samchain/econo-pairs-v1 huggingface dataset:
Geopolitical uncertainty and other factors holding back growth may recede, and the U.S. economy could resume the robust trajectory of last year. Or GDP growth could continue closer to trend, which is my own forecast. Finally, there’s always a chance that downside risks could knock GDP growth off course. But what the data’s telling us is that this period of slow growth isn’t an aberration—it’s the “new normal” we should expect for the foreseeable future. Monetary Policy So what does all this mean for interest rates? With the economy running close to our dual mandate goals, monetary policy is in the right place. Looking ahead, the Fed will watch the data and use monetary policy to keep the expansion on track. When growth is well above trend, raising interest rates to keep the economy on a sustainable path is the right decision. Equally, when faced with a crisis like the Great Recession, it’s incumbent upon policy makers to use every tool at their disposal to get the economy back on course. It’s important to remember the change in the long-run economic fundamentals means that interest rates are likely to be lower than what we saw in the 1990s, for example. In addition, the slope of the yield curve is unlikely to return to levels typically seen in the past. This “new normal” clearly has implications for banks, large and small. Conclusion In conclusion, the outlook is positive. GDP growth is on track, unemployment remains low, and there are no signs of inflationary pressures building.

You know the customers in your community because you are an integral part of the community. You represent an essential part of our financial system and economy. But I know you didn’t come here today to hear me tell you what an important job you do. What I hope is that I can give you some insights that will be useful going forward. I know interest rates play a vital role in your businesses, so I’d like to spend a bit of time talking about the outlook and what that means for monetary policy. But before I do, I need to give the standard Fed disclaimer that the views I express are mine alone and do not necessarily reflect those of the Federal Open Market Committee or anyone else in the Federal Reserve System. Where Things Stand For the last decade we’ve all had our focus on recovery from the Great Recession. The path to getting back on track has been a long one, and there is a sense that the economy has now fully recovered. GDP growth came in at 3 percent in 2018 and I expect it to be around 2 percent this year. The difference between last year’s numbers and this year’s forecast has caused some concern, and that’s where I’m going to keep my focus. Many people are hoping for GDP growth of 3 or 4 percent, similar to what we saw in the late 1990s. Less optimistic forecasts for 2019 growth are therefore, understandably, a source of worry.
It was established to promulgate the international regulatory and supervisory standards for Islamic financial institutions worldwide aimed at achieving harmonisation of Islamic banking practices, fostering best practices and securing soundness and stability in Islamic finance. Another initiative to accelerate the integration of Islamic finance was the setting up of the International Islamic Financial Market or IIFM in 2002. The IIFM provides the environment to link all the financial centres around the world that participate in Islamic finance, thereby encouraging active participation by both Islamic and non-Islamic financial institutions  6  BIS Review 49/2005  in the secondary market for Islamic financial instruments. As the volume increases, it would strengthen the inter-linkages and integration amongst the Islamic financial centres. While having a Master Plan will provide a shared vision and a common goal, it needs to be recognised that the evolution of an Islamic financial system with all its component parts cannot be achieved within a short period of time. Having the medium and longer term goals outlined however, provides a basis to ensure the short term initiatives will be consistent and coherent with the long term objective. In other words, the construction of the building blocks must move in the right direction. As part of the process, each Islamic banking institution needs to formulate its own strategic plans and short-term action plans within this longer term perspective. With the foundations built and the plans in place, the future is by no means secure.

Today’s discussion aims to contribute towards a deeper awareness and understanding of the risks and emerging issues in mortgage financing. We hope that this, in turn will be useful to the boards and senior management of financial institutions in framing your own approaches to managing risks in this area. Tremendous growth prospects exist in the mortgage market in Malaysia. Over the last 5 years, mortgage financing experienced a strong and sustained average annual growth of more than 9%. Such loans now constitute a significant 27% of the total industry loan books. With emerging signs of an early and stronger recovery in the domestic economy, renewed optimism can be expected for more robust growth in the domestic mortgage market. The demand for housing will also receive additional support from continuous efforts by the government to promote home ownership and investments. For example, the new scheme to be launched this year for EPF contributors to fund the purchase of higher value or additional houses is expected to increase consumer purchasing power for homes in the coming years. The growing stream of new entrants in the labour market has also enhanced prospects for an expanded market among first time home buyers. At present, the overall mortgage financing portfolio in Malaysia remains sound, with gross non-performing loan on a declining trend since 2000. However, while mortgage financing has continued to be a profitable business for most banks, competition has intensified considerably, with lending yields falling dramatically over the last decade.
These schemes pursue low, stable inflation, healthy public finances, strong and well regulated financial systems and realistic exchange rates. Of course policies vary from one country to another, but their basic principles are shared. In Chile, a fiscal policy that saves during good times, an autonomous central bank that conducts monetary policy under an inflation targeting regime and a floating exchange rate, were key elements to successfully work its way out of the crisis. Furthermore, the country has a solid, well regulated financial system that does not allow for many of the operations that dragged some economies to their  BIS central bankers’ speeches  1  troubled present-day situation. A traditional banking model dominates the banking industry, where a strong base of deposits, both personal and institutional, permits to finance mainly credits. Before the crisis, a lot was said about the decoupling of emerging economies’ growth path from that of developed countries. This idea, which gained momentum in 2007 and 2008, was seriously questioned during the disaster because, as I said, no one was spared its effects. In hindsight, however, we can say that there actually was a decoupling. It is true that in a globalized world commercial and financial intertwining does not allow the economies to isolate themselves from the global cycle, but the performance of emerging markets is living proof that mitigating the negative consequences from the external cycle can be done.

It is actually on a flatter slope than it was in the 1990s and that of other emerging economies  4  BIS central bankers’ speeches  that have adopted measures to control capital inflows (figure 12). Still, it is important to be on the watch for excess flows that might incubate financial fragilities and exacerbate economic cycles, in which case it could be necessary to review financial regulations in place to avert any costly imbalances. Recent monetary policy decisions The scenario outlined in the latest Monetary Policy Report assumes that in the coming quarters the Chilean economy will grow in line with its potential. This will allow trend inflation, today in bounded levels, to converge and remain around the 3% target in the coming quarters. To achieve this objective, we have withdrawn some monetary stimulus, bringing the monetary policy interest rate (MPR) closer to the neutral range. Although this is the baseline scenario, the Report also indicated that inflation (and growth) risks were biased upward. For inflation, arguments were based on the combination of adverse supply shocks in energy and foodstuffs, the closing of output gaps and the strong dynamism of the domestic demand. Some of the aforesaid risks have eased. Private inflation expectations have moderated, consistently with MPR adjustments and the recent decline in oil prices and other commodities (figure 13). Anyway, commodity markets remain volatile, so it is premature to evaluate at what level international prices will settle.
No one is going so far as to allege that the global markets are besieged by a broad-based movement to violate the law or act contrary to ethical business practice, but it could nonetheless be that the rules are stretched quite a bit, though perhaps within the limits of legality and even ethics. In so doing, companies everywhere are factoring in the value of assets for which there is, at present, no market. To be sure, assessing the market value of assets that are not marketable, either for the short term or for the long term, is a tricky matter. In the vast majority of cases, a market will develop at a later date, and if the companies in question have the wherewithal to hold them until that market develops, there is no reason to harbour any real anxiety. But assets that end up at a fire sale are another matter entirely. So it is difficult to determine market value when the market is sticky and virtually closed. All of these conditions kindle suspicions and undermine faith, and as it seems, the real problem is not so much a growing lack of liquidity as a growing lack of faith. The sooner trust and faith begin to grow again in world markets, the sooner they will rise up from this slump, or recession – at the moment we don’t know which term is more appropriate. Many things are changing, both in Iceland and elsewhere. A new edition of the book “Ten Little Negroes” causes ripples of unrest.

But by now most have realised how unlikely these problems are to disappear so quickly. There is every reason to believe that the coming months could prove difficult as a result, and there is correspondingly little reason to believe that the crisis is past. Uncertainty abounds. A huge investment bank like Merrill Lynch could not foresee that, in only two weeks’ time, it would have to write down billions of dollars’ worth of outstanding debt. The CEO of the company has had to pack his bags and leave, albeit with a generous going-away present. The largest bank in the world is also beset by the restlessness, and it isn’t yet fully clear what the effects will be, but that CEO has received his marching orders as well. And according to the latest reports, while there are reported write-downs of a mere 20 billion dollars on subprime mortgages, the actual amount could in the end be between 250 and 300 billion. BIS Review 131/2007  3  One cannot help but wonder whether market participants in Iceland and elsewhere preferred to suffer through a shaky third quarter in the hope of some redemption in the fourth quarter, and in the process, avoided recording some items that should have appeared in third-quarter accounts.
And there are now some 1.7 million credit card transactions involving $ billion every day. It is also noteworthy that for a small city of just over seven million people, Hong Kong has around 34 million Octopus cards in circulation, with an average of 14 million transactions per day. This means on average each person in Hong Kong makes two transactions by Octopus cards daily. Anyway, there are many new developments in the mobile payment market since we granted 13 stored value facility (SVF) licences in 2016. Second, I believe it unlikely that fintech firms will displace or replace traditional banks because, in addition to speed and convenience, customers also need protection of their life savings or investments. I have previously stated my view on the future landscape of banking and finance. I’ll say it again here. On the one hand, we will see more and more tech companies venturing into finance by riding on the highly successful and popular e-commerce, payment or social media platforms that they have developed. The paradigm of these newly emerged platforms is that it is highly “customer-centric”, meaning they design everything to provide what the customers want, taking care of many practical and life-style needs of customers. However, when it comes to finance, tech companies need to realise and accept that they have to earn the trust and confidence of customers if they wish to handle their savings and investments.

This new context has had several consequences: •  both inside and outside the euro area, the reputation of the euro as a solid currency has fostered the holding of euro-denominated banknotes, which has doubled in a few years, now representing the largest banknote circulation in the world;  •  the so-called “home bias” in asset holdings has decreased further, both inside the euro area vis-à-vis assets issued in other Member States and outside the euro area vis-à-vis assets issued in the euro area. This has increased globally the demand for euro-denominated financial assets;  •  the integration and competition in the banking and financial markets that has been fostered by the euro speeded up the development and the spreading out of financial innovation throughout the euro area, affecting money and credit developments in different ways. Let me just mention some of them. 6  2    One is the rapid pace of expansion in the activities of the so-called “other financial institutions” or OFIs. OFIs are not part of the money-creating sector and are neither insurance companies nor pension funds. In particular, they include financial vehicle corporations that purchase, pool and repackage as marketable securities loans that are “securitised” by banks, thereby reducing the growth rate of loans to the private sector. The expansion in OFIs’ activities is to a certain extent mirrored in the development of their monetary assets: which is now quite significant and amounts to around 10.5% of M3.
Turning to the debt burden of households and firms, as we noted in our Financial Stability Report of the second half of last year, the financial indicators of the corporate sector look favorable, with a stable and limited currency mismatch. The household average shows no financial deterioration because the increase in private consumption has been accompanied by an increase in labor income. However, households as well as firms must keep a watchful attitude facing possible risk scenarios. As for banks, the sector has adequate capital levels to absorb the materialization of a severe risk scenario. As shown in our last Financial Stability Report, stress tests indicate that the banking system’s current levels of capitalization would permit it to absorb an episode of sharp GDP slowdown, an increase in the cost of credit in pesos and an exchange rate depreciation. Meanwhile, the State keeps a net creditor position, contributing to the access to external loans at low spreads. Our terms of trade, although lower than some months ago, are high by historic standards, and our external credit access conditions are good, also by historic standards as well as compared with other emerging economies. Annual inflation is somewhat above 4%. The latest monthly CPI figure was unexpected, but given its characteristics it does not change our evaluation of the medium-term inflation trend, which remains centered on 3%, just as we stated in our Monetary Policy Report. Private inflation expectations are also stable around 3% y-o-y.

Similarly, keeping a floating exchange rate policy points in the same direction, as it provides the proper incentives for prudent management of external liquidity and borrowing. It also helps in the economy’s process of real adjustment when facing a deterioration in the external scenario. In terms of both the exchange rate and access to credit, it is of high importance not to distort the incentives of financial institutions and firms to prudently administer their risks in a complex environment. To sum up, I would like to point out once again that the Board of the Central Bank of Chile strongly believes that as a country, and particularly as a Bank, we are well prepared to confront periods of stress. We are certainly not immune to the events outside our borders, and risks are very high today. We have at our disposal the necessary tools to mitigate the effects of more adverse external conditions but, most importantly, we can and will use them whenever the situation calls for it. Solid proofs of this are the measures we have taken in the last weeks. Thank you.
Here a particular effort should be made to explain all the decisions adopted by the different levels of government in Spain that have been well-received and valued by the markets, such as structural reforms, pension reform and the recent Organic Law on Budgetary Stability, among others. There should likewise be a common effort, in the interest of all sectors of the Spanish economy, to disseminate and address in depth the additional measures that should shortly be adopted to tackle the crisis. There is no more important or pressing task in the short term than to restore lost confidence. And here, collaboration is called for by politicians and economic and social agents in positions of responsibility, and by all institutions with economic policymaking responsibilities. BIS central bankers’ speeches  5  A fundamental determinant of confidence is the credibility of regulatory and supervisory institutions, based on their ability to exercise their powers professionally and independently. This is always an essential element of a country’s economic reputation, but all the more so when confidence has been called into question and the recovery in growth depends on the external financing of its economy. Adam Smith observed in his famous work that the wealth of nations was then closely related to how open their trade was. And today we can see how the richest and most democratically sound countries in the world are those that have competent and independent regulatory and supervisory agencies that act as a counterweight to governments potentially succumbing to interventionist temptations.

While at one end of the spectrum, the case is being made that there is no other alternative to the market to generate an efficient functioning financial system, at the other end of the spectrum the call is for a more interventionist regime. The solution lies in a balance between these, and the avoidance of an over reaction in addressing weaknesses and excesses that have been built over an extended period of time. Equally important is to recognise that for markets to function efficiently, institutional and market infrastructure need to be well developed. The incentive structure, the rules of the game, the transparency and the levels of financial literacy also needs to be in place. When these elements are still yet to be developed, as in many emerging economies, it increases the risk to financial stability. For advanced financial systems, however, when the institutional structures and rules became deficient and less relevant, it is necessary for them to be changed. In essence, the environment has become highly dynamic requiring regular regulatory reinvention. Let me turn to the approach adopted by Bank Negara Malaysia. The recent global developments will not fundamentally alter the main tenets of our approach to the regulation and supervision of financial institutions in Malaysia. It will continue to be a balance between rules-based and principles-based regulation. The principles-based approach is more likely to produce more efficient market outcomes, better risk-alignment and socially responsible behaviour.
If it is structured correctly, each form of intermediation will not be subject to the same risks. Diversity also allows risks to be more closely aligned with risk-bearing capacity in the system. With scope for creditor preferences to be more closely matched with those of borrowers, the full potential of finance to intermediate can be exploited and the cost of finance for the real economy minimised. If we can succeed in safely and sustainably combining bank and market-based finance, the effectiveness of the system can be dramatically increased. Households and businesses can benefit from access to markets while the advantage of banks in originating loans can continue to be exploited. A trusted financial system can be much more effective. Through cultural change, reforms to compensation and building markets that are transparently fair, finance can earn the legitimacy needed to operate and innovate to serve customers and clients in the real economy. The literature on the benefits of an open global financial system is admittedly mixed. The contradiction between this conclusion and the clear and overwhelming benefits of trade integration is reconciled by the previous unsafe and potentially unstable nature of the global  14  BIS central bankers’ speeches  system. As my colleague Andy Haldane observed recently, connectivity can serve as a shock-transmitter.30 A risky system cannot be an open system. The renewal of globalised finance must therefore go hand in hand with making the global system safer, including through mutual trust and cooperation between supervisors and regulators.

The issue is with the barrels in which they are stored.20 Leaders and senior managers must be personally responsible for setting the cultural norms of their institutions. But in some parts of the financial sector the link between seniority and accountability had become blurred and, in some cases, severed. The public were rightly angered that so many of the leaders and senior managers who were responsible for sowing the seeds of the crisis and for allowing cultures to develop in which gross misconduct took place have walked away from their actions or inactions. In the UK, Parliament has established a stronger regulatory framework to allocate responsibilities to individual executives and board members and to give regulators the tools to hold them to account. The excuse of having delegated a responsibility simply will not wash. The public bail outs and the fact that few of the consequences of scandal have been borne by those who were directly responsible revealed a great deal about the balance of risk and rewards for those who worked in in financial services. Compensation schemes overvalued the present and heavily discounted the future, encouraging imprudent risk taking and short-termism. To align better incentives with the long-term interests of the firm – and, more broadly, society – major changes have been made. At the request of G20 Leaders, the FSB has developed principles and standards for sound compensation practices. 19  Chart 13 shows the sharp increase since 2010 in the number of FICC-related misconduct fines.