samchain/econo-pairs-v1 huggingface dataset:
Jon Cunliffe: Regulatory reform and returns in banking Speech by Sir Jon Cunliffe, Deputy Governor for Financial Stability of the Bank of England, at Chatham House, London, 20 October 2014. *  *  *  On 13 October 2008 – just over 6 years ago – the UK government injected nearly £ of public funds to stabilise Royal Bank Scotland and Lloyds Banking Group. Parts of both banking groups had started the year in a precarious position, with swollen, highly levered balance sheets and a reliance on short-term wholesale funding. By October, losses had left them dangerously undercapitalised. Absent a resolution regime for dealing with failing banks, and given the importance of these two banks to domestic lending, the government was left with no choice but to inject public funds, bailing out the banks’ creditors. In the intervening 6 years the landscape of banking has changed beyond recognition. Some of this is due to a very different approach to regulation and supervision. Some is due to a very different commercial environment. And most important, there has been a sea change in public attitudes towards banking and bankers. Bankers should not expect to be popular. But the outburst of public anger that accompanied the crisis and its very painful and protracted impact on the real economy – families and jobs – has not abated much. The latest polls put public trust in bankers at nearly the bottom of the class – only marginally above politicians.

BIS Review 72/2010  9  Figure 6 Interest rate differentials (*) (percentage) 14  14  12  12  10  10  8  8  6  6  4  4  2  2  0  0  -2  -2  07  08 Brazil Mexico  Chile Poland  09  10  Colombia Malaysia  Korean Rep.  (*) Difference between each economy's reference rate and the US Fed Funds rate. Sources: Bloomberg and Central Bank of Chile. Figure 7 Current account balance (percentage of GDP) 8  8  6  6  4  4  2  2  0  0  -2  -2  -4  -4  -6  -6  -8  -8  80  84  88  Emerging economies  92  96  00  Emerging Asia  04  08 LAC - 7 (*)  (*) Simple average for Argentina, Brazil, Chile, Colombia, Mexico, Peru and Venezuela. Source: WEO, April 2010. For 2009-2011, estimate and forecast. 10  BIS Review 72/2010  Figure 8 Latin America: Change in international reserves (billions of dollars) 150  150  125  125  100  100  75  75  50  50  25  25  0  0  -25  -25  -50  -50  80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 (f)  (f) Forecast.
Robert Ophèle: Micro economic analysis of companies Introductory speech by Mr Robert Ophèle, Second Deputy Governor of the Bank of France, at the Plenary Meeting of the European Committee of Central Balance Sheet Data Offices (ECCBSO), Paris, 18–19 October 2012. *  *  *  Mr President, Ladies and Gentlemen, It is a great pleasure for me to welcome you in our new conference center. I am delighted to receive so many distinguished participants to this meeting, coming from the same universe of statistical institutions or central banks – whether they are members of the Eurosystem or not – and sharing the same interest for micro economic analysis of companies. We are very happy indeed to organise this year’s ECCBSO regular meeting which will enable you to discuss in depth about the past achievements of your task forces and the prospects, drawing possibly some kind of action plans. Undoubtedly, we need to explore further a number of those issues where your Committee is fully and often very successfully involved. I am grateful that BDF can provide, in its turn, the opportunity to host this conference. As you know, Banque de France is one of the co-founders of the Committee and has always shown its commitment by actively contributing to these task forces.

Where development needs are identified through FIDE Forum’s screening process, it should be able to refer candidates to the existing director education programmes provided by ICLIF, or work with ICLIF to develop new ones to respond to an unmet need. To my mind, this clarity of role and purpose will significantly enhance the potential impact and influence of FIDE Forum and ICLIF, to the overall betterment of the industry. As members of FIDE Forum, directors have a critical role to play in setting its priorities and in driving future initiatives to ensure that FIDE Forum remains relevant and continues to add value. In this respect, members should be active in giving their views, including providing inputs to concept members, engage in propagating the common interest of the industry and enhancing the good image of the sector. Conclusion The Malaysian financial sector has taken important strides to strengthen boards, in particular through the ongoing education and increase in supply of top-quality directors. The success of ICLIF’s FIDE Programme and the industry-led initiatives by FIDE Forum in pushing frontiers in developing, sourcing and attracting board-level talent would very much depend on the collective efforts of all. It is from this perspective that the FIDE Forum should be commended for initiating this effort. I encourage the industry to continue to use FIDE Forum as a platform for promoting board-level talent management and through it, to build an effective partnership with ICLIF as the centre of excellence for directors’ education in the financial sector.
An example of this is Germany’s decision to transfer its banking supervision into its central bank. The relationship between the Central Bank and the Financial Supervisory Authority (FME) is among the issues that must be examined thoroughly in Iceland in the coming period. The arguments in favour of closer collaboration between the Central Bank and the FME touch on the previously mentioned shortcomings in the regulatory and supervisory framework. In order for a central bank to perform its role as lender of last resort, it must at all times have information that allows it to assess whether a financial institution in distress is faced illiquidity or insolvency. It must also have thorough knowledge of the available collateral. Moreover, it is important that the central bank have an overview of large exposures in the system as a whole and that it be able to assess the risk of contagion between financial institutions. This requires that the central bank have access to information similar to that possessed by financial supervisors. In the event that it is decided to let capital adequacy ratios vary with reference to credit and asset price cycles, it will be necessary to join the tools of financial supervisors with the macroeconomic overview of central banks. Furthermore, it is widely held that in small countries, where the external sector plays a key role, there is a stronger argument in favour of close co-operation or merger between these institutions than there is in larger economies.

Work is currently being done, both in Europe and globally, towards reforming the regulatory framework for international banking operations. Until the framework for those operations is more secure, however, the wisest course for Icelanders may be to proceed with caution and adopt tighter rules on cross-border financial activities than are set forth in the minimum requirements. A clear example of this is a restriction on the accumulation of deposits in foreign bank branches. The long-term need for such more stringent rules will be determined to a degree by Iceland’s future currency and exchange rate regime. Experience shows that maturity mismatches between banks’ assets and liabilities that are not backed up by a lender of last resort represent a substantial risk. The global financial crisis has revealed a variety of weaknesses in the regulatory framework and the supervision of the financial sector. On the whole, the quantity and quality of financial  2  BIS Review 136/2009  institutions’ capital was insufficient to provide the necessary shock absorption. In particular, there should have been more unpledged common equity. The risk assessment of assets and liabilities was distorted because it was based on historical data that did not assign sufficient weight to bad states of the world. Liquidity risk was vastly underestimated, and the procyclical tendencies within the financial system were not sufficiently offset by the regulatory and supervisory framework. On the contrary, it can be argued that the interplay of regulatory provisions and financial reporting rules based on mark-to-market exacerbated these tendencies.
While there is wide sympathy for our decisive action against market manipulation, we have been cautioned by some on the need not to be confused by herding behaviour. Others have challenged us to come up with hard evidence that manipulation existed, reminding us of the established academic theory of market manipulation, and urging us to examine carefully the history of the events leading to last August, collect data and conduct econometric research into them. While I agree that all these need to be done where possible, I must tell you that such advice reminded me of what Andrew Crockett, the General Manager of the BIS and Chairman of the Financial Stability Forum, once told me. He said that the economic theorists are those that attempt to look in a dark room to find a black cat. The economic historians are those that attempt to look in a dark room to find a black cat that is not there. And the econometricians, who conduct all those regression analyses from the data collected, are those that attempt to look in a dark room to find a black cat that is not there and say that they have found it. I certainly do not wish to be involved in that sort of thing. But there is surely one thing that ought to be done, if we are serious about the matter. Using the same analogy of the dark room and the black cat, why don’t we just light up the room and look?

Yet there is no equivalent of a World Trade Organisation to deal effectively with the problems that inevitably would spring up, even though the degree of complexity and time criticality of international finance far exceed that of international trade. There is, of course, the IMF, and the Bank for International Settlements (BIS). They perform useful roles respectively in providing assistance to individual economies in difficulty, and in setting international regulatory and supervisory standards, and they have done a good job in these areas. But, as very much part of the international financial architecture, they need to evolve to cope with the rapidly changing nature of international finance. They need to ensure that they are able to play the roles required of them in prudently managing the risks, and limiting the destabilising impact, of the increasing freedom of international finance. There is much catching up to do, and much international effort has been devoted to this task. But, presumably because of the difference of opinion on what exactly needs to be done, we now have a rather confusing picture of where all this effort might lead us to. There have been many new international forums created to look at the relevant issues and, together with the existing forums, everybody seem to be involved in this work - G3, G7, G10, G22, G26, APEC, EMEAP, etc., with multiples of working groups formed under each. More recently, there is the more authoritative Financial Stability Forum formed, in which the HKMA participates.
New, cost-effective solutions such as QR payments and “Tap-on-Phone”, which leverage on the already high penetration of smartphones in Malaysia, may be preferred over traditional POS terminals. Indeed, we are encouraged to see that industry players are starting to roll out interoperable solutions. Notably, these include several pilot initiatives ahead of the nationwide roll-out of PayNet’s Interoperable 1/4  BIS central bankers' speeches  QR payment solution. Such solution has the potential to become a game-changer by facilitating merchants to accept payments from customers of different participating banks and non-banks by using only a unified QR code. Beyond that, we should accelerate the digitisation of the value chain for both users and merchants. This could include digitising salary payments, and payments to suppliers, wholesalers and distributors. These developments would make it more compelling for consumers and businesses to maintain funds digitally, thereby providing a natural incentive to keep using and accepting e-payments. The second key area is on strengthening public confidence. Some segments of the population may still lack awareness and confidence in e-payments, despite fraud levels being relatively low in Malaysia. Some consumers are also concerned about overspending, as they are used to relying on cash withdrawals as a way to budget and control expenses. These are cognitive barriers that can be overcome with concerted efforts. Banks and non-banks alike should intensify efforts on awareness-building and education campaigns. These could focus on use cases that are central to day-to-day life, such as paying for fuel, groceries and F&B.

For example, there may arise situations in which the taxpayers in one country may be faced with the prospect of essentially bailing out the depositors of a branch in another country through their national deposit guarantee scheme. Incidentally, there is a recent example from my own country (although, technically, it concerns a bail-out under the investor compensation scheme rather than the deposit guarantee scheme). After a long and complicated investigation the Swedish Deposit Guarantee Board decided around two weeks ago to commence payments to a group of mostly Italian investors that were the unfortunate clients of the hair-raisingly ill-managed securities company CTA, which went bankrupt in 2004. Fortunately, CTA was not one of the bigger players – in fact I had never heard of it before it became an item for the Deposit Guarantee Board – and the fund will be able to cover the payments to the approximately 1 200 clients, amounting to around € million in total. However, if a larger institution had gone bust, the fund alone would not necessarily have been able bail out the investors. All deposit guarantee schemes – as well as investor compensation schemes – are typically underfunded and are not able to cope with failures in large cross-border financial institutions. In such events, additional government funding will be needed.
Singapore has been included in the JP Morgan and Lehman Brothers global bond indices. Our challenge now is to sustain the growth in the local debt market. We need to work with market participants to broaden the debt markets’ investor base and improve swap market liquidity. But our most difficult problem is that our starting premise has yet to materialise. We had envisaged that as the region recovered, corporates and governments would again need funding, and this time their debt funding would be in the form of tradable paper rather than bank loans. This has not happened … yet. Wealth management Wealth management has been our most successful growth area. Since 1998, Singapore’s total assets under management have doubled, no mean feat in this climate. Singapore has overtaken Hong Kong in terms of discretionary assets under management. More players, ranging from large institutional fund managers to boutiques, have set up shop in Singapore. The local fund management community is now more diverse and covers a wider universe of investment styles, geographic foci and asset classes. Singapore as a financial centre In aggregate, we have made promising headway in a few fields, but Singapore still has not set itself apart decisively from other Asian financial centres like Hong Kong and Sydney. Southeast Asia’s predicament has a lot to do with this. In the long term, we have to rely on the region recovering its stability and vitality. But meanwhile we must do our best to differentiate ourselves.

MAS has developed sectoral leading indicators and a new macroeconomic model of Singapore, which help us to better anticipate events that could impact our economy, and give us time to work out appropriate policy responses. Of course, we must not forget the important deterrent role played by our strong reserves. We have to manage the reserves under our charge wisely, to deliver good long-term risk-adjusted rates of return while providing for unexpected demands on our liquidity. Hence, we have also strengthened our investment and risk management capabilities to diversify into different instruments and markets. V.  Priorities moving forward  Going forward, I would sum up our key priorities under five thrusts. Managing within a riskier environment First, we must manage within a riskier environment. The financial sector we now supervise is more unforgiving. Volatile markets and poor economic conditions have heightened the risks financial institutions face. Competition has put pressure on margins, inducing financial institutions to take on more risk to maintain their earnings to satisfy increasingly demanding investors. With liberalisation, our financial sector is no longer sheltered from these risks. Our response is not to avoid these risks but to learn to manage them. We have to continue enhancing our risk-based supervisory capabilities. The foundations are in place. We need to collect better information and use it more effectively to produce accurate risk profiles of the institutions we supervise. These risk profiles, constantly updated, will help MAS to detect problems early and take prompt corrective action.
The need for credibility may therefore in itself indicate that cyclical considerations should only very seldom lead to discretionary deviations from the main rule. Automatic stabilisers will still have an effect. I believe that our politicians are aware of this risk. In the National Budget for 2002, the budget balance was cyclically adjusted by NOK 5.1 billion, which shows that we are experiencing a period of strong expansion. The plans nevertheless called for the use of petroleum revenues in 2002 that was identical to the expected real return on the Petroleum Fund at the beginning of the fiscal year. Hence, it is only via automatic stabilisers that fiscal policy will be adapted to the cyclical situation this year. I interpret this to mean that the threshold for departing from the main rule is high. 10  BIS Review 7/2002  Structural effects on the Norwegian economy As may be inferred from the presentation so far, it is monetary policy that shall address the second challenge: preventing the increased use of petroleum revenues from resulting in nominal instability. Despite many uncertainties, I do not believe that there are grounds for serious concern with regard to monetary policy’s ability to deliver nominal stability over time, at least as long as fiscal policy is stable and predictable. However, the interest rate level will naturally have to be adapted.

The budget for 2002 adhered to these guidelines. The implementation of monetary policy The inflation target is set at 2½ per cent. In the implementation of monetary policy, we aim at achieving this objective. The interest rate affects inflation through a number of channels. An increase in the interest rate will normally contribute to reducing inflation by curbing demand for goods and services and by strengthening the krone exchange rate against other currencies. A lower interest rate has the opposite effect. Generally, the effects of an interest rate change depend on the situation prevailing at the time and on how the market perceives the interest rate change in each case. The effects may also vary over time. Monetary policy influences the economy with considerable lags. Analyses performed by Norges Bank indicate that a substantial share of the effects on inflation occurs within two years. Two years is thus a reasonable time horizon for achieving the inflation target of 2½ per cent. The regulation says that in general, the direct effects on consumer prices of changes in taxes, excise duties and extraordinary temporary disturbances shall not be taken into account. However, knowledge of such disturbances two years ahead will be the exception rather than the rule. Normally, there will be a correlation between the projections of overall inflation two years ahead and such adjusted projections. However, an adjusted price index reflects where we are today in relation to the target in two years.
At the same time, there is great uncertainty surrounding fiscal policy as there is a political deadlock between the Democrats and the Republicans in Congress that may remain after the presidential election in 2012. The uncertainty has caused analysts to talk about the US economy facing a fiscal cliff next year. The concern applies on the one had to whether earlier income tax cuts and reductions in payroll taxes will be extended beyond the end of the year, and on the other hand is linked to the automatic expenditure cuts that will come into force at the turn of the year unless Congress can agree on long-term sustainable budget consolidation. All in all, these automatic tax increases and cuts in public expenditure entail a tightening during 2013 of 3–4 per cent of GDP. A further element of uncertainty is the result of the presidential election in November. If the results of the election are inconclusive and no party gains a clear majority, there is a major risk that the political deadlock will persist. The lack of credible budget solutions at present, and the low confidence in the political system’s ability to deal with the fiscal policy challenge, could led to companies and households beginning to act with greater caution. This would subdue growth in the world economy. We have given consideration to these risks in our forecast, but it is of course possible that the situation will be more problematic than we have assumed. Realistic to believe in an orderly resolution of the euro crisis?

Mugur Isărescu: Hard landing unlikely for Romania Interview with Dr Mugur Isărescu, Governor of the National Bank of Romania, by Mediafax news agency, Bucharest, 8 September 2008. *  *  *  Mr. Governor, foreign analysts have placed Romania along with four other states – Lithuania, Latvia, Estonia and Bulgaria – in a group of countries heading to a hard landing. In fact the economies of Estonia and Latvia have contracted sharply, with growth plunging from levels of around 10 percent into negative territory; inflation has reached two-digit levels and the external deficit exceeded 15 percent of gross domestic product. Is it possible for Romania to witness similar negative growth dynamics? Is it fair to include Romania in that group? Reading what those foreign analysts said, I have hardly found a solid rationale that would justify Romania's being placed within the hard-landing risk zone. On the contrary. Turning now to comments, I will underline that there are some similarities among the countries in this group: GDP per capita is below the EU average, they all have registered high growth rates in the catching-up process. However, there are also fundamental differences, among which the most important in my view is the monetary policy mechanism. Three of the four countries mentioned in the group have currency boards in place, and the fourth, i.e. Latvia, has a mechanism close to a currency board. Of course, currency board has its clear benefits.