samchain/econo-pairs-v1 huggingface dataset:
Governments, regulators, prosecutors and non-executive directors have all struggled to come to terms with firms that pose a risk to taxpayers, cannot be prosecuted because of their systemic importance, and are difficult to manage because of their size and complexity. It is not in our national interest to have banks that are too big to fail, too big to jail, or simply too big. Solving these problems is the work of a generation, and I hope that the financial community will rise to this challenge and not shrink from it. The City as a whole does merit trust. And, when the historians look back on this period many years from now, they will conclude that although we were not wiser than the financiers of the past, we did learn and we reformed, and the country benefitted and prospered as a result. As I leave the scene, there is undoubtedly much unfinished business for my successor. I am delighted that Mark Carney will be the next Governor. He brings a new generation of leadership to the Bank, as well as enormous experience from his time as a central bank governor and his role in steering the Financial Stability Board. He has my wholehearted best wishes for his term as Governor. Mark is, however, not the first Canadian to have been in the frame for the Governorship of the Bank of England. The very first Governor of the Bank of Canada, Graham Towers, was put forward by Keynes as a successor to Montagu Norman.

This is not surprising news, given that major global players in the industry such as HSBC, Standard Chartered and Citibank have established SSO centres on our shores. Regional players such as Maybank, CIMB and OCBC have also outsourced certain operations here to increase their productivity levels. We are happy to have them here today to share their experiences and perspectives. It would not be presumptuous of me to say that the financial institutions in Malaysia are in an enviable position where SSO is concerned in view of Malaysia's standing as a leading destination for the establishment of SSO hubs. A.T. Kearney ranked Malaysia as the third most attractive outsourcing centre in their Global Services Location Index in three consecutive reports, including this year's index. The report states that Malaysia was a "natural choice" for outsourcing in view of its low costs, modern infrastructure, business environment and high levels of global integration. Frost & Sullivan ranked Malaysia as the fifth most attractive SSO location in 2007 whereby the finance sector was identified as one of Malaysia's niche areas, ranking fourth in this sector. Key strengths that they pointed out include infrastructure quality, favourable Government policies, political stability and cultural adaptability of skilled workforce. Indeed, the Multimedia Development Corporation has implemented various initiatives in developing the Multimedia Super Corridor or MSC Malaysia as a conducive and attractive environment for outsourcing activities. Leveraging on these competitive advantages of Malaysia would seem to be a natural progression for financial players who are looking to stay ahead of the game.
And so they actually found a way to get into some securities activities, and then Glass-Steagall Act a number of years later was actually formally repealed because the firms were already, essentially, in the business. Now my own personal view is that I don’t think the Glass-Steagall Act had much to do with the great financial crisis. If you look at the firms that got into great difficulty, at the earliest stages – Bear Stearns and Lehman Brothers, AIG – they really had nothing to do with Glass-Steagall because they really weren’t banks and securities firms. They were securities firms and insurance companies. My own view is that the Glass-Steagall Act was not a major – the repeal of the Glass-Steagall Act was not a major factor behind the Great Recession and the financial crisis. Now this is something that people probably would debate. Other people might have somewhat different views. You could repeal the Glass-Steagall Act again. I think it would obviously require a lot of financial corporate restructuring because there are a lot of firms in the U.S. that are in both the securities business and the commercial banking business today. I think that there are links between those two businesses. It probably helps those firms, satisfy the demands of their large corporate clients more easily than if you had to separate them into separate entities. But you could do it.

Of course, the automation of activities through a smart contract raises many questions about how firms and regulators ensure appropriate risk management and resilience. In the UK, the authorities are to establish a regulatory ‘sandbox’ to allow firms to investigate technical feasibility in this area and the regulators to assess related risks and risk management. It is of course impossible to say how successful and how disruptive these technologies will ultimately prove to be in finance. History has many examples of technologies that promised much but failed to deliver. Given the pace of change and the disruption we have seen in other sectors of the economy it would, as I said be very unwise for financial regulators to ignore these developments. But it would also be unwise for innovators and the authorities alike to forget that to be successful and sustainable, technologically driven innovation needs regulation. A succession of cryptowinters will not, in the end, help the deployment and adoption of these technologies and the reaping of the benefits that they may offer. History also has examples of technologies that have been put aside/ shunned because of dramatic early failures. While the causes of the Hindenberg Zeppelin disaster are still debated, it is very probable that the general development of the use of hydrogen in transport was put aside for decades as a result. Innovators, alongside regulators and other public authorities, have an interest in the development of appropriate regulation and the management of risk.
7 The gap in manufacturing is around 50%. 8 UK estimates of firm-level productivity dispersion are based on Bank of England analysis of ONS data, whereas non-UK estimates of productivity dispersion are provided by the OECD. Differences in underlying data used may therefore play a role in Charts 5 and 6. 3  All speeches are available online at www.bankofengland.co.uk/speeches  3  low road. Capitalism always of course throws up winners and losers, hares and tortoises, gazelles and snails, upper and lower tails. In the UK, however, these differences are far-larger, and have increased by more, than elsewhere. And therein, I would argue, lie the roots of the UK’s productivity gaps. Let me start with the good news, focussing on companies on the high road. The first and most important point to make is that the UK does not lack for innovative, high-productivity companies. If you tour the UK, as I do, you find these “frontier” companies in every region and every sector. Their productivity is world-leading, their technology world-beating, their managers and workers world-renowned. They are inspirational. Micro-analysis of UK companies confirms this anecdotal impression. Chart 7 plots the distribution of UK 9  relative to French and German companies. There are more UK companies in the upper tail than in Germany, with its much-vaunted industrial reputation, and France. The top 10% of UK companies have levels of productivity at least 100% above the median.

The IFSB which was established in 2002 has been instrumental in developing and issuing global prudential standards and guiding principles for the industry. The IFSB has also contributed to the harmonisation in the development of Islamic finance across different jurisdictions. Apart from the implementation of these prudential standards, there is also a need to ensure the supervisory and legal infrastructure remains relevant to the rapidly changing Islamic financial landscape. In Malaysia, these efforts are also supported by a comprehensive financial safety net that includes a deposit insurance scheme and a resolution mechanism, so that not only are depositors protected, but it also allows for prompt, effective and least cost resolution of the financial system that can facilitate recapitalization of Islamic financial institutions as well as institute programme to remove troubled assets from the books of financial institutions. Greater collective effort by international community to strengthen global financial stability In the reform of the international financial architecture, the G20 has launched an ambitious agenda to reform financial regulations, which include key main areas namely, (1) the strengthening of international frameworks for prudential regulation, (2) the review of the scope of regulation, (3) the revision of accounting standards; and (4) more effective oversight of the credit rating agencies as well as strengthening risk management. 1 These areas should  1  2  Declaration on Strengthening the Financial System by Leaders of the G20, London 2 April 2009.
The chief executive? Peter Robinson. The company? Liverpool FC. Perhaps banks should have heeded the message. If they had, this crisis might have felt rather different. If UK banks had reduced dividend payouts ratios by a third between 2000 to 2007, £ billion of extra capital would have been generated. 13 Had payouts to staff been trimmed by 10%, a further £ billion in capital would have been saved. And if banks had been restricted from paying dividends in the event of an annual loss, £ billion would have been added to the pot. In other words, three modest changes in payout behaviour would have generated more capital than was supplied by the UK government during the crisis. Opportunistic behaviour is also needed to repair banks’ liquidity positions. Reversing the fall in the maturity of banks’ balance sheets will require a front-loaded terming out of their debt liabilities. There is some evidence of banks doing so. But given the scale of the refinancing mountain, this will be an uphill struggle. There is also some evidence of companies tapping capital markets opportunistically to help repair their balance sheets. Corporate bond issuance by non-financial companies during 2009 was around $ trillion globally, the highest on record. Manchester United have  10  Cameron, A (1995), “Bank of Scotland 1695-1995”, Mainstream Publishing. 11  Modigliani F and Miller M (1961), “Dividend Policy, Growth and the Valuation of Shares”, Journal of Business, 411–33.

At times in the distant past it has been higher still: the average payout ratio to Bank of Scotland shareholders over the period 1800 to 1995 was around 70%. 10    Second, there is little evidence of payout ratios being higher for financial than for non-financial companies. Such high payouts are themselves something of a puzzle because, at least in theory, the payout ratio ought not to affect the value of a firm. 11 This may be a collective action problem, with firms fearful of sending an adverse market signal through lower payouts.   Third, for both financials and non-financial firms, the flow of dividend income is much less volatile than firms’ stream of profits. In other words, there is evidence of firms systematically smoothing dividend payouts to shareholders. 12 This may also reflect a problem of collective action.   Fourth, the profits stream of the financial sector is significantly more volatile than for non-financial companies. That appears largely to be the result of large-scale, one-off losses by banks. This is as we would expect, given their greater leverage.   Fifth, as a result, the dividend payout ratio for banks is more volatile than for nonbanks. This behaviour is unlikely to support banking stability. It risks profits being distributed as dividends when they are most needed to augment capital ratios and boost confidence. In 1996, the Chief Executive of a famous company observed: “We are an old-fashioned business, not a quoted plc, and we don’t pay dividends to shareholders”.
However, during the summer the countries affected have managed relatively well in issuing government bonds, and the banks’ interim reports have been positive. The European Central Bank has been able to reduce both its purchases of government bonds and its lending to the banks. The general picture is, to summarise, that the unease in the financial markets has been subdued during the summer, at the same time as the situation is still not normal. From this international perspective I shall now move on to a national one, and take a look at economic developments in Sweden. Economic developments in Sweden At the beginning of this presentation I summarised the picture of developments in Sweden painted in the Riksbank’s Monetary Policy Report. The Swedish economy is developing strongly following the severe downturn. GDP was expected to grow relatively quickly over the coming years, and the labour market was expected to improve. Inflationary pressures are currently low, but are expected to increase as resource utilisation rises. I will now describe developments in the Swedish economy in a little more detail, and at the same time discuss new information received during the summer. 1  Somewhat simplified, one can say that a CDS is a contract where the buyer pays the seller a premium for the seller to take on the credit risk linked to an underlying asset, such as a bond. The premium then becomes a measure of the credit risk.

An increased credit risk means that it becomes more difficult and more expensive for the banks concerned to fund themselves on the credit markets, which can hold back lending. This also dampens the real economies in the countries concerned. (Figure: CDS premiums for the banks). Reduced concern, but still not normal In an attempt to assess the stability of the banking sector the Committee of European Banking Supervisors, CEBS, carried out stress tests on 91 European banks in July this year. The results of these stress tests have now been published. The assessment is that all but 7 banks have sufficient resilience to manage a worse scenario in the period 2010–2011. The CEBS has here assumed a weaker economic growth, higher interest rates and poorer stock market than in the European Commission’s forecasts, as well as losses linked to the banks’ holdings of European government bonds. The four major Swedish banks included in the survey managed all of the stress tests with a good margin. 2 The results of the stress tests have generally been well-received by the market. However, it should also be pointed out that there has been some criticism, which has concerned the CEBS’ assumptions not being sufficiently tough. Nevertheless, interest rate differentials towards Germany declined after the CEBS reported its results, as did the basis spreads and the CDS premiums for banks in the four countries concerned, although they have risen again in August and the levels remain higher than they were in the spring.
Strengthening financial market infrastructures is another important initiative underway to make the financial system more resilient and robust. In this regard, there are two important strands of work underway. First, there is strong momentum both in the United States and abroad to require that standardized OTC derivative products be cleared through central counterparties (CCPs) and that the information associated with all OTC derivatives trades be reported to trade repositories, with this information then being available to regulators around the world. Second, the Committee on Payment and Settlement Systems (CPSS) and the International Organization of Securities Commission (IOSCO) are undertaking a review of international standards for financial market infrastructures. This review will lead to a comprehensive set of  BIS Review 131/2010  7  recommendations as to what constitutes best practice with respect to the operations of financial market infrastructures. These recommendations will apply to a broad array of financial market infrastructures, including CCPs and trade repositories. The final report will be completed during the first half of 2011. The goal will be to have these standards endorsed by the Financial Stability Board and the G-20 leaders. With those endorsements, it should be possible to harden the recommendations into more substantial standards. In all of the reforms that we are implementing it is important that we pay close attention to the shadow banking system.

It is also my hope that by establishing a robust global regime, we can mitigate the incentives for national regulators and supervisors to impose local rules that make it hard for globally active institutions to manage their operations on a global basis, thereby undermining the global integration of markets that has supported economic globalization. Over the next 12 to 18 months, regulators will be particularly busy in implementing these reform efforts. Broad legal statutes now have to be turned into specific rules and regulations governing business practices, conduct and operations. Doing this well – in particular, in a way that is sufficiently informed, deep and broad – will be very important. Basel III and the  1  Governor Daniel K. Tarullo, Comments on “Regulating the Shadow Banking System”. Brookings Panel on Economic Activity, September 17, 2010. 8  BIS Review 131/2010  Dodd-Frank Act are important markers on this road, but it will always be a journey to a neverreached destination of perfection. Thank you for your kind attention. I would be happy to take a few questions. BIS Review 131/2010  9
– Analysis of the  size and depth of capital markets in the EU27”, New financial, September 2019  4/4  BIS central bankers' speeches

Out of that pain and misery emerged a consensus – a hard won consensus – that low and stable inflation was a prerequisite for economic prosperity. More recently, though, there have been some worrying signs that cracks may be appearing in that consensus. A sense that inflation is somehow yesterday’s war. That central banks should focus more on growth. That a period of higher inflation may even aid the recovery. This is dangerous talk. It sometimes feels like we’ve been here before. One of the mistakes made by policymakers in the late 1960s was to allow inflation to get out of control after nearly two decades of price  2  King (1997), “Inflation targeting 5 years on”, speech given at the London School of Economics. 3  King (1997), “Changes in UK monetary policy: Rules and discretion in practice”, Journal of Monetary Economics. 4  George (1999), Annual Cornwall Lecture. BIS central bankers’ speeches  3  stability. As Sir Alec Cairncross, who worked in a host of senior economic roles in the heart of the civil service during this period, put it “...governments in the last years of the 1960s …allowed inflation expectations to develop that proved increasingly difficult to extinguish” (Cairncross 1992). There is little doubt that policymakers of that time had a strong aversion to inflation, but they were complacent about the risks posed by further stimulus. It would be irresponsible to repeat the same mistakes again. How do we ensure that the lessons of yesteryear are not forgotten?
Today, we are in a much better state. We have reopened our borders and business travel has substantially resumed. Global firms are now once again able to build up the necessary staff capacity to meet their expanding business needs. Second, public discussions on growing the Singaporean Core, and some recent changes in work pass policies have also added to concerns about whether Singapore continues to be welcoming to foreigners. As I have said earlier, growing the Singaporean Core is not a zero-sum game with attracting the best of global talents. An internal MAS study shows that there is generally a high degree of complementarity between high-skilled employment pass holders and local professionals in the financial sector. In fact, staying open to global talent has been critical to the growth and success of our financial centre. Our financial sector will not be where it is if we had not been welcoming of talents from around the world. As we become an even more international and sophisticated financial centre pursuing cutting-edge developments in technology and sustainability, it is even more critical that we remain open. The recent changes in employment pass policies will not hinder firms from continuing to have access to the talents that they need for their growth in Singapore. There are no quotas on Employment Pass holders. The purpose of the new Employment Pass Complementary Assessment or COMPASS framework is not to reduce the intake of employment pass holders.

Not only did this reliance on short-term funding create the potential for a firm to fail in an extraordinarily rapid manner when faced with a loss of market confidence, but it also served as a channel through which the effects of those failures were widely propagated throughout the broader financial system. I will focus my brief remarks on describing the structural vulnerabilities associated with shortterm wholesale funding, laying the groundwork for our discussions at today’s workshop. As always, my remarks reflect my own views and not necessarily those of the Federal Reserve System. As this audience knows, in the two decades leading up to the financial crisis, the global financial system underwent a rapid transformation. During this period, there was a shift from bank-based financial intermediation to capital markets-based financial intermediation, and an increase in the scale and complexity of securitization activities. In the pre-crisis period, the growth of securitization was accompanied by an increasing reliance on short-term funds raised in wholesale markets to finance securities and activities essential to securitization. This ranged from the use of repo funding to finance inventories of securities held for market-making purposes to the issuance of asset-backed commercial paper by conduits created to acquire and hold securities. Both demand and supply factors drove the increased use of short-term wholesale finance. On the supply side, the growth of savings from corporations and institutional investors in need of deposit-like products in which to place their cash balances created a plentiful source of funds.