To supplement its guarantee schemes, the CGC, under its Business Advisory Service Entity programme, has identified and engaged a panel of consultants to assist the SMEs, particularly in drawing up business plans and other financial documents. Bank Negara Malaysia recognises the important complementary role of DFIs in the financial system and their developmental role in supporting the national socio-economic agenda. As such, Bank Negara Malaysia in its Financial Sector Masterplan (FSMP) has drawn out the roadmap on the development of the DFIs, with the objective of developing a group of DFIs that are able to perform their mandates in an effective and efficient manner at minimal cost to the Government. In order to achieve this objective, three broad development thrusts have been outlined for the DFIs, namely, strengthening of the regulatory and supervisory framework of the DFIs, capacity and capability building as well as institutional efficiency enhancement of DFIs. A total of eight recommendations have been formulated premised on these development thrusts. One of the significant milestones in the strategies to strengthen the DFIs is the enactment of the Development Financial Institutions Act 2002 (DFIA). The Act provides a comprehensive regulatory and supervisory framework for DFIs, with the primary objective of ensuring that the DFIs perform their mandated roles and that their activities are carried out prudently, effectively and efficiently. Bank Negara Malaysia was appointed as the single regulatory and supervisory body for DFIs under the Act.
DLT) and across borders  RTGS 24/7 Payments  DLT  4  30.3.2023  Swiss Payments Vision – an ecosystem for future-proof payments | Money Market Event | Andréa M. Maechler / Thomas Moser | © Swiss National Bank  Instant payments offer many benefits for the economy  In real time, final and around the clock like cash, but in electronic form  Lower costs and risks through shorter settlement chains Seamless connection with new services as part of automated value chains Cross-border payments thanks to links with other IP systems  Settlement in central bank money 5  30.3.2023  Account-based at commercial banks  Swiss Payments Vision – an ecosystem for future-proof payments | Money Market Event | Andréa M. Maechler / Thomas Moser | © Swiss National Bank  Instant payments – an innovation based on proven principles for futureproof payments  24/7  max.

6  ANNEX 2 - Functions of the governing bodies of the Banco de España In accordance with the provisions of Articles 17 to 23 of Law 13/1994 of 1 June 1994 of Autonomy of the Banco de España, and of its Internal Rules, the functions of the governing bodies of the Banco de España are, essentially, the following: 1 Powers of the Governor               Run the institution and preside over the Governing Council and the Executive Commission. Act as the Bank's legal representative to all effects and purposes, especially in the Courts of Justice. Authorise contracts and documents and perform all other activities necessary for the conduct of the functions conferred on the Banco de España. Represent the Banco de España at those institutions and international organisations in which its participation may be envisaged. Sit on the Governing Council and the General Council of the European Central Bank (ECB). Represent the Banco de España before the Spanish Parliament, acting as the channel for providing parliamentary access to Banco de España information that falls under the secrecy obligation, and attending the sessions of the parliamentary committees at which his/her presence is required under parliamentary regulations or national law Manage, at the highest level, all the services of the Banco de España, and sign any documents, such as minutes and circulars that he/she is required to formalise. Propose to the Government the appointment of the Deputy Governor.
Even if liquidity abounds, it does not move from those who have it in excess to those in demand, because of the great uncertainty that exists and the decision of financial entities to hold on to their liquidity surpluses to cushion themselves against balance-sheet shocks (Allen and Carletti, 2008) or simply to benefit from buying assets at discount prices. The financial crisis is the outcome of two key phenomena. On one side is a period of stability, low interest rates, abundant liquidity, fast economic growth and an asset price bubble (figure 7). This combination of aggregate factors gives way, as often occurs, to a phase of fast credit expansion. Actually, a financial crisis is much more likely to owe to a credit expansion, but not every credit boom ends up in a crisis 4 . At the same time, many countries have recorded a real-estate boom, but not all of them have found themselves in the extreme financial system breakdown as the United States. The problem is that this has occurred within a spiral of financial innovation in very poorly regulated market segments. One important task will be to figure out why the financial systems of different economies with similar credit growth rates and housing price behaviors have had so different outcomes. The low interest rates prompted a search for better returns. Individuals with zero repayment capacity were provided loans, and to reduce the risk, said loans were securitized and often taken out of the banks' balance sheets (i.e.

Changes in supply chains – with a shift in emphasis from efficiency to resilience – may also exert a drag on economic recovery. Overall, MAS expects the global economy to grow by 3.5% in the second half of this year, following an estimated minus 5.5% in the first half. [3] SINGAPORE ECONOMY 2 / 15  BIS central bankers' speeches  The Singapore economy is going through its most severe downturn since Independence. In year-on-year terms, the economy contracted by 6.5% in the first half of 2020, its first decline since the global financial crisis. It is more meaningful to evaluate the performance and prospects for the economy by type of activity rather than the usual categories of construction, manufacturing, and services. Construction, travel-related, and customer-facing domestic services bore the brunt of the COVID-19 containment measures. Construction, accounting for about 4% of GDP, was severely affected by the Circuit Breaker measures and the spike in infection among foreign workers in the dormitories. The travel-related cluster—comprising air transport, accommodation, arts, entertainment and recreation, and also accounting for about 4% of GDP — exerted the largest drag on economic growth. Consumer-facing domestic services—comprising retail, food services and land transport and accounting for another 4% of GDP—were affected by heightened fears of infection and the Circuit Breaker measures. Thus, roughly 12% of the economy is at the epicentre of the impact from COVID-19. The trade-related cluster – comprising manufacturing, wholesale trade, and water transport and storage – was also affected by the COVID-19 pandemic but less so.
But even if a crisis is inevitable, being warned in advance will enable you to limit the detrimental effects of a crisis by starting remedial action early and taking action fast. And that is vital, because for banks, sunshine turns to rain quickly. Banks typically operate with so much leverage on their balance sheets that even a relatively small loss can wipe out much or all of their capital in almost an instant. This means that a bank that has a high and very satisfactory level of capital in one quarter can become insolvent in the next! We have a recent Nordic example of this – Capinordic. This Danish bank – with a branch in Sweden – stood at 33 percent capital adequacy in the third quarter of 2009. The next quarter, that capital had vanished. Credit losses consumed it all. When a situation like this emerges, confidence tends to deteriorate fast. And when confidence leaves, funding follows. Capinordic was a minor bank and its problems had few repercussions in the financial system. But when a larger bank is in trouble, confidence in the entire system may evaporate. When that happens, contagion is already at work. Liquidity  4  BIS Review 50/2010  dries up. Banks and investors will be forced to sell, depressing asset prices, which triggers further sales. A systemic crisis is in full swing. So, when the first alarming signs appear that something is wrong, markets will be watching.

If you want to maintain confidence, you simply do not have the luxury of time. But even if you cannot hinder a crisis, addressing it as early as possible and with determination can at least limit its effects. So my second principle of effective crisis management can be summed up as acting swiftly. While this principle is easy to support, crisis management in practice is often characterised by the opposite: taking too little action, too late. Essentially, there are two main reasons for supervisory and other authorities to neglect taking sufficient action in time – they lack either the willingness to act or the ability to act – sometimes both. There are many reasons for supervisory and other authorities to not want to act. Pressure from the industry and politicians is one of the first that springs to mind. Sometimes – consciously or unconsciously – supervisory and other authorities also want to let banks gamble on turning themselves around. And banks and their shareholders are often more than willing to play along – they face a one way bet as they approach the brink of failure. But in the end, the longer you wait, the harder you fall. For that reason, I don’t have a high opinion of regulatory forbearance or other excuses for supervisory inaction. Ability to act may also be constrained. First and foremost, the ability to act is, of course, dependent upon the tools available.
It is, however, important for the Swedish krona's status as an independent and internationally viable currency that it is not perceived to be more complicated, expensive or unsafe to make payments in Swedish krona than in other currencies. 9  Denmark has not taken a stance on TIPS, but uses the Eurosystem's pan-European platform for securities settlement, T2S. 6 [8]  This means that the settlement services offered by the Riksbank to financial institutions must be at least as safe and efficient as those available abroad. From this perspective, too, it would appear a good idea to share a technical platform with the euro countries. How will RIX and TIPS co-exist? If the Riksbank begins using the TIPS platform to offer settlement of instant payments, RIX needs to change its form and function. It is not appropriate to go into all the details here and now, so let me just describe the arrangement on a general level. The current RIX system (hereafter referred to as RIXRTGS) will remain in place. When RIXRTGS closes for settlement at the end of the working day, the Riksbank will implement its monetary policy transactions, just as it does today. But RIXRTGS will additionally be equipped with some new features. For instance, a participant in RIXRTGS will have access to intraday credit almost 24 hours a day, compared with today when it is only available during RIX's normal opening hours. In addition to RIXRTGS, settlement will be available 24/365 via the TIPS platform (hereafter referred to as RIXINST).

In addition to development costs, there are operating costs for personnel and IT and communications systems. Moreover, the payment system must be protected against various forms of threat, for instance, cyber attacks and large-scale frauds.8 The Swedish market is not sufficiently large to carry such a platform on its own shoulders cost-effectively. If the Riksbank is to supply a settlement service for instant payments, it is therefore preferable if it can do so by sharing a technical platform with other central banks. The more who share the cost of running the platform, the cheaper it will be and the more attractive to use. Platform sharing with the Eurosystem As I mentioned earlier, the Riksbank is not the only central bank thinking about how its payment system needs modernisation to meet the demands of tomorrow, not least with regard to instant payments. The Eurosystem therefore decided in 2017 to add a new technical platform to its payment system TARGET2 (the Eurosystem's equivalent to RIX). This platform is called the Target Instant Payment Settlement (TIPS). It has been developed and run by the Italian central bank since November 2018. During the spring the Riksbank has investigated the potential for using TIPS to settle instant payments in Swedish krona. The platform was initially built with the function of being able to settle payments even in other currencies than the euro,  8 See Reducing the risk of wholesale payments fraud related to endpoint security, CPMI Papers No 178, BIS 2018.