samchain/econo-pairs-v1 huggingface dataset:
[3]  South and Southeast Asia are among the most dynamic economic regions in the world. Growth in these two regions is driven by favourable demographics, rising affluence, young tech-savvy consumers, and rapid urbanisation. ASEAN is likely to benefit from supply chain diversifications and an outward shift of labour-intensive manufacturing from China. South and Southeast Asia have booming tech sectors that present opportunities for PE/VC investments. The pandemic has accelerated digitalisation in Southeast Asia as retail transactions and communications migrated online to overcome COVID-19 restrictions. According to industry estimates, 3 out of 4 persons in ASEAN are now online. [4] Higher digital adoption in ASEAN has helped spur a vibrant technology sector. There is a burst of entrepreneurial energy in ASEAN and the region is home to many innovative high growth companies. The number of unicorns in ASEAN has continued to increase over the last few years. ASEAN’s early wave of tech giants like Grab, GoTo and Sea have made public exits. As other promising start-ups in the region scale up and expand their footprint, they will need to raise capital and seek PE/VC funding. Private credit will be a key driver of growth in private markets. There are opportunities for private credit to play a larger role in Asian enterprise financing just like its private equity counterpart. Private credit is generally structured in the form of floating rate exposures. Hence, investors benefit from larger coupons as interest rates rise.

Otherwise the financial industry will be unable to fulfil its role as a financial intermediary. A lot has been achieved in recent years to strengthen the resilience of the banking system. In particular, the two big banks have made progress in this area. They have increased their highest-quality capital and reduced their risk-weighted assets. This is an on-going process that will further increase the stability of the system. Challenges for the financial industry Ladies and Gentlemen, so far I have focused on the macroeconomic challenges arising from the importance of the financial industry for the economy. Let me now turn to the challenges the Swiss financial industry itself faces. Obviously, like its peers abroad, the Swiss financial industry has to cope with several challenges. Let me focus on three which I consider to be most relevant for Switzerland – wealth management, residential mortgages and regulatory measures addressing “too big to fail” issues. Wealth management is challenged on several fronts. Revenues in wealth management will continue to be depressed. In jittery financial markets, client trading volumes are low. The flat yield curve reduces the margin between deposits and credits. In addition, competition in private banking with foreign clients will continue to intensify.
First, following the sharp decline of hydrocarbon prices in 2014, the large contraction of hydrocarbon exports in 2015, in a context of still high imports after the significant increase of imports of goods over the period 2007-2014, resulted in a high external current account deficit (-16.4 percent of GDP). With hydrocarbons remaining Algeria’s main export, the external shock resulted in a significant contraction in international reserves, from $ billion 179 in 2014 to $ billion 144 in 2015. Nonetheless, this level remains comfortable, representing 27 months of imports of goods and services, in a situation of historically low medium and long term external debt (1.8 percent of GDP) and the absence of any external indebtedness of the hydrocarbon sector for more than a decade. Second, the exchange rate of the dinar vis-à-vis the US dollar depreciated by 20 percent in 2015, while it depreciated by only 3.8 percent vis-à-vis the euro. In view of the large depreciation of Algeria’s main partners’ currencies, the real effective exchange rate of the dinar remains close to its equilibrium level. Therefore, the exchange rate played, to a large extent, its role as an external shock absorber, reflecting its flexibility, supported by the Bank of Algeria’s interventions in the interbank exchange market. Third, as a result of the sharp contraction in fiscal oil revenue and the expansion of public spending, the fiscal deficit rose to 16 percent of GDP in 2015 from 7.3 percent in 2014. However, public debt has remained historically low, representing 13.6 percent of GDP at end 2015.

In the pursuit of this objective, the Bank of Algeria will use all of the available data provided by the new credit bureau, which complies with the international standards and was fully implemented in September 2015. Given the expected reversal of the liquidity cycle during 2016, the role of the Bank of Algeria as a lender of last resort, following fourteen years of structural excess liquidity, will be reactivated in the second half of the year to refinance the banking sector. This will contribute to the activation of the role of interest rates as a transmission channel of monetary policy, in the context of an active interbank money market. To mitigate the liquidity stress some banks are starting to face, the Bank of Algeria may reduce the reserve requirement rate, which now stands at 12 percent. In this situation of external shock coupled with an emerging acceleration of the credit cycle, the use of macro-prudential tools will support the conduct of monetary policy, itself being in transition as of 2016, with credit risk remaining the main risk to financial stability in the medium term. Finally, the role of the committee on financial stability will shortly be strengthened, notably with regard to the regular assessment of banks’ financial soundness using relevant indicators and stress tests. This will be supported by a strengthening of the Bank of Algeria’s capacities in conducting macro-prudential policy. 3.
These issues are already addressed in the Code to some extent, and perhaps if the spirit of the Code had been more closely adhered to, some of the recent bad publicity for the banks could have been avoided. However, it is evident that the Code needs to be made more specific in some areas, and the issue of how to ensure compliance must also be addressed. The Code of Banking Practice is not part of our reform measures, but I have digressed to talk about it for two reasons. First, as already indicated, it becomes all the more important in a deregulated environment to ensure that there is a fair and balanced relationship between banks and their customers. Second, the fact that we are going to have to devote resources to this issue for the rest of this year means that one of our reform measures, namely a review of the current three tier system of authorisation, will be postponed from this year to next. This will also allow us to take into account the results of our forthcoming review of deposit protection arrangements, which may have a bearing on the minimum size of deposits that authorised institutions which are not licensed banks should be allowed to take. Safety and soundness of the banking system Deposit protection is part of what might be called the safety net arrangements for the banking system.

It is estimated that 1 out of 9 jobs in Norway are linked to the oil industry. BIS central bankers’ speeches  1  Fiscal rule It was established at an early stage that Norway’s oil and gas resources belong to the Norwegian people. The tax system for the petroleum industry was designed to make sure that the bulk of the large revenues, the economic rent from the petroleum sector, would accrue to the state. Petroleum companies pay a surtax of 51 percent of profits, on top of the normal corporate tax rate of 27 percent. The government also has direct ownership shares in the most profitable oil fields. However, policymakers’ handling of Norway’s newly discovered petroleum wealth got off to a rather bumpy start. During the first 25 years of oil production, Norway experienced two deep recessions. Both downturns were rooted in hugely optimistic income expectations. In the 1970s, the public sector was the big spender, and the government had to tighten policy later on. In the 1980s, a credit-fuelled consumption boom in the private sector led to necessary cut-backs after the oil price plunge in 1986. These two episodes of turbulence made clear how vulnerable a small open economy is to terms of trade disturbances, as well as to short-termism and exuberant expectations. To prevent the same mistakes from being made again, fiscal institutions were set up in the 1990s. Among the most important of these are the oil fund and the fiscal rule.
Well, you all well know that Milton Friedman was rather sceptical about our ability to avoid serious mistakes in this very area and that led him towards the formulation of a “simple rule” of constant growth of the money stock. In this framework no forecasting was required. Of course, he faced evidence of the failure of the large-scale econometric models that had been used in the 1950s to 1970s and that were later subject to strong criticism. The models were hit by a series of structural breaks, which made the previously observed relationships unreliable. Consequently, it was argued that these breaks were not a result of bad luck only, but also reflected a lack of microeconomic foundations in the models, neglect of forward-looking expectations and ad hoc econometric restrictions. The terms “Lucas critique” and “Goodhart law” have become standard warning signs for all macroeconomic modellers. The actual way in which forecasts are produced and used at central banks has, however, changed substantially over the past two decades. The changes have reflected developments both in the economic (and econometric) theory and in monetary policy regimes. Bearing in mind the failure of large-scale models, the profession has started to prefer smaller-scale models with a sounder microeconomic background, built in recent decades usually along the lines of New Keynesian Economics. As the first generation of these new models matured, though, the second generation started to become more detailed again.

The first one relates to the comparability of the CNB’s forecast with the rest of the forecasts produced by the ESCB members. As I mentioned earlier, the CNB produces an unconditional forecast that includes a reaction function of the central bank. However, this is not the case with the rest of the ESCB members. Although there is a tendency towards the use of unconditional forecasts and the Bank of England and Sveriges Riksbank have started to use at least the trajectory of the short-term interest rate derived from the money market term structure instead of an assumption of a constant short-term interest rate as a base for their forecasts, conditional forecasting still plays a crucial role among the ESCB members. This, of course, seriously reduces the comparability of the results. Second, the forecasting system and the modelling framework have not yet been adjusted to our expected entry into the ERM II and the euro area. ERM II participation clearly raises the question of consistency between the “low” inflation environment required by the Maastricht inflation criterion and stability of the nominal exchange rate, both in a converging economy. Recent experience among the new EU member countries provides some evidence on the difficulties of fulfilling the Maastricht inflation criterion amid a stable exchange rate. The issue to be solved is to what extent the forecasting system should reflect the dualism of the targets, or whether the policy rule should consider the inflation target only, leaving the exchange rate as a fully endogenous variable.
The institutional arrangement for monetary policy in Norway does differ in some respects from that in countries with an inflation target. Some central banks with explicit inflation targets have to give an explanation to the Government or other authorities if the inflation target is not being met. Our mandate, however, refers to an exchange rate target as opposed to an inflation target. If a situation arises in which Norges Bank is not able to return the krone to its initial range, as defined in the mandate, without triggering inflation or a deflationary recession, the Bank will inform the authorities that measures other than those available to the central bank are required. One possibility could then be to recommend fiscal measures that make it possible to bring the krone exchange rate back to its initial range and stabilise it. Some observers have argued that the possibility that such situations can arise creates an uncertainty that may weaken the credibility of Norwegian monetary policy. However, Norges Bank has declared that it cannot with open eyes contribute to higher inflation or a deflationary recession. Financial market indicators show no evidence of monetary policy lacking credibility. Although the actual conduct of monetary policy is similar to inflation targeting, there are a number of institutional differences between the Norwegian system and inflation targeting regimes. BIS Review 101/2000  2  1. Norway has a long tradition of cooperation between the political authorities and the social partners.

Moreover, this deficit is financed in large part by purchases of U.S. debt securities by Asian central banks and by public institutions from oil exporting countries. Some people call it a “revived Bretton Woods” system and claim it could work for years, if not decades6. I agree that temporary constructs often survive much longer than one could expect; just recall the former temporary Syreny military pontoon bridge on the Vistula river in Warsaw built in 1985, that lasted for fifteen years 7 . However, one can be next to certain that without farreaching reforms undertaken by major stakeholders financial markets may experience significant volatility in the not-toodistant future, with potentially harmful consequences for global growth. The third risk to global growth is the avian flu pandemic. Both the risk and the consequences of the worst-case scenario are impossible to assess, but the potential human and economic costs could be enormous. Financial markets Now let me turn to financial markets. The recent few years are marked by a significant growth in financial transactions, stock exchanges have risen, corporate and emerging markets spreads have tightened, the ratio of non-performing loans has dropped 8 , 9 . According to the Bank for International Settlements, private capital flows to emerging markets have reached the level last seen in 1997, before the Asian crisis. Inflows to European emerging markets have reached all-time highs. Factors responsible for a sharp increase in capital flows to emerging markets can be divided into pull factors (local fundamentals) and push factors (global liquidity, global cyclical factors).
Interest rate risk arises through changes in the yield curve, which is comprised of market rates for different durations. An analysis of this curve usually focuses on three factors; parallel shift, slope and curvature 13 . A parallel shift entails the entire yield curve moving up or down in a parallel manner. As such shifts have historically explained the largest part of the variation in the yield curve, many asset managers’ choice of interest rate exposure focuses on different measures linked to these shifts. This includes the Riksbank, which on a strategic level governs the interest rate risk with the aid of the modified duration measure 14 . The discussion of the choice of duration is often based on the assumption that the yield curve slopes upwards 15 . The interest rate is thus expected to increase with the duration. By choosing a longer duration, investors can expect to obtain higher earnings on their investments. At the same time, the risk increases, as the volatility of the earnings usually increases with the length of the duration. This means that a longer duration is connected with larger fluctuations in a portfolio’s market value and earnings. The choice of duration for a portfolio is simplified if the investor has a clear investment horizon. For instance, it is natural for pension funds and life assurance companies with long debt commitments to invest in bonds with a duration corresponding to their debt.

Thus, in this way central banking for the first time really became a cornerstone of the building of world prosperity and world peace. Of course the single reserves might be sufficient under normal circumstances but when things get out of hand, it may not be sufficient, and banks do shut down. The government and the central banks thereupon undertook that most important function of building world peace, which is looking after the poor and the disadvantaged, by putting up deposit insurance schemes, the first being in New York in 1829 but the first nationwide schemes being in Czechoslovakia in 1920 whereby at least the smallest and the least knowledgeable depositors are protected. Of course, a better alternative would be to try and make banks less liable to failure. Since banks are often in an oligopolistic system or at the very least, they are leveraged by the ratio of debt to equity of around 12:1, being the inverse of the capital adequacy ratio now defined by the Bank for International Settlements to be at least 8%, and using other people’s money in a way that normal companies cannot 1  BIS Review 111/2000  do - the central bank then underpins the viability of commercial banks by supervising and examining them so that sensible decisions are made and fraudulent activities are minimised. Surprisingly, that may not even be the biggest way central banks contribute to world peace. For nations taken individually, the biggest function deemed to be of the central banking is monetary policy.
The solution is to simulate – to stress test – bad shocks before they happen. That’s why, every year, we subject Britain’s major banks to a public stress test. The scenario reflects the target for resilience of major banks that I discussed earlier. The test shows whether major banks would, in fact, be resilient to it. When they show they’re not, it can be corrected before any real-life test comes along. We can be held to account every year for continuing to ensure that our resilience targets are met. 8  See Remit and recommendations for the Financial Policy Committee: Budget 2018 9  All speeches are available online at www.bankofengland.co.uk/speeches  9  Taking transparency and accountability to the next level So with a clear mandate from Parliament, transparency and discussion about how its translated into resilience targets, and transparent stress tests to show those targets are being met, we can be held to account for delivering Parliament’s intent and no other. It’s a framework that ensures we are citizens in service and not people in power. But we’re always looking for ways to reinforce that. We are, for example, working to display more of the handiwork in translating our objective into levels of resilience in other parts of the system, such as the mortgage market. We’re working on ways to measure in a disciplined way how, if debt rises, it should make our stress test scenarios tougher. And above all, we’re helping to widen the net of our accountability.

We’re very grateful to those in the North East, Northern Ireland, Yorkshire & the Humber, London, Scotland, the West Midlands, and the South West who, in recent months, have spent an evening with me or my colleagues. They’ve given us much to chew on about how the economy and the financial system really look from where they sit in different parts of the country and society. They’ve challenged us on the financial crisis, quantitative easing, interest rates, living costs and more. And most importantly, they’ve held us to account, forcing us to explain every aspect of our work. And some. While that’s not easy, it’s essential. Because it’s their economy, their financial system and their lives that we influence. We are simply citizens in their service. 11  All speeches are available online at www.bankofengland.co.uk/speeches  11
Már Guðmundsson: Cross-border banking – where do we stand? Speech by Mr Már Guðmundsson, Governor of the Central Bank of Iceland, at the Eleventh Asia-Pacific High Level Meeting on Banking Supervision, Manila, 11 February 2015. *  *  *  Chairmen and distinguished participants, I would like to begin by thanking the organisers for inviting me to address this impressive meeting. I spoke in this forum in Tokyo in 2009. The title of my presentation then was The collapse of Iceland’s cross-border banks: lessons for regulation, supervision and crisis management. The experience of the financial crisis in Iceland was then fresh in our minds, and it was considered to be both an extreme and an interesting case. But now, after other cases have been better analysed and after the banking and sovereign debt crisis in the euro area, it is clearer that although there was a significant domestic element in the financial and economic crisis in Iceland, the cross-border banking crisis aspect was to a significant degree an extreme manifestation of a global problem. That is partly why I want to take a more global perspective here today than I did in 2009 and ask where we stand with cross-border banking. To gain a clearer perspective on the big risks in recent forms of cross-border banking, it is useful to remind ourselves that fractional banking, with the associated maturity transformation, is inherently very risky.

Of course, since interest rates cannot fall below zero, we are running out of room for further cuts. But it must not be forgotten that even if Bank Rate remains where it is, the recent cuts in Bank Rate will continue to provide a building boost to demand through this year and beyond – we don’t have to keep on cutting rates in order to provide a stimulus. Second, in November, the Government announced a temporary cut in VAT and an acceleration of spending on public investment projects, which should help support demand in the near term. Third, and most importantly, to supplement the measures taken last October, the Government has launched a five-point plan to ensure an adequate supply of credit to households and business. This comprises measures: to reduce uncertainty about the adequacy of bank capital by capping the losses on their holdings of risky assets; to facilitate  2  BIS Review 19/2009  bank funding through the attachment of state guarantees; to boost the availability of funds to business through direct purchases of company debt; to raise the availability of mortgage finance to households by halting the running down of Northern Rock’s mortgage book; and, finally, to establish a concordat with the banks under which they will maintain an adequate flow of credit to the real economy.