samchain/econo-pairs-v1 huggingface dataset:
In addition to increased competition between banks, new participants – both financial and non-financial – have contributed to increasing the pressure on margins. Securities markets have also become more important in terms of their role in saving, financing and risk management, adding to the pressure on financial intermediaries such as banks. Like banks in other countries, Norwegian banks have had problems compensating for the decline in net interest income by increasing other income or reducing costs. Intensified competition both between banks and from other financial market participants suggests that banks will in general be facing major challenges in the years to come. On top of this comes EMU, which will probably amplify some of these trends. The euro will have varying effects on different market segments. The most immediate consequence of the transition to the euro is the elimination of foreign exchange and hedging transactions in the BIS Review 16/1999  –5–  currencies concerned. As exchange between euro-country currencies accounts for a very limited share of total currency exchange in Norwegian banks, this will be of little consequence. Two other areas that will be directly affected are international payment transactions and liquidity management. International payment transactions do not represent a substantial source of income for Norwegian banks. However, it will be important for banks to be able to provide competitive payment services in euros to avoid losing customers. Foreign lenders today account for close to 30 per cent of all loans to Norwegian enterprises, a share that has been stable for the past five years.

For the time being inflation in Norway, although fairly moderate in absolute terms at just over 2 per cent, is considerably higher than inflation in the euro area. Narrowing this differential is a prerequisite for strengthening the krone and is thus the best contribution monetary policy can offer in the current situation. There are, however, obvious limits to how tight monetary policy can be. Interest rates cannot be set so high that it results in an unnecessary severe economic recession and deflation, because that in itself would reduce the credibility of monetary policy and most likely weaken the krone. Since August last year Norges Bank’s key rate has been 8 per cent – close to 5 percentage points higher than in the euro area. For the time being we find that our instruments are set in a manner consistent with bringing the krone back to its initial range over time. This illustrates the challenges of stabilising the exchange rate of a small, open, oil and commoditiesbased economy against that of larger, more diversified economies. Though a much larger economy, the UK has also over time experienced problems with exchange rate targets, most recently the events that led sterling to leave the ERM in 1992 and orient monetary policy towards an inflation target. The introduction of the euro from 1 January 1999 did not in itself require changes in Norwegian monetary policy. The euro could replace the ECU as the operational indicator of the external value of the krone.
The third flaw in our financial system was the inappropriate corporate regime governing the savings banks, which came to account for almost half the Spanish banking sector. If the crisis has shown us anything it is that, despite the good management performance at numerous savings banks, the former ownership regime of those institutions and, in some cases, their reliance on political power, created risks that hindered their proper management. The successive reform measures taken, and in particular the legislation on savings banks and bank foundations enacted last year, are a key qualitative change, requiring that former savings banks over a certain size be transformed into (ordinary or bank) foundations and that those which maintained  BIS central bankers’ speeches  3  a significant shareholding in a bank have sufficient incentive to waive control of the bank and meet, in any event, certain conditions to ensure they are professionally and independently managed. I take this opportunity to confirm that in the next few days the Banco de España will be issuing, for public consultation, a draft circular which implements the abovementioned legislation and sets out in detail some of the requirements that the bank foundations will have to satisfy. 4. The fourth and last main flaw in the Spanish banking system was its surplus capacity, as a result of the tremendous growth in loan demand during Spain’s long period of economic expansion.

Notes: The figure shows by how much the term premium component of euro area sovereign yields (weighted average of Germany, France, Italy and Spain) with maturities of one to ten years is estimated to be compressed due to the APP through the duration channel at three dates: the announcement of the APP (Jan 2015), the extension of the programme in June 2018, and the announcement of the restart of net purchases in September 2019. Chart 9 APP impact on ten-year euro area sovereign yield over time (basis points)  Sources: ECB, based on Eser et al. (2019). Notes: Evolution of the APP impact on the ten-year synthetic sovereign yield (weighted average of Germany, France, Italy, Spain). The impact is derived on the basis of an arbitrage-free affine model of the term structure with a quantity factor (see Eser et al. 2019). Latest observation: September 2019. The first point is January 2015 when the ECB had just announced that it would start purchases in the following March at a rate of € billion per month, intended to run until September of the following year. According to ECB staff estimates, the anticipation of the purchases, the associated balance sheet accumulation of the ECB and, as a flip side of the coin, the expected duration extraction were associated with a term premium compression of almost 50 basis points for the ten-year maturity. For shorter-term bonds the effects are lower, such that the expectation of asset purchases is estimated to have led to a flattening of the curve.
In Russia, a federal state with a very large geographical area, the Central Bank has sixty territorial branches and nineteen regional banks - apparently rather modest numbers for a country with some 150 million people spread across ten time zones. But in addition the CBR in 1994 ran 1,356 cash and settlement centres, 13 banking schools, and 30 “other organisations”. To run this empire the bank employed over 52,000 staff, having created over 7,000 additional posts in the previous two years to conduct its various new functions. Central bank staffing and costs All this shows that, even though all European central banks face similar pressures, the solutions remain quite diverse. That is reflected in relative costs. Comparable data are hard to come by, but the Bank of Russia appears to have more staff per head of population than any other. The People’s Bank of China is larger, employing some 150,000 people (but only 1,000 in head office where policy is centralised), but considering the PBoC’s continuing role as banker to the state-owned enterprises that looks small in relation to a population of 1.2 billion. Other very large central banks are the Reserve Bank of India with 32,000 staff and the US Federal Reserve System with 25,000. One would expect the number of staff employed by a central bank to depend not just on the population of the country (and in this there should be some economies of scale) but also on the range of tasks it has and how efficiently it conducts them.

Legislation in 1942 followed the then German model, particularly in making the Bank of Japan subservient to the Ministry of Finance; and after the war, there was American influence. 1 Rosa Maria Lastra, “Central Banking and Banking Regulation”, LSE Financial Markets Group,  1996, page 285. BIS Review 33/1997  -3-  In Figures 1 and 2, I have attempted to capture some of the distinctions between these leading central banks. (Because I am concentrating on distinctions, I have omitted common tasks - such as the issuance of banknotes and acting as banker for government - which are carried out by virtually all central banks.) Figure 1 shows the UK’s “scores” in five areas, while Figure 2 adds in, by way of comparison, the other G5 countries. Mapping the distinctions is not an easy task. For instance, though in Germany a government office is responsible for banking supervision, it is central bank staff who undertake much of the day-to-day work of monitoring individual banks. In France, supervision is the responsibility of the Commission Bancaire, but its secretariat is effectively part of the Banque de France, and the Governor chairs it. And in Japan, the central bank closely monitors the large banks, though the responsibility for supervision formally rests with the finance ministry.
I am pleased to note that many Malaysian companies have already established their presence in the global construction industry with commendable achievements. The number of overseas projects awarded to Malaysian contractors has increased by 43% to 40 in 2008 valued at RM8.5 billion, from just 28 projects valued at RM2.9 billion in 2004. In 2008, the Middle East region being the major end-users of the projects undertaken by Malaysian contractors, accounted for nearly RM6 billion or 68% of the total value of the projects comprising various sectors including energy and transportation. Indeed, the achievement  BIS Review 7/2010  1  signifies that our local contractors do have competitive advantage to reap the vast opportunities in the global market. In complementing the efforts of local contractors to strengthen their international presence, relevant authorities and institutions should be continued to enhance and improve the enabling environment. In this regard, I am pleased to note that the CIDB has effectively played a key role in promoting the capabilities and strength of Malaysian contractors to the relevant parties in the global market. Apart from having well established companies with excellent track record to undertake infrastructure projects, the other critical component in ensuring the success of infrastructure development is the availability and accessibility to financing. Bank Negara Malaysia has always accorded and will continue to accord high priority to ensure that financing continues to be available to support the needs of the economy.

The prerequisite for this confidence is price stability, which is the responsibility of the Eurosystem (the ECB and the 19 national central banks); we have successfully achieved this primary mission. In France, the inflation rate has more than halved: 1.4% per year on average between 2002 and 2021, compared to 3.4% between 1982 and 2001. This is not just a statistic, it is a very concrete reality, measurable by a few examples. The price of a kilo of bread was EUR 2.7 in December 2001 and EUR 3.6 in November 2021, i.e. an annual increase of 1.4%. The price of pasta has increased at a much slower rate, with an average increase of 0.1% per year. The euro has therefore helped to protect the purchasing power of French citizens, which has increased by 25% over the last twenty years. The temporary “inflation hump” that we have been seeing for the past few months, associated with an unprecedented economic rebound, does not change this observation, and I will return to this later. A forward-looking euro means new banknotes after 2024, with a new design, and even more secure – there are now only 17 counterfeits per million banknotes, making the euro one of the most secure currencies in the world. It is also a digital euro. The investigation phase for a “digital retail euro” was launched on 1 October last year, for a period of two years.
Thirdly, more directly linked to the present tensions in the European sovereign debt, I would only remind all of us that the central banks – and the ECB in particular but with all others – have called permanently for sound fiscal management, sound economic policies and structural reforms, strict implementation and reinforcement of the European economic and fiscal governance – tirelessly, not only in stress times, but also in times of generalised benign neglect of both governments and markets. We call all authorities to implement swiftly all decisions and to be constantly ahead of the curve. As institutions that are independent, that are devoted to stability and that are medium- to long-term oriented, central banks are more than ever an anchor of stability and confidence. This is especially the case in an environment which is turbulent since 4 years, in open crisis of the financial sector since 3 years – shall I say exactly 3 years – and in a market environment characterised by acute tensions of some sovereign signatures in the advanced economies since one year and a half. It is exactly what is inspiring the Governing Council and the General Council of the ECB: to offer the most solid anchor of stability possible to all economic agents and, overall, to our own people. For in very difficult times, all depends on the confidence of our fellow citizens. It is what is inspiring the 27 central banks of the European Union. It is what is inspiring the sister central banks in all the world.

This rate is in compliance with the provided demand of the economy for money, coming from its real growth by 6 percent. The Bank of Albania monetary program is designed in line with other policies of the economy, where its harmonisation with the government fiscal policy is highlighted. The Bank of Albania estimates that like in the past years, even in 2005, the country's economic development will be in conformity with the overall development program objectives. The last developments of the banking system consolidate the optimism that it will fulfil to the best of its knowledge the role of financial intermediation in the economy. We deem that its consolidation will continue with accelerated rhythms throughout this year, providing to the large public more credits, more services and more security in the savings conduct. 2/2
This results in an output potential that over time satisfies demand without generating pressures in the economy. The equilibrium interest rate is determined by long-term phenomena associated with the structure of the economy, while the neutral rate is defined on the basis of its influence on pressures in the economy and thereby on inflation. In the long term, the neutral interest rate will correspond to the longterm equilibrium interest rate in the economy. The long-term equilibrium interest rate is determined by fundamental structural relationships in the economy, such as consumer impatience and the economic growth rate. Rising population growth means that a larger labour force must be equipped with real capital. Fixed investment and saving must increase. Higher population growth will therefore require a higher equilibrium interest rate. The higher productivity growth is, the higher future gains from today’s investments will be. This also provides the basis for a higher equilibrium interest rate. The long-term equilibrium interest rate cannot deviate too much between countries over time. With liberalised capital markets, capital will move towards those countries that can provide the highest return. Substantial interest rate differentials between countries cause fluctuations in the exchange rate and will not be compatible with a long-term equilibrium. Thus, we may refer to a global equilibrium interest rate for open economies, although perhaps with an added national risk premium. The interest rate has thus several roles to play in the economy and these roles should be fairly closely linked.

As a result, although necessary and desirable, the digital transformation of financial intermediaries carries a significant execution risk. This is the first type of risk to which we are exposed, and one that is highly idiosyncratic, but we need to recognise it. Next, digitalisation is challenging existing business models and their profitability, which can have destabilising effects in a banking industry such as Europe’s where there are overcapacity issues and where profitability is rising but remains well below US levels. The third type of risk is that digitalisation gives operational risk a more systemic footprint. In a 2/7  BIS central bankers' speeches  largely dematerialised world where financial services can be accessed via multiple channels, cyber-risk poses an increasingly significant threat. Similarly, the use by financial intermediaries and their operational reliance on a small handful of providers of “suites” of technological solutions, and not just softwares, raises the risk that a service disruption might impact the entire system and not just a single entity. b. What are the priorities for microprudential supervisors? In light of these complex and interconnected risks, and the fact that a significant portion of them are new, financial intermediaries and supervisors need to exercise vigilance in order to understand the exact nature and impacts of the threats, and take appropriate steps to contain and manage them.
In such a scenario, it will be even more important for all institutions with financial stability responsibilities - be it the central bank, supervisory authority or other government agency - to co-ordinate their efforts in the area of system oversight and to share any information which could be relevant to the proper fulfilment of their respective functions. Indeed, whereas until recently the prevailing concern related to the choice of institutional arrangement for the supervision of the financial sector, it is now sometimes argued that it is not the institutional framework which matters most, but rather the existence of adequate mechanisms guaranteeing the exchange of information and policy co-ordination between the entities responsible for overseeing systemic stability and those that monitor the health of individual financial institutions. Beyond that, it is claimed, any institutional set-up can work. Likewise, any one can fail. While this conclusion might be valid from a national point of view, it does little to address the question of whether information exchange and policy co-ordination relating to financial sector developments affecting the EU as a whole would be more appropriately addressed by a supranational EU institution with supervisory responsibilities, or whether such tasks are best handled by the national authorities of member countries. This issue has certainly gained in importance in recent years with the increased recognition of the links between supervision and monetary policy.

From a broader policymaking perspective, moreover, there is also the question about the role that financial stability concerns should play in the formulation of macroeconomic policy more generally. I am sure that the second seminar session will provide further insights in this regard, when the interrelationship between fiscal policy, monetary policy and financial stability will be considered. Policy transparency, good governance and market discipline The relationship between macroeconomic policy and financial stability also serves to highlight the importance of policy transparency and good governance, both at the national and corporate level. In fact, it is generally agreed that the likelihood of disturbances to the financial system can be greatly diminished if the authorities manifest their policy intentions clearly, and explain the rationale behind policy measures once decisions have been taken. This helps to reduce the chances of investors and creditors making uninformed decisions, only to reverse them later. This aspect has become especially relevant in the context of capital account liberalisation, particularly in those countries that operate variants of fixed exchange rate regimes. It is even more so in countries which are simultaneously engaged in efforts to place public finances on a stable footing and to gain credibility for the central bank’s monetary policy. Here, a sudden shift in investor confidence could have serious repercussions, not only for financial stability but also for the conduct of monetary and fiscal policy.
Donald Joshua Jaganathan: Enterprise risk management harnessing disruption Opening remarks by Mr Donald Joshua Jaganathan, Assistant Governor of the Central Bank of Malaysia (Bank Negara Malaysia), at the Institute of Enterprise Risk Practitioners (IERP) Annual Conference 2017 “Enterprise Risk Management – Harnessing Disruption”, Kuala Lumpur, 23 May 2017 * * * It is my pleasure to have the honour of addressing you this morning. I would first like to take this opportunity to congratulate the organisers for successfully gathering an array of distinguished speakers to share their broad-ranging and invaluable experiences. The breadth of the programme over the next few days reflects how vast the area of Enterprise Risk Management (ERM) has evolved, and how much there is for risk managers today to discover, learn and master. In my speech this morning, please allow me to share my thoughts on risk management, amid the so-called “age of disruption”. Technology and risk management Amongst all ‘disruptions’ witnessed thus far, perhaps none have been as forceful and impactful as technological disruptions. Take the smartphone, its use has permeated almost every aspect of our daily lives and has become almost like another limb for some of us. I’m no longer woken up by an alarm clock, nor do I read the papers on “paper” or take photos on a camera. In the palm of my hand I hold a music player, internet browser, GPS navigator, torchlight, and compass, even a wallet in more and more places.

I will approach the question from the point of view of central banks and ask: what influenced their ability to raise market awareness with respect to building vulnerabilities within the financial system? And can we rely on the ESRB to repair this problem in the future? The information at the disposal of central banks and other bodies with financial stability competencies enabled them to point to growing risks and vulnerabilities, but it did not allow a deeper understanding of the interconnections in the financial system and of the potential magnitude of the detected risks. As a result, the discussion of the risks in their public communications or publications tended to be mostly of a qualitative nature, and generally did not involve a clear risk prioritisation exercise, and therefore had a potentially smaller impact on market behaviour. Another important element was that risk assessments were generally not made with the specific aim of suggesting appropriate remedial policy actions in terms of prudential policies or regulation. Recommendations, mostly formulated in broad terms, tended to target market participants’ behaviour (e.g. proposing mitigating actions), but they were more muted regarding policy measures that could be taken in the prudential and regulatory area. One reason for this is, again, the information base. The formulation of concrete policy recommendations (e.g. with respect to capital buffers or funding-related issues) would need to be backed by rigorous quantitative assessments, for which publicly available information is generally not sufficient.