samchain/econo-pairs-v1 huggingface dataset:
The internationalisation of Islamic finance has observed the strengthening of ties between Asia and the Middle East in trade and investments in the recent years. The early trade ties allowed the Old Silk Road to flourish. Today, Islamic finance involving financial flows between the two regions has revived and revitalized these economic ties that generate mutually reinforcing growth prospects for both regions. The emergence of new financial centres in Asia and the Middle East and their increased integration has strengthened the foundations for a New Silk Road. It has also opened up and extended this potential to  BIS Review 60/2010  1  developed economies to forge stronger financial linkages with the growth regions of Asia and the Middle East. Our ties with Bahrain have long been cemented with the signing of a Memorandum of Understanding between the Central Bank of Bahrain and the Central Bank of Malaysia in 2001 to jointly develop Islamic finance. There is a presence of institutions from Bahrain with interest in institutions in Malaysia and from Malaysia in Bahrain, since 2001. In Malaysia, they have become part of more than 150 entities that participate in our Islamic financial system that offers the spectrum of Islamic products and services. While Islamic finance has demonstrated its resilience during the challenging period, continuous efforts are being taken to further strengthen its resilience and facilitate effective liquidity management across border.

The Islamic Development Bank (IDB) in collaboration with the Islamic Financial Services Board (IFSB) has formed two taskforces – the Taskforce on Islamic Finance and Global Financial Stability and the High Level Taskforce on Liquidity Management. An important recommendation of the Task Force on Financial Stability that has been now operationalised in 2010 is the establishment of an Islamic Financial Stability Forum (IFSF) to be held twice a year following IFSB Council Meetings. It forms a strategic platform for productive dialogue to promote financial stability in the Islamic financial system. It also has the potential to interface with the Financial Stability Board in the conventional system to serve the common aim of achieving global financial stability. Let me conclude my remarks. An important dimension of Islamic finance is not only its potential role and relevance in contributing to global financial stability but also its potential to support overall global economic growth. More importantly, it also represents an important channel for greater connectivity among emerging economies to not only enhance trade and investment flows but also international financial flows between nations and in so doing contribute towards an optimum allocation of resources across borders. These combined efforts will contribute to the stability of the international financial system and global economic prosperity. 2  BIS Review 60/2010
Indeed, any decision to instead rely on morerestrictive interest rate policies to achieve financial stability at the expense of poorer macroeconomic outcomes must pass a cost–benefit test. And such a test would have to clearly illustrate that the adverse economic outcomes from more-restrictive interest rate  3  I should note that increases in interest rates since last spring have increased discount factors and thus lowered the present value of pension fund and other fixed nominal liabilities. For instance, see Fitch Ratings (2013). 4  BIS central bankers’ speeches  policies would be better and more acceptable to society than the outcomes that can be achieved by using enhanced supervisory tools alone to address financial stability risks. I have yet to see this argued convincingly. Macroprudential tools Let’s discuss some of these macroprudential tools. One simple but important tool is enhanced monitoring. Even before the recent financial crisis, central bankers were well aware of the key role played by stable financial markets in economic activity. Since the crisis, however, the analysis of financial stability issues has been greatly expanded and given a more prominent role in the FOMC’s deliberations. We comb through reams of data looking for evidence of incipient risks to financial stability. The Federal Reserve also has revamped its approach to bank supervision substantially to expand the focus on macrofinancial risks. Traditional bank supervisory tools are being used more intensively, and new tools have been developed. Bank capital stress tests are one wellknown addition to our supervisory toolkit.

References Evans, Charles, 2014, “Recurring themes for the New Year,” speech, Corridor Economic Forecast Luncheon, Coralville, IA, January 15. Federal Open Market Committee, 2013, meeting minutes (external), December 17–18. Fitch Ratings, 2013, “Fitch: U.S. corporate pension plans underfunded status improves,” press release (external), New York, August 15. 6  BIS central bankers’ speeches
It was vitally important that the Monetary Policy Committee was able to introduce a new policy instrument at the point at which Bank Rate reached its effective lower bound. This instrument had to be credible, both in terms of its economic impact and the willingness of the Committee to use the instrument in force. My own view is that the speed with which the asset purchase programme was introduced and the scale of the programme played an important role in reaffirming the MPC’s commitment to achieving the inflation target and reinforcing the belief in our ability to do so. 4  See, for example, Thomas (1997). 5  See Fisher (2010) for a more detailed discussion of these operations. 4  BIS Review 29/2010  Estimating the effects so far So what impact have our asset purchases had to date? That’s the two hundred billion pound question. Unfortunately, it is hard to provide a definitive answer. To be clear this is no different from our inability to assess precisely the impact of the reduction in Bank Rate from 5% to 0.5%. Or indeed of any macroeconomic policy measure. Without knowing what would have happened in the absence of a policy action, it is not possible to identify its incremental impact. But what is different is that this policy instrument is relatively untried and untested. So the demand to provide some insight into its impact is that much greater. This demand is quite understandable, but difficult to satisfy.

With the aid of international rating agencies and global issue managers, corporate entities on their part are raising funds wherever it is priced most cheaply and available with minimal hassle. On the demand side, investors recognize the importance of global liquidity and market diversification. By taking  BIS Review 31/2002  1  advantage of the financial links provided by intermediaries, retail investors have become empowered to actively manage a global portfolio of investments. In this environment, no single national regulator can afford to focus just on activities taking place in its domestic markets. To achieve the objectives of investor protection and systemic stability, cross-border regulatory cooperation is imperative. The Sep 11 incident demonstrates the degree to which financial markets are interwoven and illustrates the need for such collaboration. All of you will recall that the event resulted not just in the closure of US markets for 4 working days, but also justified the temporary closure of several markets in Asia, while delaying trading hours in others. The reality was that regulators the world over found themselves having to assess the situation, update one another, and decide on actions to be taken in their respective markets. Systemic risk has also increased with the trend towards commoditisation, ie volume business at competitive costs. The concentration of volumes into key nodes such as large global custodians represents exposure by market participants to entities located in other jurisdictions. Meanwhile, crossborder capital flows have significantly increased the magnitude by which markets adjust to shocks as evidenced in the Asian crisis.
The state will find difficulty financing the increased public expenditure on healthcare and pension systems given shrinking populations of working adults, falling tax revenues and high dependency ratios. In order to remain competitive, these advanced economies have 2 options. They can choose to augment their population through the import of young labour or global talent. This path leads to challenges in cultural integration. The alternative is for these countries to compensate for a stagnant and aging workforce with the deployment of technology. Japan and Korea are the best examples, relying on an increasing level of automation and sophisticated robotics. As demographics change, so too will consumer demands. Singapore is positioning itself to attract companies to monitor and understand these changes within Asia. The Singaporebased Asian Consumer Insights Institute, launched in 2011, is helping companies to develop and test-bed Asian-specific products and business strategies. In 2012, Nielsen, a global provider of consumer insights, chose Singapore to launch an innovation hub. This hub, the first of its kind in Asia, will develop new technologies and methodologies in neuroscience, shopper technology, and measurement science to enhance consumer and market insights for companies working to reach consumers in Asia. Technology The final trend I’d like to talk about is that of technology. Technology, especially information technology, continues to change the world and is reshaping the social compact between states and citizens. According to IMS Research, the number of internet-connected devices has reached 9.6 billion. That is more than the number of people in the world today.

By 2030, 20 years from now, the centre of gravity of global trade patterns is projected to shift even further to within Asia, with China accounting for 17 out of the top 25 bilateral trade routes, overtaking trade links between developed countries like Japan-USA, Germany-USA that will grow but they will grow much more slowly. Within Asia, trade patterns will evolve. With increasing urbanisation and consumer demand, China’s trade with developed Asia, will change. It will start to import relatively more finished  BIS central bankers’ speeches  1  consumer goods from Japan, Korea and Singapore. These bilateral trade routes are not new, but they will rise in importance. China’s trade with developing Asia, particularly with Malaysia, Thailand and Indonesia, will propel these bilateral trade routes into the top 25 bilateral trade routes by 2030. Indonesia in particular, with low wage costs and proximity to China, is well placed to become the next manufacturing hub and sell low-end manufactured products back to the Chinese. The shift in centre of gravity of world trade to Asia is more than a China story. As developing Asian economies become wealthier, they will consume more and trade more with each other. For example, bilateral trade between Thailand and Indonesia is projected to be almost five times as high in 2030 as it was in 2009. To support this Asian integration, countries in Asia have already come together on regional platforms to foster greater openness and cooperation.
On the face of it, that is not easy to square with (regulatory and monetary) policies having had a significantly damaging impact on aggregate productivity by keeping alive a large tail of low-productivity companies. However, these distributions cannot by themselves identify the role monetary policy has played in influencing companies’ fortunes. To gauge that, we need to undertake a counter-factual exercise. Specifically, we  54  Bahaj, Foulis, Gal and Pinter (2016). 15  All speeches are available online at www.bankofengland.co.uk/speeches  15  consider a simple scenario in which Bank rate is held at 4.25% rather 0.25%. What impact would that have had on companies’ solvency and hence on aggregate productivity? With data on their debts, interest payments and profits, we can simulate interest cover ratios for each company in our sample – that is to say, their profits before interest divided by interest paid (Chart 24). And by making an assumption about the level of the interest cover ratio at which a company is forced to default, we can simulate how a different interest rate path might have affected the solvency of each firm and hence aggregate productivity. For the purposes of the experiment, we assume a default threshold for the interest cover ratio of one. That is to say, we assume a company that cannot cover its interest payments with profits fails. Different assumptions are clearly possible.

Implications of the new environment for financial stability oversight  It will be clear from the litany of issues I have just mentioned - new players, new products, new risk transfer techniques and interconnections - that the changes in today’s financial world are indeed quite profound in relation to financial stability oversight. But are they net benign or net negative? The world here is sometimes portrayed as being in two designated camps. This may be a bit of a parody, but I am sure the two protagonists would forgive my little sketch. The bullish view is led by Governor Greenspan. This holds that, in the new financial world, banks now possess the enhanced ability to disperse risk - to offload risk to others, be they investors, insurance companies or whatever. The banks have thereby been able to weather a variety of shocks, which in an earlier age might well have engendered financial instability. The Asian crisis, Russia, 9/11, Enron: I could go on. In each case the banks came through and the financial system has demonstrated greater resilience as derivatives and sophisticated risk transfer processes have dispersed risk to a wider audience. The bearish camp is led by Warren Buffett. This points out the opacity of today’s world: the difficulty of spotting risk concentrations; or judging the behavioural expectations in the face of given types of shock. My view would be that both schools of thought are right! I think in reality it depends on your vantage point. There has been improved capital formation.
Why did we decide to inject further monetary stimulus into the economy? And how likely is it to be effective? We started quantitative easing in March 2009 in the aftermath of the collapse of Lehman Brothers, as the UK economy was undergoing its deepest post-war contraction. Bank Rate was almost as low as it could go and further stimulus was necessary to put a floor under demand and get the economy growing again. All told we bought £ billion of gilts during that initial phase of quantitative easing. Quantitative easing essentially involves trading one liability of the state – gilts – for another – monetary claims on the Bank of England. We aim to buy mainly from non-bank private financial institutions, such as pension funds and insurance companies, not from the  BIS central bankers’ speeches  1  banks, as is sometimes erroneously claimed 1. When we buy a gilt, we simply credit the bank account of the seller with an appropriate sum. If the seller were indifferent between holding the gilt and holding the associated bank deposit, that is where things would stop. But because deposits tend to yield less than gilts and assets such as corporate bonds and equities, the seller is likely to want to buy some other asset instead. The consequence is upward pressure on the prices of a whole range of assets, including corporate bonds and equities. That increases the availability, and reduces the cost, of finance to corporates.

During late 2009 and through 2010, a recovery of sorts appeared to be taking hold and, by the beginning of last year, some of us were starting to think that the time to begin withdrawing some of the monetary stimulus might be starting to draw near. As the year wore on, though, it became increasingly clear that the underlying growth rate was moderating. To begin with, that reflected a continuing squeeze on household real incomes, and thus on spending, resulting from the increase in the standard rate of VAT in January and the impact of higher energy and import prices. In fact, real household income declined a total of 2½% in the two years after output troughed, whereas in normal conditions it might have been expected to rise about 5% in that time. But since last August, the deterioration also seems to have reflected heightened concerns about the prospects for the euro area. That was reflected in much tighter funding conditions for European banks, including those in the United Kingdom, and increased caution on the part of businesses both in regards to hiring and capital spending. Output is reported to have contracted by 0.2% in the final quarter, though some of the business surveys at the start of this year suggest that the economy may again be expanding. It was that deterioration in the outlook that led us to restart our asset purchases in October.
Of course, this is because the financial system is constantly changing – new instruments and markets arise and technology develops. And, as the financial system changes, the risk outlook changes too. What at first seems to be uncomplicated and “risk-free” need not be so in reality. This suggests that a broad set of macroprudential supervision instruments is needed to tackle systemic risks. … suggest a broad toolkit for macroprudential supervision So what should we bear in mind when selecting and designing tools for macroprudential supervision? Firstly, we need to be able to counteract different types of systemic risk and, for this, we clearly need different types of tool. The principle used in dealing with problems involving a tendency towards exaggerated cyclical behaviour is to variously make it more expensive and less attractive to allow risks to build up when times are good, at the same time as buffers are created that can be used when times are bad. Problems caused by the financial system’s structure should instead be approached by managing individual institutions’ contributions to total systemic risk, for example by way of specific requirements for capital buffers, strengthened requirements for transparency, or limitations on certain types of activity. Secondly, there is probably a need both for tools with a wide area of effect and for those aimed at a particular sub-market or activity. Countercyclical capital buffers are an example of a tool with a relatively wide area of effect. These are based on the total expansion in credit and cover all banks.

When one knows all about a particular “signature” or about a particular country, there is much less reason to embark into blind crisis contagion. Here is the motto I would like to be 5  BIS Review 52/2000  accepted globally by market participants: “Let us judge the quality and creditworthiness of any particular signature upon its own peculiar fundamentals, upon its own, particular, assets and liabilities”. –  On the euro, I want to stress that the euro zone has adopted a sound macro policy and has embarked in a fairly comprehensive program of structural reforms. These reforms will take time to be fully completed. But they have already boosted economic growth, job creation and the restructuring of firms. I am impressed by what has been achieved during the past years and National Central Banks as well as the ECB are strongly encouraging governments and corporate businesses to foster structural reforms and business restructuring in the future. The Eurosystem, which is the guardian of the euro for the sake of the people of Europe, knows that our fellow citizens want the single currency to be at least as solid as were their previous national currencies: in France, to give only one example, 96% of the people are calling for the euro to be at least as solid as the Franc; needless to say that it is the same in Germany and in all other countries of the Monetary Union.
Øystein Olsen: Monetary policy and wealth management in a small petroleum economy Speech by Mr Øystein Olsen, Governor of the Norges Bank (Central Bank of Norway), at the Harvard Kennedy School, Cambridge, USA, 9 April 2013. *  *  *  Please note that the text below may differ from the actual presentation. Charts in pdf-format  Introduction I am delighted to be here at the Harvard Kennedy School, and I really appreciate this opportunity to talk to you. My topics are Norwegian monetary policy and the central bank’s management of Norway’s oil fund, the Government Pension Fund Global. I will begin with some background on the macroeconomic policy framework in Norway, and why we believe it works well. A rules-based approach was adopted after two turbulent decades of boom-bust economic cycles. The path towards the current regime was developed and supported by successive governments in the 1990s and early 2000s as it gradually came into place. Since 2001, the operational target of monetary policy has been annual consumer price inflation of around 2.5 percent over time. With growing petroleum revenues, asset management has also become one of Norges Bank’s main tasks. Both in our conduct of monetary policy and in asset management, transparency is a guiding principle. I will explain how we see ourselves as a global financial investor, and elaborate on the main elements of our investment strategy.

You will discuss it extensively today in two panels, moderated by Wim Boonstra and Servaas Deroose. I am looking forward to listening to your views on the matter. However, I would briefly refer to three ideas. First of all, the NBR’s approach to euro adoption is a balanced one. On the one hand, we are fully aware that a higher degree of real convergence is needed – at least 70–75 percent of the Eurozone average in terms of GDP per capita at PPP. Otherwise, we would be insufficiently developed and, therefore, vulnerable to asymmetric shocks and unable to synchronise our business cycle with that of other euro area economies. On the other hand, however, a high enough level does not mean that we are so ambitious as to aim for a convergence level of 90% of the Eurozone average or a level equal to that of Germany (as is the case with certain approaches in Hungary or Poland). And, equally important, regardless of how high one sets its targets, it is essential to preserve the pace of this process: once steps forward have been made, we may not stop or go back. In order to successfully adopt the euro, one should be a marathoner rather than a sprinter. I would like to say that the Latin saying festina lente is perfectly suitable in the case of the NBR’s approach: hurrying in a slow manner on the convergence path means achieving a sustainable pace in the medium and long run.