samchain/econo-pairs-v1 huggingface dataset:
In the past, as we all know, reversals of capital have trigged serious debt defaults, banking distress, and currency crises. So, with the nature of risk becoming more external, the abilities of central banks to respond effectively to the new challenge based on domestic measures will be limited. This calls for a reconsideration of policy coordination, both in the context of within-country coordination, and cross-country coordination. The third implication from the global crisis is the heightened expectation and trust that the public now has on central banks, as guardian of stability, to do its utmost to avoid financial crisis, and to do it professionally and independently. In the west, the current crisis has diminished public trust on the roles of government and financial institutions in safeguarding and upholding public interest. To this end, central bank independence is seen as an  BIS Review 138/2010  1  important pre-condition for ensuring safety, continuity, and stability. This is a challenge that central banks will need to recognize in performing their duties. So, given this backdrop, challenges facing central banks going forward will be more demanding. And to meet these challenges, central banks will need to be thinking clearly on at least two issues. The first is the right policy framework to respond to the challenge.

As I noted earlier, effectiveness of the domestic policy response tends to weaken when the challenge is of a global nature. A case in point is the current cycle of capital flows which, in essence, is a global phenomenon driven by exceptionally low interest rates in the major economies. Hence, policy response calibrated with domestic orientation may be of limited use if the problems at the source remain. This means that the thinking on policy needs to broaden to explore possible benefits of a closer coordination of policies between countries, especially when central banks face similar challenges of a global nature like capital flows. Such coordination will elevate central banks’ policy-making to a new level, commensurate with the new challenge posed by the post-crisis globalisation. 2  BIS Review 138/2010
We should be able to withstand the shocks from a reversal of the capital flows and economic adjustments as long as we remain level-headed. We are endowed with a strategic position with the “Hinterland of Mainland China and Interface with the World” under the “One Country, Two Systems” principle. It is true the Chinese economy is experiencing a slowdown, but this reflects a structural shift from unbalanced growth at a breakneck speed to a high-to-moderate growth rate on a more sustainable basis. Indeed, sustainable and healthy development will become the “new normal” in China if it can reap the “reform dividends” by remaining committed to reform and liberalisation, and moving towards a modern and market-based economy. 20. Against such a backdrop, there is vast potential for Hong Kong’s intermediary role for trade and commerce as well as fund flows between China and the world. To fortify our role, we must, with support from the central government, foster more links with the Mainland. In the financial sector, we should strengthen our soft power by attracting, nurturing and retaining professionals. We should also encourage financial innovation while keeping a firm grip on risk management. In short, we must trump other financial centres in every way to continue our position as the most vibrant and competitive international financial centre in Asia. Thank you. 4  BIS central bankers’ speeches  Chart 1: Comparison of US economic recovery strength  * Excluding the 2001, 1970, 1974 and 1980 double-dip recessions. Chart 2.

Decline in US potential GDP  BIS central bankers’ speeches  5
It is to set short-term interest rates with the consistent aim of hitting the Government's symmetrical 2½% inflation target (on a precisely defined measure of retail price inflation - RPIX). Now the reason we've been set that task is not - as some people imagine - because either we or the Government think that consistently low inflation is the be all and end all of economic life. It is because we've learned from long experience that consistently low inflation is a necessary  BIS Review 19/2002  1  (though not in itself sufficient) condition for the sustained growth of output of the economy as a whole, for high levels of employment, and for rising living standards, which are, of course, more fundamentally the things that we are all seeking to achieve. Carrying out our task is not as straightforward as it sounds because there is no simple, direct, link between short-term interest rates - the only instrument we have - and the rate of inflation. Interest rates essentially affect the demand side of the economy. They don't directly influence the supply side, which depends upon a whole host of structural characteristics which are largely beyond the direct reach of monetary policy. What we have to do in managing short-term interest rates is to keep overall demand growing broadly in line with the underlying - sustainable - supply-side capacity of the economy as a whole to meet that demand.

The wealth management connect will enable Mainland residents to directly invest in offshore wealth management products for the first time. For fund companies, there will be opportunities in product origination by developing products in Hong Kong to tap into the Mainland investor base. Banks can base their sale and distribution operations in Hong Kong to reach out to your Mainland customers. Asset management and treasury operations will also benefit. We are working out the implementation details with the Mainland authorities and I hope to be able to share more details with you soon. Closing 18. To summarise my message today, we see before us the beginning of a huge wave of inflows going into Mainland China’s capital markets, propelled by index inclusion and increasing openness of the markets. And the best and safest spot to hitch a ride of the wave is via Hong Kong and the Connect schemes. 19. Hong Kong’s fundamental strengths as one of the best places to do financial transactions and manage assets are well in place. Capital flows freely into and out of the territory as guaranteed by Article 112 of the Basic Law. The Linked Exchange Rate System, 3/4  BIS central bankers' speeches  underpinned by $ billion foreign exchange reserve, continues to anchor our monetary and financial stability, as it has for the past 36 years. The resource and expertise of the biggest global and Mainland banks in the region are concentrated in Hong Kong.
While the rapid emergence of the "new economy" bubble in 1999 and early 2000, followed by a series of sharp corrections, illustrated once again the potential of modern financial markets, e.g. to finance technological innovation, it also demonstrated their tendency to over-react, moving from excessive optimism to disproportionate pessimism, with the ensuing negative consequences for the behaviour of firms and households. We should be very attentive to these boom-bust episodes on financial asset markets, since they can affect the monetary and financial stability of the world economy. I would like to discuss two issues here: -  First, some factors encouraging excessively homogeneous market behaviour may hinder a smooth and efficient functioning of the markets, and  -  Second, ways of fostering more diverse behaviour on the markets should be considered. 4  BIS Review 49/2001  2.1  Some factors encouraging excessively homogeneous market behaviour may hinder a smooth and efficient functioning of the markets  Financial asset prices fluctuate widely and sometimes deviate from economic fundamentals for long periods of time. Several factors are in play when this happens. I shall give a few examples. -  Some market participants have become more inclined to engage in "short-termism", that is, they are too preoccupied with their short-term results. This trend might result, in particular, from growing pressure to yield immediate financial results that are not necessarily sustainable. -  Mimetic behaviour is by no means a new phenomenon on financial markets.

Muhammad bin Ibrahim: Towards proportionality in practice – financial inclusion and implementation of global standards Opening remarks by Mr Muhammad bin Ibrahim, Deputy Governor of the Central Bank of Malaysia (Bank Negara Malaysia), at the Global Symposium on Proportionality in Practice, Kuala Lumpur, 28 May 2015. *  *  *  Ladies and gentlemen, thank you for the opportunity to speak today at the opening of the Global Symposium, with the theme “Towards Proportionality in Practice: Financial Inclusion & Implementation of Global Standards”. Financial inclusion has captured the attention of many decision makers around the globe. We can confidently say that we have been successful in educating the world on the importance of ensuring access and usage of quality financial services by all segments of society. I think it has dawn to the power that be that financial inclusion empowers low income households and SMEs to improve their livelihood and because financial inclusion provides equal opportunities (and hopefully, it appropriately designed, equal outcomes), it also enables the under served to save in a secure manner, invest in productive activities and protect against unforeseen shocks. Financial inclusion, based on empirical evidence also reduces inequality 1, which in turn supports inclusive and sustainable growth, by allowing the poor to stay healthy, stay out of poverty, pay for education and accumulate human capital 2. It is, a very worthwhile agenda to pursue.
Fifth, I would like to encourage the Albanian and international media to uphold the good tradition of accurate and real-time transmission of economic and financial developments in Albania, including the activity of the Bank of Albania and the financial sector, which occupy a significant place. Last but not least, I would like the Albanian public to continue to be discreet and have full confidence in the financial architecture we have built. We commend its added prudence, which is reflected in its propensity to increase savings. Therefore, household balance sheets remain positive, an indicator that sends positive signals for a potentially growing consumption in the near and distant future. I take this opportunity to reiterate that optimism shapes our present and our future. The time has come for the consumers’ sentiment to start its take off. This would create the desired chain reaction for accelerating money velocity and circulation of goods in the economy, making the economy recover to its pre-crisis parameters. On my behalf and on behalf of the Bank of Albania, I would like to thank the Bank of Italy and the Bank of France for the assistance and partnership during the twinning project. At the completion of this project, the Bank of Albania has upgraded the organisational and operational framework of its main departments and has approached to its European counterparties. 6  BIS central bankers’ speeches

5 In the UK, the Financial Services Compensation Scheme guarantees retail bank deposits up to £ 6 On the eve of the financial crisis HBOS, Lloyds and RBS held over £ billion of sight deposits from UK households, and provided close to half of the UK’s personal current accounts. 7 As the then-Governor Mervyn King said at the time “The actions that were taken were not designed to save the banks as such, but to protect the rest of the economy from the banks.” 4  All speeches are available online at www.bankofengland.co.uk/news/speeches  4  60% of payments were made in cash, by 2018 this had fallen to 28%, and has been predicted to drop to 9% of payments by 2028.8 [See chart 2]. Technology, alongside changes to domestic and European regulations designed to foster competition and innovation, is also enabling a new set of players, in addition to banks and card companies, to provide transaction related services. Some of these seek to replace banks or card companies in performing operations in existing payment systems while others seek to add new services to those operations. These developments are about improving the efficiency and functionality of transacting electronically in commercial bank money. But there is also a new wave of technological development that enables the transactional use not of central or commercial bank money but rather a new form of asset, so called ‘crypto-assets’ - cryptographic digital tokens, recorded in distributed ledgers and held in electronic safety deposit boxes called ‘wallets’.
There will now be a  4  BIS central bankers’ speeches  period of opportunity for the politicians of Europe to get on with making the changes that would really make a long-term difference, such as improving competitiveness in the countries of southern Europe. To summarise my assessment of markets at this point I would no longer say that they are healing. Rather, markets are scarring over – adapting and evolving to the new environment. No one is quite sure where the process will end, but the industry has a job to do, including investing large sums of money here and now. And in some fashion, reflecting the enhanced perceptions of risk, that will continue. Given what happened in financial markets, it is no surprise that there are policy initiatives on financial market regulation everywhere one chooses to look: Dodd-Frank in the US; EMIR, Solvency II and the Crisis Management Directive in the EU; the Independent Commission on Banking (ICB) proposals in the UK; the new Basel 3 rules on capital and liquidity globally (CRD IV in Europe), and numerous initiatives under the auspices of the Financial Stability Board including defining the key attributes for effective resolution regimes. The full list of new rules is much, much longer of course. Despite the variety of authorities involved, I believe there is a common thread behind the policy reactions. Many of the changes have been prompted by perceived excesses in much of the financial sector.

A resilient and innovative banking system will support the efficient allocation of capital and therefore technical progress and growth. Financial markets are fundamentally about risk-taking: credit risk, liquidity risk and market risk are basic components of even the safest and soundest banking systems. As a society, we need risk taking as part of the process of allocating capital to competing ends. And people who take risks – at least with their own money or their own careers – need to be rewarded (appropriately!) for that risk or they won’t take it. So we are not in a world where, as a matter of policy, we want to eliminate financial risk. The key is for financial risks to be properly appraised, priced, managed and provisioned. And we should discourage some of the cross-subsidisation of different types of risk taking if we want risk capital to be appropriately allocated. That includes any perceived public subsidy, which is what the ICB recommendations are about. We also want to avoid profits being made  2  The Forum, City AM, page 20, September 14 2012 (http://www.cityam.com/forum/why-britain-s-banking-rulesaren-t-restricting-our-economic-recovery)  BIS central bankers’ speeches  5  out of dishonest practices such as insufficient provision of information, the deliberate mis-pricing of risk or other market abuses. The new Financial Conduct Authority will have an important role to play in that. The regulatory reform process will inevitably take time. And while the process is developing there are risks arising from the uncertainty that it brings. We need banks to raise more equity capital.
As a result, the Committee has engaged in an exhaustive – and sometimes exhausting – public dialogue with bankers, supervisors, and other observers on Basel II’s structure and merits. That dialogue was critical to improving the quality of the new framework, and I would like to express my gratitude to all who took great pains to share their views and concerns. You provided us with the perspective of other markets and countries. You shared detailed comments on the proposals. You encouraged your banks to participate in our consultations. The improvements that the Committee made to Basel II would have been impossible without your contributions. Indeed, it was during those public discussions that policymakers in emerging market countries raised three sensitive questions. I would like to turn now to address those questions and help explain my belief that Basel II represents an opportunity for banks and supervisors in many countries. 1. Will Basel II harm the international flow of capital? The first key question in the discussion about the new framework and emerging markets is whether Basel II will harm the flow of capital across borders and especially to emerging markets. In this context, some observers suggest that the new capital framework’s heightened sensitivity to risk may reduce the flow of foreign investment in developing economies, since exposures to those economies might typically be considered of higher risk. As I will explain, I believe that Basel II will not have a material effect on the flow of capital.

Nevertheless, the main reason that we have not fully recognised diversification effects at this stage is because first we need to see clear evidence from many banks that they have robust systems in place themselves to assess and quantify such effects and that they rely on their measures of diversification in their daily risk management. Of course, as systems improve in the future, we would be happy to discuss them, and once there is a “best practice” in this field we will be better able to recognise it in the capital framework. In the meantime experience with internal credit models will provide us with highly valuable information. In addition, since loan pricing is not predominantly driven by regulatory requirements, banks are free to recognise diversification benefits in their own pricing calculations. Consequently, they can indeed capture their sense of the benefit of diversification in their credit decisions and loan pricing for every borrower, whether in an emerging market country or not. From a different perspective, I think that what should be of concern to emerging market is not just the level of capital flowing into a country, but also the volatility of the level of capital that is flowing inwards. Abrupt changes in capital flows can be just as harmful as contractions in flows. Volatility erodes the confidence that businesses and governments have in the future supply of credit, rendering long-term planning meaningless.
For example, the firm might notice that the yield on corporate bonds relative to Treasury yields was higher than the range observed in recent years. If Long-Term Capital believed the former relationship would reassert itself, it would buy corporate bonds and sell short Treasury bonds. If the spread narrowed as expected, the firm would profit. If, however, the spread continued to widen, the firm would incur losses. This basic strategy and many complex variations was followed across many interest rate products in the US and many overseas markets as well. The firm was active both in traditional securities markets, and perhaps more importantly, in derivative product markets such as futures, swaps, and options. Anticipating that some positions would move in their favor and some would move against them, the firm relied on diversification across a large number of product and geographic markets. Long-Term Capital proved quite successful at this strategy, generating returns in excess of 40 percent in 1995 and 1996, though somewhat less in 1997. Perhaps their success went to their heads. Long-Term Capital took on larger and larger positions. They also leveraged their investments at higher levels, returning capital to their investors but not, apparently, reducing risks. We now also know that they took on significant positions in equity markets, through both swap and options contracts. The reputations of the Long-Term Capital partners, as traders and economists, and their initial success, appear to have contributed to so many counterparties’ willingness to deal with them.

This was evident in several periods, the early nineties, the mid-nineties, and the outflows during 1997-1998, and in the current period following the de-leveraging by financial institutions in the advanced economies. In the early days of the Bank, policy actions were focused on the management of liquidity in the financial system through the imposition of statutory and liquidity reserve requirements,  BIS Review 12/2009  1  and through prescription of interest rates and portfolio restrictions, including ceilings on lending. Further progress and sophistication in the financial sector, the deepening of the financial markets and the growing influence of capital flows, resulted in the reliance on interest rate and other market-based instruments for monetary policy. Further, with the increased role of expectations, greater clarity in policy signals became desirable. Thus in 2004, the New Interest Rate Framework was implemented, in which the Overnight Policy Rate became the new policy rate, thereby enhancing the efficiency of the monetary transmission mechanism. The new framework has also served as a catalyst for efficient pricing of financial products and services by banking institutions. A key issue for monetary policy in an open economy like Malaysia has been in maintaining a flexible exchange rate and monetary independence in the face of increasingly large capital flows. To better manage surges in capital flows which have become more prevalent, the range of market-based instruments for monetary policy operations has been widened.