samchain/econo-pairs-v1 huggingface dataset:
But they found it harder to adjust to the post-crisis ‘Basel 3’ liquidity rules, which gave centre stage to the very instruments they were prohibited from holding, including government bonds, such as UK gilts and US Treasuries, and remunerated central bank reserves accounts. To meet this challenge, the Basel liquidity rules give national supervisors discretion to treat sukuk as High Quality Liquid Assets (HQLA), subject to haircuts or other conditions. The consequent increase in demand for sukuk from banks was one factor boosting issuance in recent years. But the proportion of sukuk classed as eligible for regulatory buffers remains relatively modest compared to demand. As a result, while sukuk can provide a reliable medium-term store of value, the relative scarcity of HQLA-eligible stock can give rise to uncertain price movements, especially in stressed markets, reducing the value that is readily realisable, and making it harder for banks to increase their holdings quickly when required. All of this means that Islamic banks can face a somewhat uneven playing field relative to conventional banks when it comes to liquidity management. Unable to use liquid gilts or interestbearing reserves accounts at the Bank of England to meet short-term outgoings, they have tended to hold inefficiently high stocks of cash at zero return, or higher-yielding but somewhat less liquid sukuk. The design and launch of the Bank of England’s Alternative Liquidity Facility That’s where our new Alternative Liquidity Facility (or ‘ALF’) should make a real difference.

We look forward to a productive day and continuing the conversation after the event. Thank you.12 1 From Robin Willner, NYS P-TECH Leaderships Council 2 From Sarah Conte, Per Scholas NY  3/3  BIS central bankers' speeches
William C Dudley: Panel remarks at the Bank for International Settlements' Annual General Meeting Panel remarks by Mr William C Dudley, President and Chief Executive Officer of the Federal Reserve Bank of New York, at the Bank for International Settlements' Annual General Meeting, Basel, 25 June 2017. * * * John Clark, Gerard Dages, Linda Goldberg, Eric LeSueur, Jonathan McCarthy, and Joseph Tracy assisted in preparing these remarks. Let me start by thanking Jens Weidmann and the Bank for International Settlements for the opportunity to respond and comment on Professor Hélène Rey’s thoughtful remarks and on the issue of international spillovers associated with U.S. monetary policy. As always, what I have to say today reflects my own views and not necessarily those of the Federal Open Market Committee (FOMC) or the Federal Reserve System.1 As is characteristic of her work, what Hélène has to say is well-argued and provocative. It is also very relevant to the conduct of monetary policy and the functioning of the international monetary system. I mostly agree with the major points she makes. First, I wholeheartedly agree with her on the hazards of financial booms. Rapid increases in credit and capital flows, asset prices, and leverage can lead to potentially severe corrections that can impose great stress on financial systems. As we have seen repeatedly, this stress can impair the ability of the financial system to perform well in intermediating credit between savers and borrowers, and in helping households and businesses manage their financial risks.

This was another step in a long chain of communications about the balance sheet —incremental steps that highlight the evolution of our communication practices. I hope you would agree that we have taken a very measured and careful approach. This process started with the initial release of the Policy Normalization Principles and Plans in September 2014, which indicated that the FOMC planned to reduce securities in a gradual and predictable manner. Related comments followed in the minutes of the July 2015 FOMC meeting and the December 2015 FOMC statement. Subsequently, FOMC participants discussed potential long-run frameworks for monetary policy implementation as detailed in the November 2016 FOMC minutes. Next, the March 2017 FOMC minutes reaffirmed that a change in balance sheet policy would be gradual and predictable, and achieved primarily by changing the reinvestment policy. These minutes also noted that most participants judged a change in reinvestment policy would likely be appropriate this year, should economic data develop as they expected. Then, in the May 2017 minutes, it was noted that nearly all participants had a favorable view of a phased-in, cap approach whereby reinvestments would be decreased gradually. Participants favored this 2/4  BIS central bankers' speeches  strategy because a preannounced schedule would be gradual and predictable, limiting the magnitude of the runoff could help mitigate any adverse market effects, and the strategy would be relatively easy and straightforward to communicate.
They thereby trigger a payment that reduces their deposits while increasing the deposits on the payment recipient’s account. By far the most common form of loan in Switzerland is a mortgage. When a mortgage is taken out for the purchase of a house or an apartment, the deposit does not normally even appear on the borrower’s account, since the bank remits the loan amount directly to the seller of the house or apartment in exchange for the mortgage certificate. To execute the payment, the bank needs to have sight deposits with the SNB. If it holds enough liquidity in the form of central bank money, the payment can be made without delay. If not, the bank needs to obtain liquidity on the interbank market or via credit facilities at the SNB, which only works if the bank has sufficient collateral in the form of securities or if it is prepared to pay a premium. Our example illustrates the following key points: An individual commercial bank cannot use the granting of loans to ensure a lasting increase in the deposits it holds. Due to payment transfers, the deposit created by a loan flows out and disappears from the books of the lending bank. For the banking system as a whole, however, things look different. The payment transfer creates a new deposit at another bank. While the total volume of central bank money remains unchanged, lending by an individual bank increases deposits in the banking system and hence also the overall money supply.

The mood is to continue cautiously down that path, but to emphasise the need, not only for sound macro-economic policies, which everyone accepts as a sine qua non, but also for steps to accompany capital account liberalisation designed to reduce the risks of volatility. These relate in part to the process of capital account liberalisation, where there is now a good deal more stress on ‘sequencing’ - that is on liberalising potentially more stable, longer-term, capital inflows initially, rather than short-term borrowing denominated in foreign currency. BIS Review 49/1998  -4-  But they relate particularly to three key conditions for living with free capital movements. The first is “transparency”. In a broad sense a need for greater transparency is recognised in relation to public policy, to the relationship between the public and private sectors, to corporate governance, accounting standards, and so on. In a narrower sense there is seen to be a need for more reliable, and greater and more timely disclosure of, financial information generally, at the level of individual borrowing entities, but especially also in relation to countries’ true foreign exchange short-term asset and liability positions. This is especially important in relation to the foreign currency liquidity position of the monetary authorities and of the banking system.
This does not mean that we should revise up expected future returns – perhaps the opposite. 13  NORGES BANK  Chart 12 Low long-term interest rates Ten-year US Treasury yield. Percent 16  16  14  14  12  12  10  10  8  8  6  6  4  4  2  2  0 1960  ECONOMIC PERSPECTIVES 18 FEBRUARY 2021  0 1970  1980  1990  2000  2010  2020  Source: Bloomberg  The expected annual real return is estimated at 3 percent. The estimate was most recently updated in connection with the decision to increase the allocation to equities. Two key variables were used in the calculation. One was the expected return on the fixed income portfolio, and the other the size of the equity risk premium, which is the extra compensation we expect when taking risk in the equity market. The bulk of the fixed income portfolio is invested in long-dated sovereign bonds. When interest rates fall, bond prices rise. The return on the fixed income portfolio therefore held steady through the period of falling interest rates. But this is a one-off gain (Chart 12). Interest rates have now fallen to historic lows, and the expected return on the fixed income portfolio going forward has fallen. Equity prices have risen sharply in recent years. Taking risk in the equity market has paid handsomely. But we cannot assume that the gains will be as high in the future.

The composite output Purchasing Managers’ Index – which has a high correlation with growth in the euro area – remains above its long-term average and is close to six-year highs. Overall, survey data continue to point to growth in the quarters ahead. Moreover, Eurostat’s Economic Sentiment Indicator is near a ten-year high. The ongoing recovery has led to solid employment gains. The number of people employed in the euro area has increased by almost 7 million since hitting a trough in mid-2013. This means that all of the employment losses recorded during the crisis have been offset. Additionally, the unemployment rate is now at its lowest level in eight years and continues to decline, notwithstanding an increase in labour force participation. Employment growth, together with the gradual increase in employee compensation, supports households’ disposable income and is underpinning solid consumption dynamics. Robust consumer spending is driven by buoyant sentiment, favourable bank lending conditions and the notable progress achieved with respect to deleveraging. The investment outlook is also positive, supported not only by a need to modernise the capital stock after years of subdued investment and an improving outlook for profitability, but also by easy financing conditions as our policy measures have passed through financial markets to affect the borrowing conditions of businesses and their customers. Since the announcement of our policy measures in June 2014, bank lending rates for euro area non-financial corporations have fallen by around 120 basis points and those for households by around 100 basis points.
Jean-Claude Trichet: Interview with the Börsen-Zeitung Interview with Mr Jean-Claude Trichet, President of the European Central Bank, and the Börsen-Zeitung conducted by Dr Jürgen Schaaf on 16 December 2008, published on 31 December 2008. *  *  *  Question: Do you believe that the citizens of the euro area will one day have a similarly strong relationship to the euro as the Germans used to have to the Deutsche Mark? Answer: Confidence in the currency, in the central bank as an institution and in the independence of the central bank to deliver price stability is crucially important. When asked whether they considered the ECB’s independence from politics to be an important condition for price stability, 78% of the 320 million fellow citizens of the euro area said “yes”. And that was before the recent intensification of the financial crisis. Question: And now? Answer: All evidence suggests that, since then, the sentiment of our fellow citizens on the importance of the euro and of the ECB as an independent institution has even increased. Question: Studies have shown from time to time that the support of the population for the stability of the currency is even more important than the institutional independence of the central bank. Has the euro already achieved this status? Answer: As a symbol of European unity, the euro is already extremely successful. Since the outbreak of the financial crisis, the euro and the ECB have become, even more visibly, a central anchor for confidence.

This impulse is, at the moment, far from having been fully transmitted to the economy. That being said, as I always stress, we are never pre-committed and we always do what is necessary to solidly anchor inflationary expectations in the medium term. 4  BIS Review 1/2009
As with our monetary policy tools, we are closely monitoring the situation and we will review our approach on a regular basis. Independent of the ECB’s actions, banks need to perform proper risk management, acknowledge the recognition of impairments, and book an appropriate level of provisions. I would now like to turn briefly to the subject of central bank digital currencies (CBDCs) and how the pandemic has had an impact on them. The arguments in favour of CBDCs have intensified during the pandemic; one of them is reaffirming the role of central banks as the sole issuers of money. Although these arguments are legitimate, they do not necessarily tip the scales in favour of immediate action in favour of CBDC issuance. This is due to the many legal, operational and policy issues around CBDCs which remain unresolved, standing in the way of a transition from traditional cash to CBDCs. I have touched on those issues in some of my previous speeches. Suffice to say that the issues in question will continue to provide food for thought for the ECB, euro area NCBs and central banks throughout the world as they further explore the costs and benefits of CBDCs. Conclusion Let me conclude. In the blink of an eye, the coronavirus pandemic and the response to it placed the global economy in an induced coma. The ECB has acted forcefully and well within its mandate. Our crisis response shows that our legal framework is flexible, but only up to a certain point.

But, we will conduct purchases only to the extent this is necessary and proportionate to fulfil our mandate. In short, the PEPP is a targeted, proportionate and temporary measure in response to the crisis triggered by the COVID-19 pandemic. The legality of the PEPP is ensured for three reasons: First, and as I mentioned earlier, the PEPP falls within the ECB’s mandate in that it pursues monetary policy objectives. As in the Gauweiler case, the measures designed to preserve the monetary policy transmission mechanism may be regarded as seeking to maintain price stability. Let me add that the argument invoking the transmission mechanism cannot be used to ease credit risk premia which are due to the idiosyncratic economic and financial situation of a country. Second, in accordance with the PEPP Decision,“Purchases shall be carried out…to the extent deemed necessary and proportionate”.3 The proportionality assessment of the PEPP must be supported by economic analysis which shows that the measure: (i) is suitable for attaining the monetary policy objective in current and future environments; (ii) does not go beyond what is necessary in order to achieve this objective; and (iii) weighs up the various interests involved to prevent any disadvantages which are manifestly disproportionate to the objectives set.
In countries where the use of the euro as a medium of exchange is highly significant, such as the Central and Eastern European Countries, 60% to 80% of exports and imports were settled in euro. B  The euro contributes to the stabilization of exchange rate regimes and financial systems  The euro is an instrument for the diversification of foreign exchange reserves •  According to the latest available data from the Bank for International Settlements (BIS), the euro is the second reserve currency after the US dollar (19.7% of the total amount in 2003 compared with 63.8% for the dollar) but the share of the euro has increased significantly (it stood at 12.6% in 1999). This is an important factor of protection for many countries with regard to strong exchange rate fluctuations because it allows public investors to diversify their reserves assets. Moreover, it constitutes a stabilizing factor for the international monetary and financial system as a whole. The euro is a factor of stability for exchange rate regimes •  In 52 countries or territories, the euro serves as the anchor of exchange rate policies or as the sole reference currency or as part of a currency basket. This mainly concerns the countries that have trade or institutional arrangements with the euro area (acceding countries, accession countries, the Balkans, North Africa and the Franc zone). These exchange rate regimes are the result of unilateral decisions that do not involve the Eurosystem.

It also assumes that export volume will grow a little over 1.5% this year, and the rate will double in 2018. Behind this increase is an improved external scenario, which I will discuss in a moment. In this context, the current account deficit will be smaller than projected in December, and 2017 will be better than 2016, due to slower growth in domestic demand and improved terms of trade (table 1). 4  As I said earlier, the greater growth expected in 2018 originates in the economy having no major imbalances, the end of some factors that have hindered growth in recent years— for example, the four-year plunge of mining investment—an expansionary monetary policy stance and a stronger impulse from abroad compared with previous years. As for fiscal policy, it is assumed that the consolidation announced by the Administration will proceed further. The recovery that reflects in the annual figures projected for 2018 should begin during the course of this year, considering the negative impact of the debilitated economic activity at the end of 2016 and early 2017. In fact, the average annual GDP growth of the last quarter of 2016 and the first of this year is somewhat above 0%. Already for the second quarter, in our baseline scenario, it will rise above 1.5% annually, which, on average, will be sustained and increased in the second half of the year.
Muhammad bin Ibrahim: Developments in the global Islamic finance industry Remarks by Mr Muhammad bin Ibrahim, Governor of the Central Bank of Malaysia (Bank Negara Malaysia), at the International Shari'ah Research Academy for Islamic Finance Alumni Hi-Tea, Kuala Lumpur, 5 September 2017. * * * I would like to thank ISRA for inviting me to this event with alumni of various nationalities and to deliver some remarks. We take pride in knowing that you have been enrolled to pursue studies in among the world’s leading universities in the field of Islamic finance and Shariah such as the International Islamic University Malaysia and Yarmouk University in Jordan. I believe that with the knowledge and competencies gained, you will now have a deeper understanding and appreciation of the fundamental importance of Shariah in Islamic finance. This deeper understanding and knowledge of Shariah matters serve as a springboard for you to play a meaningful role in the future development of the Islamic finance industry. Role of the alumni in developing the global Islamic finance industry Globally, Islamic finance has been making headways as it makes its presence felt. Many jurisdictions have offered Islamic finance as part of their banking system’s products and services. This is good progress. But Islamic finance should not be looked upon as a value proposition only for the Muslims. This thinking, in my view, is regressive. Islamic finance is for all. It incorporates universal concepts and values that cater to all and sundry. An important distinction that is worth reminding.

The central banks that target inflation can be said to have three main approaches. •  One alternative is to assume that the exchange rate will be unchanged during the forecast period, quite simply to adopt a cut-off rate. This, however, raises a number of problems. As exchange rates are liable to shift rather rapidly and the assumed rate is of considerable importance for the forecast rate of inflation, this approach may entail sudden changes in the assessment of inflation and thereby in the repo rate. Another problem is the risk of being trapped in a game situation with the market. So there are sound reasons for not resorting to a more short-term pattern of reactions. Sooner or later, other central banks have generally come to the same conclusion. •  Another alternative is to base an exchange rate forecast on market pricing or other assessments of market expectations. This approach, which is used by a number of central banks, reduces but does not eliminate the risks associated with rapid fluctuations and speculation. Another problem here is that the picture of expectations is liable to vary with how they are measured. On the other hand, this approach has the advantage of presumably being most credible in the eyes of market players; it is, after all, based on their assessments! •  The Riksbank has chosen a third alternative, which is to make an independent assessment. Here the initial position - the cut-off rate - is naturally one important component and so are the market’s expectations.
But after the series of new shocks during last summer – Russia, LTCM, the deepening recession in Japan and the worsening position in Brazil – the prospects, at around the time of the IMF meetings in Washington last autumn, were looking pretty bleak. Now I would completely destroy my reputation as a central banker if I were to suggest that we are out of the woods. But the darkest financial storm clouds have lifted a little since the Fund meetings. The US Congress finally approved more resources for the IMF, the threat of a credit crunch extending to the industrial economies in the wake of LTCM receded, helped also by an easing of monetary policy in Europe as well as in the United States. In Asia, Japan took more determined policy action to address the fragility of the banking system and to stimulate domestic demand; the yen strengthened; China and Hong Kong both remained admirably resolute; and there have even been some encouraging signs of renewed capital inflows to some of the Asian countries. The floating of the exchange rate in Brazil last month inevitably increased concerns about emerging market instability, but it is encouraging that adverse effects on other markets have so far been limited. BIS Review 17/1999  –3–  There may be further particular setbacks, as far as the overall financial situation is concerned, but I think I can confidently say that if it doesn’t get any worse it is likely to get better.

It is important that macroeconomic imbalances should be avoided and that a critical mass of structural reforms should support a sustainable growth path. This lesson holds particularly true for the emerging economies. Over the past several years, I have repeatedly pointed out in my speeches that convergence with the EU along with maintaining macroeconomic stability is the major challenge facing Romania. In recent years, fast-track economic growth drew on external saving. Banks became dependent on external financing and the current account deficit exceeded the sustainability limits, which caused the Romanian economy to grow vulnerable. The global crisis fostered this vulnerability which translated into a marked economic slowdown. Today it has become clear that the natural bias towards speeding up real convergence needs to be balanced by the need to ensure a sustainable convergence process. The NBR has repeatedly warned against the pro-cyclical nature of the fiscal policy, which added to excess demand. We should learn the lesson that allowing wide budget  4  BIS Review 56/2009  deficits while the economy is expanding ends in failure. It would have been much easier today for us to find the means to weather the crisis if our budget had been on a surplus over a two-year period prior to the unleashing of the crisis. 9. The adoption of the euro cannot be a substitute for the need of domestic policy adjustment. This lesson became clearer at the moment emerging economies were hit by the economic crisis.