samchain/econo-pairs-v1 huggingface dataset:
Telematics,as this approach is called, enables the incorporation of personalised information distinct to the policyholder in setting insurance premium prices and rewards those who continuously maintain good driving standards – a winwin situation for both the insurers who mitigate their underwriting risk and consumers who benefit from lower premiums. Technology has also advanced to a level where machines’ capabilities extend beyond simple tasks, but also able to carry out complicated tasks by professionals more quickly and efficiently. A bank in the US, for example, has created a machine-learning programme to sieve through and review legal contracts in mere seconds, saving 360,000 of labour hours which are better spent on more productive tasks. It is an ideal worker – having a low margin for error which minimises the occurrence of costly mistakes, and better yet, never gets ill or asks for leave. Of course, 1/5  BIS central bankers' speeches  investments in technology may be expensive and returns may not be immediate. It is, nevertheless, not a choice and it is crucial to start early. Not innovating along with the latest technology should not only be seen as lost opportunities, but also lead to risk of your business being rendered obsolete. Business transactions and financial services are becoming more digitised and reliant on the internet. Alongside this, the extent of technology risks and the level of sophistication of cyberattacks are rapidly expanding. There is a need for risk managers to be quick in identifying and responding to cyber risks.

The 2008 subprime crisis is a textbook example of how backward-looking data is not a good indicator for the future economic environment. Hence, organisations need to be pragmatic and shift towards more forward-looking and proactive risk identification, assessment and management. In a recent financial industry survey conducted by the Bank to gauge the top operational risks among financial institutions, it is evident that most financial institutions are still focused only on “typical” risks such as card fraud and operational errors, rather than proactively anticipating and preparing against emerging risks. This has to change. In this regard, the Bank highly encourages pre-emptive and forward-looking risk management practices such as scenario analysis to anticipate the potential impact of future threats to an organisation and provide sufficient time for remedial actions to be taken. Incorporating culture into risk management Let me now move on to another element that a good risk manager cannot ignore, which is the importance of incorporating culture into enterprise risk management. At the heart of every corporate scandal is the failure of the people at different levels of the institution to uphold the highest standards of ethical behaviour and integrity. This is the reason why organisations need to do more than just comply with rules and regulations. The accounting scandal at a major Japanese conglomerate recently, illustrates this point. The company was once seen as exemplary in corporate governance. Such was its reputation that it frequently appeared as a case study in books on governance.
The social partners have actively contributed to this development and the results of the reforms have been good: Growth has been high and real wages have risen, despite the moderate increases in nominal wages. It is of course extremely important that this positive development can continue over the coming years. Almost the entire economy is covered by a central wage agreement period that comes to an end in mid-2007. The wage bargaining rounds in 2007 will be very widespread. The economic conditions prior to the coming bargaining rounds are good and there is reason to believe that wage formation will be able to function efficiently. However, we will of course follow the bargaining rounds very closely, as we always do. I would like to emphasise that the social partners can sign agreements based on the Riksbank’s inflation target standing firm. Judging from the surveys we make of inflation expectations, monetary policy in this respect has a very high level of credibility. 1  See Heikensten, L, “The Riksbank’s inflation target – clarifications and evaluation”, Sveriges Riksbank Quarterly Review 1, 1999. BIS Review 96/2006  3  It is fairly clear that the labour market is facing many challenges and changes. This has been seen in particular from the fact that developments in the labour market have long been weak, despite several years of good growth and historically low interest rates. The poor growth in employment thus does not appear to be primarily the result of weak demand.

So there are sound economic arguments for an inflation target that is not lower than 2 per cent. To sum up, it is these considerations I have in my mind when I talk about the importance of keeping our eye on the ball. Basically, it is a question of constantly being very clear about the guiding role of the inflation target in the design of monetary policy. The lower bound of the repo rate is less than zero Regarding negative interest rates, I presented my own view on the matter in a speech around this time last year. 6 I think that the difficulties with negative rates are not so much a question of purely economic aspects, but rather of what is feasible according to social conventions and possible to create understanding for. For example, the biggest problem is probably not the one that is commonly highlighted, namely that the general public would choose to empty their bank accounts and only hold cash, as soon as the interest rate is negative. Holding savings in cash is, when it comes down to it, both troublesome and costly and given that most people in Sweden have started to abandon cash, it is not something that would seem particularly natural. The pain threshold here is probably relatively high, from a purely economic perspective.
Under both the LA and EA scenarios, climate change has broadly been brought under control by the end of the 30 year period. By contrast, with no additional action the impacts will persist well beyond the 30 years of our scenario – incurring substantial economic costs not captured in these estimates. [11] Even sticking within the 30 year bounds of the scenario – and focusing on financial sector impacts – the NAA scenario is pretty grim. Projected impairment rates for banks are up 50% compared with normal levels. And whereas the ‘transition’ scenarios offer clear opportunities for banks to increase their profits by investing the transition, the ‘no action’ scenario offered no such opportunities. Instead the world gets poorer and more uncertain for all sectors, particularly those directly exposed to physical risks. The ‘no action’ scenario is particularly unpleasant for life and general insurers – even sticking to the 30 year window, their losses in this scenario were worse than in the transition. For instance UK and international general insurers, respectively, projected a rise in average annualised losses of around 50% and 70% by the end of the NAA scenario. It’s worth emphasising that these costs would be mostly passed on to consumers through higher premiums. Ultimately, in a ‘no action’ scenario, we would see a reduction in access to lending and insurance for so-called ‘climate vulnerable’ sectors and households. To give an example of what this means, homes at risk of flooding would likely become prohibitively expensive to insure or borrow against.

Today, we find ourselves at the centre of a digital revolution, perhaps the most significant breakthrough in financial services of our time. Change is upon us. The tsunami of digital technology will forever change our banking landscape. Yet, like Newton’s observation centuries ago, the path of embracing change is fraught with resistance – or, as Newton elegantly called it, inertia. In the words of the renowned scientist, this power of resisting is one in which every object endeavours to “preserve its present state”. At its core is a realisation that, individually and institutionally, we are not inherently calibrated for change. In fact, we instinctively resist change, whether intentionally or passively. Change doesn’t feel natural, even when it is positive or unavoidable. While the expectation of disruption is not new to us, the greater issue of interest to banking leaders today relates to our readiness in navigating changes. We must learn to break down inertia within our institutions. I will elaborate. Let me contextualise this subject from two sources of corporate inertia, which I think are critical to the future of the banking system: i. Human capital investment; and ii. Forward looking leadership. Human capital investment requires a new model: Learning that adapts and is continuous The approach towards talent development and career learning is rapidly shifting. Traditional learning systems are no longer sufficient. Data from a recent study revealed that the “ability to learn and progress” is the principal driver of a company’s employment brand among Millennials today.
The baseline assessment would include the environmental risk of a bank’s lending and other businesses. In this Phase, the HKMA will need to work with the industry to develop a ___ (a) common framework, drawing on the latest international standards and best practices. The HKMA will also, in collaboration with the relevant international bodies, such as the International Finance Corporation (IFC), provide capacity building and training programmes to banks in Hong Kong for better understanding of the green principles and methodology in undertaking the baseline assessment. Phase II – once we have completed the baseline assessment of banks in Hong Kong in Phase I, the HKMA will engage the industry and other relevant stakeholders in a 1/3  BIS central bankers' speeches  (b) consultation on the supervisory expectation or requirement on Green and Sustainable Banking going forward. The key objective of this Phase is to set tangible deliverables for Hong Kong’s banking industry to become “greener” and “more sustainable”. Phase III – once the deliverables have been set, the next Phase is Implementation, (c) Monitoring and Evaluation. The success of this Phase depends crucially on appropriate measurement of the “greenness” of the banks and the timely disclosure of progress or the lack of it. 4. With the support of the banking industry, I expect Phase I could be completed within around 12 months’ time from now. Responsible Investment 5. In the past few years, there has been a significant shift in mind-set amongst asset owners on Green and ESG investments.

6. Instead of setting a quantitative threshold or target for Green investments, we believe our present approach is a more pragmatic and likely to be a more effective way of promoting Green and ESG investments. We will continue to work with like-minded investors to promote focus on good ESG practices in managing their investments. In the interest of transparency, the HKMA will also consider an appropriate framework for disclosing the Exchange Fund’s Green and ESG investment efforts without arousing market sensitivity in the process. Capacity Building in Green Finance: Centre for Green Finance (CGF) 7. Hong Kong is already one of the major green finance hubs in the world. Last year a total of $ billion of green bonds were issued and arranged in Hong Kong. Earlier this morning, the HKMA, as the implementation agent of the $ billion Government Green Bond Programme, announced that a roadshow will be held for a potential green bond offering. Under the Outline Development Plan for the Guangdong-Hong Kong-Macao Greater Bay 2/3  BIS central bankers' speeches  Area, Hong Kong is the designated green finance centre in the Area. With the launch of the Green and Sustainable Banking initiative and the rapid growth of the Green Bond market, Hong Kong possesses enormous potential to become a leading Green Finance Hub in the world. However, in pursuing our aspirations, there is a pressing need to upgrade our capacity and expertise in green finance in the financial industry. 8.
The CRR/CRD started out after a global framework had been agreed in Basel, and this EU level framework was in turn implemented at national level in the Member States. In my day-to-day work I deal with financial stability issues on different levels if one will; As Chair of the Basel Committee for Banking Supervision the scope is global, while as Governor of the Swedish Central Bank I have a national perspective on financial stability although, admittedly, the international agenda and developments play a key role there, too. Being Chair of the Advisory Technical Committee of the ESRB and a member of its decision making body, the General Board, of course provides an EU-level perspective on macroprudential policy and systemic risk. These levels or perspectives are in my view becoming increasingly intertwined, especially after the financial crisis and the lessons learned there. Much of the agenda is indeed set at the global level first. And the way financial markets function today, this is also quite natural. We need at least minimum requirements at the global level. But we also need to strike a balance between common rules of the game in terms of minimum requirements and the need for national flexibility, not least in the EU, which to put it mildly is far from a homogenous group of countries. In fact, the economic and financial conditions differ substantially between the Member States.

BIS Review 95/1998  -2-  Clearly, what happens in the EU matters to Hong Kong. What therefore will be the impact of the euro on the participating countries? There should certainly be a number of economic benefits, including in particular: • a huge increase in transparency from the single currency which will make it easier to compare prices across national frontiers. This will boost competition, bring down costs and prices, and improve efficiency; • a reduction in transaction costs, in particular from the elimination of foreign exchange commissions. This will encourage trade and cross-border investment flows; • lower interest rates in individual countries from the elimination from the foreign exchange risk premium. This will reduce financing costs and stimulate investment and output; • the development of larger and more liquid debt and stock markets across the euro zone. This will create a vast new pool of capital for companies, thus giving a further stimulus to investment; • tighter fiscal discipline on the member countries under the Stability and Growth Pact and monetary discipline exercised by the new European Central Bank. Both these should ease inflationary expectations and produce a more stable financial environment for the euro zone. In summary, the single currency should be able to deliver higher economic growth and therefore increased demand for imports by the euro countries. As one of the EU’s major trading partners, this should benefit Hong Kong.
BIS Review 143/2009  5  Figure 13: Policy Rates in Emerging Figure 14: Change in Policy Rates Markets * between September 2008 and October 2009 in Emerging Markets* September 2008-October 2009 (Basis Points) 20  0  Emerging Markets Turkey  -200  17  -400  14  -600  11  -800  8  -1000  * As of 19 October 2009. Source: Bloomberg, CBRT calculations. Source: Bloomberg, CBRT. Rus sia  Hung ary  Romania  Indon esi a  Mexico Thailand Poland  India  * As of 19 October 2009. Brazil  Turkey Chi le Columbia  Peru South Africa  -1200  0709  0109  0708  0108  0707  0107  0706  0106  5  Data releases on inflation and economic activity since the inception of the rate cutting cycle have vindicated these preemptive monetary policy decisions, and thereby strengthened the impact of policy decisions on expectations, gradually bringing government bond yields to historically low levels on the back of improvement in risk premiums (Figure 15). CBRT’s effective communication policy and management of expectations, along with market perceptions indicating that the Medium Term Program (MTP) released in September is consistent and realistic, played a key role in bringing down government bond yields. This downward trend particularly accelerated after providing a medium-term policy perspective in the July Inflation Report.

0112  1011  0711  0411  0111  1010  0710  0410  0110  1009  0709  0409  0109  1008  0708  0408  0108  1007  0707  0407  0107  1006  0706  * CBRT Business Tendency Survey results from the second survey period. 1009  3.0  4  *Calculated using linear interpolation of several maturity yields in the CBRT Expectations Survey. Yields are from the second survey period. Source: CBRT. 4  BIS Review 143/2009  The sharp fall in inflation observed over the past year is not peculiar to Turkey. Inflation rates have plummeted all over the world since the peak of the crisis due to downward pressures arising from demand and cost conditions. Although there has been a slight increase in rates with the removal of the high base effect of the previous year in the third quarter (Figure 11), core inflation data indicate that the main trend of inflation in both developed and emerging markets is downward (Figure 12). Figure 11: CPI in Developed and Emerging Figure 12: Core CPI in Developed and Markets Emerging Markets (Annual Percentage Change)  (Annual Percentage Change)  5  Developed Markets  8  4  Emerging Markets (rhs)  7  4  Developed Markets Emerging Markets  6  3  5  2  3  4  Source: Bloomberg, CBRT. 2.
Many of the originators were forced into bankruptcy at the start of the year and in the last few weeks we have seen Bear Stearns’ announcement that two of its funds have lost all or nearly all of their investors’ money. I suspect the speed and scale of the changes were outside most stress test simulations. And while the most dramatic changes may have happened there will now be a long period as the implications work through the ratings of other derivatives and the full range of instruments are marked to market. A related lesson is about liquidity in new markets. The worry has been that at times of stress, liquidity would dry up and it would be impossible to trade out of positions. That would not just lock firms into losses but would disrupt strategies which require continuous dynamic hedging – for example, strategies such as constant proportion portfolio insurance (CPPI). Again that has been a feature of recent weeks. It has been widely reported that a couple of the lenders to the BSAM funds put their collateral on the market but were not able to sell as much as they wanted. That is connected to the fourth lesson, the vulnerability of valuations in sophisticated derivatives. These are not widely traded so valuations are usually based not on market prices but on models which draw in turn on correlations established over the recent past. This is a fundamental and unavoidable feature of new products and markets.

The credit cycle and monetary policy The knock on effects of defaults in the US sub prime market and the impact of big investors on asset prices are factors we need to assess not just in trying to understand the financial sector and the stresses it faces but in gauging the state of the economy more widely. The story of the sub prime market illustrates a wider point. In traditional banking markets in the past there has been an observable tendency for banks to overshoot both in offering credit at the top of the cycle and retrenching afterwards. That feeds through into asset prices and can have an impact on the wider economy. Despite the sophistication of the new capital markets, a very traditional cycle seems to have been alive and kicking in sub prime. 3  The definition of the official sector in the US Treasury survey also includes public bodies such as oil stabilisation funds. 4  See ‘International capital flows and US interest rates’, NBER working paper 12560, October 2006. 6  BIS Review 84/2007  A similar story could be told about the credit card and other unsecured lending over the last few years. The growth rate rose in the late 90s until defaults began to build up over the last 2 years and the banks and other lenders tightened up terms and conditions sharply (Chart 13). The path of commercial property prices in recent years suggests the same has been happening there (Chart 14).
More too is being done to boost linkages between our markets and economies. We have to pool liquidity across our markets, so as to add depth to the Asian capital market. An example is how the Malaysian stock exchange, Bursa Malaysia, the Singapore Exchange and the Stock Exchange of Thailand recently launched an ASEAN Trading Link. We are also cooperating to encourage financing for infrastructure projects in the region. The ASEAN Infrastructure Fund (AIF), an initiative that was led by Malaysia, is a good example. It will pool resources, knowledge and experience among ASEAN governments and the Asian Development Bank (ADB) for loans to sovereign or sovereign-guaranteed infrastructure projects. The Fund will also issue bonds, so as to bring in private sector and institutional investors. Another example of such cooperation in the region is the Credit Guarantee and Investment Facility (CGIF) amongst the ASEAN+3 countries, which aims to help companies in ASEAN+3 countries raise long term financing for infrastructure investment by providing the governments’ guarantees on their corporate bonds, thereby reducing risk for bond-holders. Projects such as Iskandar Malaysia are also a prime example of how intra-regional investments can be encouraged, and how countries in our region can develop competitive strengths jointly. •  Iskandar Malaysia’s performance has been impressive – poised to exceed its targeted RM100 billion investment mark by the end of this year.

•  I am glad there is good progress on the joint venture by Temasek Holdings and Khazanah Nasional, Pulau Indah Ventures Sdn Bhd to co-develop two separate sites in Medini. •  Other significant projects include a $ billion integrated eco-friendly tech-park by Ascendas and Malaysia’s UEM Land Berhad in Nusajaya (one of the five flagship  4  BIS central bankers’ speeches  zones in Iskandar). Once completed, the park will accommodate a range of industries including electronics and precision engineering. •  Just in the last month, we have seen other significant investment commitments in Iskandar reported by Singapore companies. Iskandar Malaysia will enhance the complementary space between our two economies. It is a win-win. To ensure continued progress in Iskandar, Singapore and Malaysia will continue to take steps to improve connectivity, cross-border trade facilitation, and immigration processes. Conclusion I would like to conclude by emphasising once again that I am basically optimistic about the prospects in our bilateral and regional cooperation. We face many challenges in this post-Global Financial Crisis era. But the opportunities for us in Asia are intact, and our ability to cooperate with each other to achieve our full potential as a region is an asset for all our countries. BIS central bankers’ speeches  5