samchain/econo-pairs-v1 huggingface dataset:
Jaime Caruana: Basel II - a review of ongoing work Keynote address by Mr Jaime Caruana, Governor of the Bank of Spain and Chairman of the Basel Committee on Banking Supervision, at the 20th Annual General Meeting of the ISDA (International Swaps and Derivatives Association), Barcelona, 16 March 2005. *  *  *  Mr Moulds, Mr Pickel, Ms. Sebton, distinguished guests, It is an honour for me to be invited to join your meetings today and it is furthermore my pleasure to welcome you and the International Swaps and Derivatives Association to Spain. It appears to me that you have all of the ingredients for a stimulating and memorable conference. The agenda is ambitious and addresses the latest topics in the ever-evolving derivatives markets. The speakers are distinguished, deeply experienced, and represent a wide range of perspectives and institutions at the forefront of financial services. And, of course, I must commend you on your selection of a marvellous location for your annual meeting. Barcelona has undergone a fantastic transformation, is a gateway for the world and a city that celebrates the ancient and the innovative. I hope that you take some time outside of your sessions to explore its blending of the old and the new. A walk through the “Gothic” quarter serves as a window into our past. A visit to any of the creations of Antoni Gaudì – after whom this conference hall was named – offers a vision of Catalan modernism through architecture.

We also published a working paper called: “Studies on the Validation of Internal Rating Systems” Let me mention these principles briefly. Firstly, we set out our understanding that validation is fundamentally about assessing the predictive ability of risk estimates and the use of ratings in credit processes. Secondly, we stress that the primary responsibility for validation lies with the bank itself, while the supervisor’s responsibility is to review the bank’s processes and outcomes – a point which I think we all agree is very important. 4  BIS Review 17/2005  The remaining principles relate more to the process itself. We note that validation is a likely to be an ongoing, iterative process which will require an ongoing, iterative dialogue between banks and supervisors. Then our fourth principle reflects that there is no single validation method, or universal tool for validation, even though techniques may converge over time. We also highlight, in our fifth principle, that validation should encompass both quantitative and qualitative elements – validation is not a purely technical or mathematical exercise, but should also include an assessment of controls and other qualitative factors. Finally, we stress our view that validation processes and outcomes should be subject to review within the bank, by parties which are independent of those who are responsible for the design and implementation of the processes. I think these principles set out clearly what supervisory expectations are, and should provide a useful steer to the industry.
These measures included tightening of debt service to income ratio (the Czech Republic, Hungary, Romania, Slovakia, Slovenia) and/or loan to value ratio rule for housing loans (the Czech Republic, Poland, Romania, Slovenia), limits to the maximum maturity of consumer loans (Romania, Slovakia, Slovenia) and more stringent risk weights on households loans (Poland, Slovenia, North Macedonia). Chart 9. Share of households with a DSTI above 40% (% of all indebted households and 90% confidence interval)  Source: Aleksandra Riedi “Household debt in CESEE economies: a joint look at macro- and micro-level data”, Focus on European Economic Integration, 2019, issue Q1/19  Recent OeNB study3 focusing on household debt in CESEE economies suggests that risks associated to households’ leverage have moderated post-crisis, but need monitoring in order to timely address potential vulnerabilities. The inference is based not purely on the level and dynamics, but some structural features as well, such as the currency and interest rate structure. Yet, estimated debt service to income ratio (DSTI) 4 for all households in all CESEE countries is below 40%, as commonly used threshold in the literature for potential vulnerabilities related to household debt burden. Debt service burden is lowest in Hungary and the Czech Republic, while Romania and Albania stand out as  3  Aleksandra Riedi “Household debt in CESEE economies: a joint look at macro- and micro-level data”, Focus on European Economic \Integration, 2019, issue Q1/19. The analysis uses macro-level data and data from the OeNB Euro Survey conducted in fall 2017.

As a global body, an early task will be to respond to the desire of other regional FX markets to associate themselves formally to the Code, and I hope to agree an effective mechanism at our next meeting in November. The voluntary nature of the Code means that transparency of adherence and peer expectation will play a key role in furthering its broad adoption. The short Statement of Commitment appended to the Code provides a means for firms to publicly demonstrate their support, and the GFXC has issued guidelines for organisations 4  interested in developing public registers to make these easy to find. If individual firms come to expect that counterparts will have committed to the Code, and have the means to see whether that is the case, then the Code will become woven into the fabric of the market. Central banks are taking a lead on this, reviewing their own practices and setting clear expectations with their FX counterparts. Three months after launch, I’m encouraged by some of the early signs of adoption within the private sector too. Interest has spread far and wide, with some 20,000 individual downloads of the Code so far. Around 10 market participants have already published commitment statements and many others have publically affirmed their intentions to do so. The development of public registers, too, is in progress – the first was launched last month and I understand other organisations are actively considering following suit.
It generates new types of risk, which constitute challenges to central banks and supervisors of financial markets. Globalization of financial markets and the related rapid growth of turnover in credit derivatives, such as CDOs or default swaps, force a focus on understanding, what types of risk are generated in particular market segments. Such risks should be continuously analysed by central banks and supervisory authorities. It may happen in the future that the social groups which incur losses in the process of globalization will force the decision-makers to take up protectionist actions, which may contribute to significant lowering of the future economic growth, through limiting the benefits from international trade. Therefore, economic policy, especially in the countries with a large share in the global product, should be  44  Schoenmaker D., Oosterioo S. “Cross-Border Issues in European Financial Supervision”, in: Mayes D., Wood G. (editors) “The Structure of Financial Regulation”, London 2005. 45  Directive 2002/87/EC of the European Parliament and of the Council of 16 December 2002 on the supplementary supervision of credit institutions, insurance undertakings and investment firms in a financial conglomerate and amending Council Directives 73/239/EEC, 79/267/EEC, 92/49/EEC, 92/96/EEC, 93/6/EEC and 93/22/EEC, and Directives 98/78/EC and 2000/12/EC of the European Parliament and of the Council. 46  The Act on supplementary supervision over credit institutions, insurance companies and investment companies in a financial conglomerate of 15 April, 2005, (the Journal of Laws No. 83/2005, item 719).

The cost of this stigma increases as we move from management buffers, to releasable regulatory buffers, to usable regulatory buffers with no consequences, and finally to regulatory buffers with consequences – and use is 11 See Bank of England’s May 2020 interim Financial Stability Report (chart B.14). 12 And, in our liquidity frameworks, banks’ liquid asset buffer requirements are intended to be usable in stress and do not  trigger any explicit regulatory consequences if dipped into. 7  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  7  often disclosed. Moreover, firms might believe that ratings agencies or supervisors would take a negative view of a firm which dipped into its regulatory buffer. All of these factors can limit practical buffer usability. Another problem is that, in stress, firms may be particularly cautious and prefer to conserve capital or liquidity to meet uncertain future needs. There may be a tension between conserving capital to provide additional individual bank resilience, and supporting the economy – especially if there is uncertainty about the timeline for the restoration of buffer levels after a recovery – even though supporting the economy would provide a better outcome for banks as illustrated a moment ago. The policy question and the opportunity to explore it If a regulatory buffer is not practically usable in the sense that banks do not want to dip into it, then it has little value in helping firms to absorb shocks in ways that keep lending going in bad times.
1/5  BIS - Central bankers' speeches  Under this light, banks' profitability is high on the agenda from a regulatory perspective. The level of Return on Equity of European Banks is shy on their cost of capital and below the respective level of other jurisdictions, like banks in the United States. A low Return on Equity compared to the Cost of Capital is a European structural issue and raises the need for formulating appropriate action plans, both by regulators and banks alike. If we want these actions to have an impact, we must first understand the factors that drive this weak performance. Overcapacity of the banking sector is a dominant factor. According to most indicators there are too many banks in Europe relative to the size of the market. This implies that there is significant scope to benefit from consolidation without exacerbating the problem of "too big to fail" through the creation of mega banks. Moreover, the Banking Union which has ended a prolonged supervisory divergence enhances the capability of reaping these benefits in a more efficient manner. Credit risk is inherent in banking and is considered a major challenge for the European banking sector. For countries that have a high level of legacy non-performing loans like Cyprus, this risk requires particular attention, despite the tangible improvement achieved in the last years. A weaker than expected economic environment may result in deterioration of asset quality.

Constantinos Herodotou: Address - Annual General Meeting of the Association of Cyprus International Financial Firms (ACIFF) Address by Mr Constantinos Herodotou, Governor of the Central Bank of Cyprus, at the Annual General Meeting of the Association of Cyprus International Financial Firms (ACIFF), Nicosia, 10 February 2022. *** It is my pleasure to address the open session of the Annual General Meeting of the Association of Cyprus International Financial Firms (ACIFF) today and present the current situation of the Cyprus and European banking sectors as well as the challenges ahead. I will also try to shed some light on the trends and developments in the banking industry. Let me start with an update on the Cyprus banking sector. We are now almost a decade after the peak of the Financial Crisis in Cyprus and looking at our banks' key financials, we observe a significant balance sheet derisking and an improvement in their loss absorption capacity. This is despite the shocks caused by the on-going pandemic. Specifically, the capital position of our banks, measured through the common equity tier 1 ratio rose from 14,2% at the end of 2014 to 17,2% at the end of September 2021. This is well above the EU average of 15,7%. In addition, during the same period a noteworthy clean - up from non-performing loans has taken place, where troubled loans in the banking sector have been reduced from 28,3bln euros in 2014 to 4,3bln euros in October 2021. Nonetheless, the NPL ratio in the Cyprus banking sector is still high, ca.
Thus, both the ECB and the European System of Central Banks should have access to relevant information from supervisors. We trust that this new structure, which is in charge of macro- and micro-supervision, will be able to help achieve the timely identification of behaviours likely to generate financial crises. But, as the ECB President Jean-Claude Trichet also pointed out, for the proposed macroprudential framework to function as intended, it is crucial that the risk warnings and economic policy recommendations issued by the ESRC be translated into policy action as effectively as possible. That is why I believe that these warnings and recommendations should be reported to the ECOFIN Council, while also providing an appropriate institutional basis that might vest the ECB and the other central banks, as advocated by President Trichet, with the necessary authority, accountability and legal capabilities in relation to the new macro-prudential tasks. 4. Wage incentives in private companies are not adequately correlated with risk management. The link between incentives for managers and risk management is not always obvious. In recent years, financial innovations and products, as well as institutions subject to inadequate regulation and supervision has allowed for building up huge profits in the near run at the price of taking very high risks. There were no incentives to link wages and bonuses to medium- and long-term profits. Thus, managers were encouraged to take risks which they either failed to understand or ignored in order to increase the profitability bonuses were linked to.

Moreover, this framework should be flexible enough to allow countries to give a response according to the features of the crisis specific to the respective country. Anyway, clear principles for preventing legal bottlenecks and the cross-country spillover of negative effects should be put in place, and countries should share the fiscal burden of a cross-border crisis in line with those principles. BIS Review 56/2009  3  6. The IMF strengthened its role after being criticised for not having foreseen the Asian crisis. A few years ago, many economists expected a sharp decline in the IMF's role in the current economic context. Against the background of the current crisis, the world seems to rediscover the role of the IMF. The institution's funds have recently been increased in order to meet the requests of different countries for financial and technical assistance. The statements of the G20 leaders are indicative of the fact that the IMF will assess regularly the measures taken and the global actions necessary to be initiated. Furthermore, a close cooperation between the IMF and the Financial Stability Board (FSB), which will include all G20 countries, members of the Financial Stability Forum, Spain and the European Commission is envisaged. Together, the IMF and the FSB will convey early warnings on macroeconomic and financial risks and will indicate the necessary actions to address such risks. My opinion is that the current financial crisis highlights the fact that in such difficult times, an institution having an image of each economy in the global context is required.
Our pattern of trade and economic structure has evolved over several decades to become a highly diversified economy. The macro economic stability reinforced by the long term development plans, pro-business policies, developed physical infrastructure, conducive business environment and trained labour force, have contributed to the advancement in our trading and industrial sector. Malaysia, in particular, has become a global player in the export of several products. In the electrical and electronics sector, Malaysia is a major exporter of semiconductors, automatic data processing machines and telecommunications equipment. BIS Review 57/2008  1  While in the furniture industry, Malaysia is currently ranked among the top ten exporters of furniture in the world. In the services sector, Malaysian companies have ventured abroad, undertaking projects in the construction of roads, ports, airports, highways, bridges, houses, commercial buildings, power generation and telecommunication, in countries of the Middle East, Africa, ASEAN and South Asia. Malaysian companies have also gained expertise in the oil and gas sector, education and healthcare. In the ICT sector, Malaysia has been ranked globally as the third most favoured location for outsourcing of business processes. Business and investment opportunities Trade has for many centuries been an important factor that has linked the Middle East to Asia. In the recent few years, the trade between Asia and countries in the Middle East has been on an upward trend.

Up to USD100 billion investments in the region are expected over the next 25 years. As at the end of April 2008, more than USD10.4 billion of investment have been committed by investors, accounting for about 70 percent of the USD15 billion investment targeted by 2010. The targeted sectors identified for development in the region are financial advisory and consulting services; creative industries; logistics; educational services; tourism related services; and healthcare. As an international Islamic financial hub in the Asian region with a track record of almost three decades in Islamic finance, Malaysia is well positioned to promote stronger economic linkages between our two regions. Malaysia is not only already highly integrated to the ASEAN region and to the greater Asia, but also has own initiatives and exciting development projects. On that note, it is our hope that the Malaysia Country showcase be an engaging event for the business and financial communities from this region and the Malaysian delegation. It is hoped that this greater engagement will lead to increased economic and financial ties between our regions. Thank you. BIS Review 57/2008  3
An expression of interest was launched last April and five companies have been selected from a pool of 54 front-end providers.3 This will allow us to test end-to-end transactions for different use cases, both online and offline. This prototype, which is expected to be completed in the first quarter of 2023, is only relevant for investigation purposes, and there is no plan to reuse it in a production environment. We are now halfway through the investigation phase and our aim is to complete it by the end of next year. Then, the Governing Council will decide whether to move into the implementation phase, in which technical solutions and business arrangements for a digital euro would actually be developed and tested with a view to their potential launch. The promotion of innovation and the Spanish experience with a sandbox The direct provision of payment services, as would ultimately be the case with the digital euro, is not the only strategy or tool that central banks have to respond to increasing digitalisation and use of new technologies by the financial sector. The instruments adopted by each supervisor or regulator differ depending on whether they are more focused on maximising the benefits stemming from digital innovations or on mitigating their potential risks. For instance, as MiCA illustrates, regulation could be useful to curb these risks, but the authorities may also hamper innovation in a jurisdiction, should the regulations not be well calibrated.

6/6  BIS - Central bankers' speeches
The banks created special intermediaries off their balance sheets to hold and structure the securitised credits. This made it possible for the banks to increase leverage both on and off the balance sheet. However, explicit and implicit guarantees from the banks to these special companies meant in practice that the risks led directly back to the banks' balance sheets. The result of all these new instruments and artificial intermediaries was a motley and almost impenetrable structure. A wide range of asset types with idiosyncrasies in pricing arose. This also made them more difficult to value. Moreover, the complicated links between the banks and their special investment vehicles made it difficult to see exactly what the banks' exposures were. Eventually, no one knew where the risks were. The increasing amount of credit not only made investors highly indebted in relation to their equity, many banks also did not really have enough capital in relation to the risks they took. When economic activity began to decline in the USA and prices fell on the US housing market, many institutions suffered major losses. Above all, however, a great deal of uncertainty arose. It proved to be simply impossible to know with any certainty who was exposed to "toxic assets", that is assets that risked losing value as a result of major credit losses. The realisation that many institutions could be more in debt than appeared to be the case on their balance sheets fuelled this uncertainty.

A well-functioning Capital Markets Union will have major ramifications as it will attract institutional investors, improving the allocation of resources and strengthening the international role of the euro. Crucially, it will help reshape capital markets in Europe after Brexit. I believe that this project is essential for the Single Market, for the Economic and Monetary Union and a resilient euro, and, ultimately, for the EU’s global competitiveness. I am certain that these and other matters will be raised and discussed during the following panel of this conference. The case for a fiscal stabilisation capacity But, even if developments in European financial markets were complete, private risksharing would still be inefficiently low. This is because private investors do not yet internalise the positive macroeconomic stabilisation externalities of their portfolio choices. In this context, the other area that urgently needs addressing is enhancing the stabilisation capacity of the euro area through fiscal instruments. Moreover, the efficiency case for fiscal risk-sharing ultimately hinges on the relevance of idiosyncratic shocks and the capacity of national fiscal policy to face these shocks. The efficiency argument meets the responsibility argument in the case of fiscal liabilities stemming from inadequate Euro-wide policies, as is now the case of financial supervision and resolution. True, some evidence suggests that national business cycles have now become more synchronised. But it is clear from economic developments over the last decade that the mere sum of national fiscal buffers may not be enough to accommodate severe common shocks.