samchain/econo-pairs-v1 huggingface dataset:
Jaime Caruana: Reform of the international standard for bank capital Notes for the testimony by Mr Jaime Caruana, Governor of the Bank of Spain and Chairman of the Basel Committee on Banking Supervision, before the Committee on Economic and Monetary Affairs, European Parliament, Brussels, 18 January 2005. * 1. *  *  Introduction  I am honoured to appear before the Committee on Economic and Monetary Affairs today to discuss the reform of the international standard for bank capital. In past years, members of the European Parliament have kindly welcomed Bill McDonough, the prior Chairman of the Basel Committee, as well as other Basel Committee representatives. I would like to thank you for giving me this opportunity to contribute to the debate and to support your important work in considering the proposed directive on capital adequacy requirements for banks and investment firms. These hearings are extremely valuable and represent a vital stage in the European legislative process, where the European Parliament has a crucial role. I will be speaking today in my capacity as Chair of the Basel Committee. But I hope you will allow me to digress on one or two occasions to supplement my remarks with my perspectives as Governor of the Banco de España. The Banco de España is a central bank and banking supervisory authority within the European Union; it will therefore be a direct subject of the legislation that is enacted on capital adequacy.

Zeti Akhtar Aziz: Banking on Islamic finance – from legality to economic value Keynote address by Dr Zeti Akhtar Aziz, Governor of the Central Bank of Malaysia, at the 8th World Islamic Economic Forum (WIEF) “Banking on Islamic finance – from legality to economic value”, Johor Bahru, 6 December 2012. *  *  *  Powerful forces of change are transforming the functioning of the international financial system and the global economy. In the aftermath of the global financial crisis, the quest has been to build financial systems that will best serve the real economy, that provides financial intermediation that promotes sustainable growth through productive and responsible innovation, and that will be resilient to shocks and less prone to crisis. There is tremendous potential to draw on the economic value that Islamic finance has to offer. In realising this potential, in a now more challenging environment, will depend on our capacity to build new capabilities that will unleash the inherent intrinsic value propositions of Islamic finance that supports and energises the real economy. It is my honour to participate in this 8th World Islamic Economic Forum in my hometown, Johor Bahru to speak on the topic “Banking on Islamic Finance: From Legality to Economic Value”.
For instance, after a strong pick-up in 2020 Q3, the GDP growth rate returned to negative territory (-0.6%) in Q4 as a result of the pandemic containment measures being reintroduced in most countries. Thus, at end-2020 GDP was still 5% below the level recorded in 2019 Q4. Drawing on the ECB projection exercise conducted prior to the spread of the pandemic (published in  2  See, for example, the October 2020 bank lending survey (BLS). See Menéndez-Pujadas and Mulino (2020) for a summary of the results of the survey for participating Spanish banks. 3  See Alves et al. (2020) and Alves et al. (2021) for further details on the developments in financing granted to firms and households in the context of the COVID-19 crisis. 4  December 2019), at end-2020 GDP was 6.3% below the level forecast for the end of that year. By country, among the four largest euro area economies, the output loss was more pronounced in Spain (9.1%) than in Italy, France and Germany (down 6.6%, 4.9% and 3.6%, respectively). Also of note is the heterogeneous cross-sector impact of the pandemic, which is mainly affecting services. Much uncertainty also persists regarding the intensity of the recovery in the early stages of 2021, in view of the recent course of the pandemic in Europe. The available short-term indicators signal a slowdown in activity so far this year. Should the additional health crisis containment measures endure across the board, a fresh contraction in some countries or sectors cannot be ruled out.

MONETARY POLICY REPORT PRESENTATION TO THE FINANCE COMMITTEE OF THE HONORABLE SENATE OF THE REPUBLIC ∗  Mario Marcel Governor Central Bank of Chile 3 April 2017  The Monetary Policy Report of March 2017 can be found at http://www.bcentral.cl/en  ∗  Introduction Mr. Governor of the Senate’s Finance Committee, Senator Carlos Montes, honorable members of this Committee, ladies, gentlemen, Thank you for your invitation to present the views of the Board of the Central Bank of Chile about the recent macroeconomic developments, their projections and implications for monetary policy. This vision is contained in detail in our Monetary Policy Report (the Report) of March 2017. It is worth mentioning that this Report includes for the first time economic forecasts for 2018, as I will show you throughout this presentation. I am here with the full Board and all the staff responsible for the topics covered in our Report. I wish to make a special mention of our new Board member, Ms Rosanna Costa, recently confirmed by this Senate, and Ms Solange Berstein, our Financial Policy Division Director, as of today. In recent months, annual CPI inflation has continued to decline, in line with forecasts in the December Report. Goods inflation continues to be shaped largely by the movements of the exchange rate, while services inflation has continued to drop gradually, marked by the widespread indexation and consistently with the business cycle. Meanwhile, in late last year and into this, GDP of non-natural-resources sectors performed weaker than forecast.
When the weaknesses  BIS Review 99/2006  1  were not adequately addressed, the process of reconstituting the Board and management of Bank Islam was initiated in 2003. In such an exercise, key shareholders are expected to be proactive in making prudent and responsible action to remove any member or employee that is found to be unsuitable or not having the required calibre so as to avoid a prolonged process in the reconstruction of the Board and management of the bank. It needs to be recognized that the responsibility for the safety and soundness at the institutional level rests primarily with the Board and the management of each banking institution and the key stakeholders such as the significant shareholders. Institutional investors should also have an active role and make swift and bold decisions in ensuring that only capable individuals are appointed and remain on the Board and senior management of banking institutions. Currently, virtually all the directors and key executives of Bank Islam are new, with diverse banking experience. In accelerating the provisions and in instituting the measures to address the bank's system, processes and business culture, it has now paved the way for drawing in new shareholders. It can now offer a valued proposition. And indeed, the participation of a new strategic investor will in fact further strengthen the bank. This has allowed the existing and new shareholders to focus taking the bank to the next level and to capitalize on the new opportunities the environment offers.

As a result, in the long term, two different uses of the CBDC could exist side by side: one for payments between financial sector players (a socalled “wholesale” currency) that uses blockchain technology and all its possibilities, notably smart contracts; and another for the general public (a so-called “retail” currency) that is simpler and better suited to retail transactions. In this respect, financial institutions are much more digitally mature than private individuals as they already access central bank currency digitally via the bank accounts they hold with the central bank. In addition, following on from the questions raised by the Governor of the Bank of England, Mark Carney, on the idea of creating an international digital currency in response to the dominance of the US dollar, I think there would be some advantage in moving rapidly to issue at least a wholesale CBDC, as we would be the first such issuer in the world and would thus reap the benefits of having a benchmark CBDC. 2/ The issuance of a CBDC can generate significantpositive externalities by increasing the productivity of the financial sector and by extension the economy, and by shoring up confidence in the currency and in the financial system. But, in parallel, it is vital that we examine the potentially negative externalities that a CBDC could generate for liquidity, profitability and bank intermediation. In particular, we need to look very closely at the risks linked to large-scale and/or sudden conversions of bank deposits into central bank money.
In such situations, it is usually argued that the best strategy is to try to avoid the worst outcomes, as we have done in preparing for a no-deal Brexit. And sometimes you need to be bold to avoid truly bad outcomes, exactly as Mario Draghi did when he said that the Eurosystem would do “whatever it takes”. Third, how should we respond to uncertainty about structural relationships? Uncertainty about the transmission mechanism is often used to justify acting gradually. Sometimes described as “tiptoeing in a dark room”, a central banker following the Brainard principle attenuates his response to inflationary shocks if he is uncertain about the precise sensitivity of inflation to monetary policy. But the more cautious he is in the first step, the more ready he should be to take several additional steps: gradualism is not inaction. Structural shifts in the economy are also constantly changing economic dynamics and equilibrium relationships, such as r* (the natural rate of interest) and u* (the natural rate of unemployment). But as John Williams of the New York Fed has pointed out, these stars are today more a fuzzy blur than a single bright point of light. So whilst they can help with the broad orientation of monetary policy, uncertainty about these stars is too wide to permit precise navigation. Overall, therefore, the theoretical guidance on how to respond to uncertainty is itself open, to say the least.

So-called soft data, such as surveys and sentiment indicators, and market signals do not always align with hard official statistics which are generally known with some delay. Statistical techniques exist to try to combine these sources together into a “nowcast” but the error bands around these central estimates are still quite wide. They also cannot deal with one of the most difficult problems: what to make of so-called “idiosyncratic factors”? For instance, to what extent is the recent stutter in the German economy due to the car industry and to the new emissions standards or to the low level of the Rhine and possibly climate change? These are very hard judgements to make. Second, “Future path” uncertainty If we are unsure about where we are, we are even less certain about where we are going, most obviously because of shocks that we cannot precisely predict. A potential slowdown in China or different choices over Brexit – which you will discuss today – are two such examples. Economic dynamics are also driven by underlying momentum that is very difficult to gauge. Is the recent growth slowdown temporary or will it persist? A temporary slowdown is, as you know, the base case for the ECB, which recently revised down its staff macroeconomic projections for real GDP growth substantially in 2019 but only slightly in 2020. Third, “Strategic” uncertainty In some cases, the uncertainty we face is about what other policy makers will do. This is particularly pernicious when unpredictability is considered a source of strategic advantage.
But, together with their counterparts in other jurisdictions, they have also spent these years designing and implementing reforms to prevent a recurrence of such an episode. Some of these have been to broaden and reinforce the underlying, the non-varying framework of regulation to make both financial firms and the financial system more resilient. Some of these reforms, however, have been to create the institutions, the macroprudential authorities such as the Financial Policy Committee (FPC) of the Bank of England, charged with assessing time-varying risk in the financial system and to give those institutions the tools to address such risks. Much of the FPC’s focus over the first four years of its existence has been reinforcing the underlying regulatory framework. While there remains much work to be done, the design of the main elements of the framework – addressing capital, liquidity, too big to fail – is essentially completed. We are now increasingly moving into the implementation stage. As the UK economy continues to expand, and as monetary policy normalises – which we expect to be limited and gradual – we will more and more need to think about the time-varying element of  BIS central bankers’ speeches  1  our mandate, how the associated credit cycle is developing and whether and how we apply our reforms to address this. Aggregate credit After a very deep recession and slow recovery, the UK economy regained its pre-crisis level of output in the middle of 2013 and has since been expanding steadily.

The TUC estimate that as many as 1 in 9 workers may be in work which is insecure in income terms.7 This income insecurity has been a key and recurrent theme in my recent discussions with charities, faith and community groups across the UK. For some, these income insecurities have been worsened by the introduction of Universal Credit. This has added time lags in payments to claimants, caused rising concerns about benefits sanctioning and has heightened uncertainties about eligibility for work criteria.8 Recent research by the Resolution Foundation has found that pay volatility in fact affects a significant number of UK workers, not just those on low pay or the gig economy.9 Over 90% of those who remained with the same employer during 2016-17 experienced at least one month when their take-home pay varied by more than 5%. This pay volatility is more prevalent for those on lower earnings and among the young. Income volatility appears to have significant welfare costs for workers. A recent study found the average worker would be willing to sacrifice a fifth of their wage to avoid a variable work schedule set by their employer.10 In practice, gig workers tend to be paid less not more. Pay of self-employed and zero-hours contract workers lies significantly below employed and permanent contract counterparts (Chart 12). This is a malign coincidence of lower and less certain income.
For this reason, we believe it is important that as the economy returns to higher growth rates, we recover these buffers, in order to be well prepared for possible shocks in the future. Thus, this new cycle makes us once again face the challenge of laying the foundations for a more stable economy, so that negative cycles do not affect us as deeply as they used to in the past. The Central Bank will be available to do its part in this effort, especially in terms of controlling inflation and safeguarding financial stability, thereby contributing to the well-being of the Chilean population. Thank you for your attention. Now if you have any questions, please feel free to ask. ***  6  Figure 1 Growth forecasts (*) (real annual change, percent)  2017  2018 3.25  2.75  4  3.5  3  1.50  Sep.  3.5  2.50 2.00  1.75  3.5  Dec.  1.75  1.75  2.25  1.25 1.00  1.00  Mar. Jun. 16  Sep.  2.5  2.5  2.5  Jun. Sep.  Dec.  1.50  Dec.  Mar. 17  17  Mar. 18  (*) The ranges show the growth forecast in each Report. Red diamonds correspond to the Economic Expectations Survey at the respective statistical cutoff. Source: Central Bank of Chile.

16  17  18  19  20  Figure 10 Business expectations (IMCE) (1) (original index)  80  80  Investment expectations (2)  70  70 Present situation  60  60  50  50  40  40  30  30  Employment expectations (3)  20  20  10  10 10  11  12  13  14  15  16  17  18  (1) Value above (below) 50 shows optimism (pessimism). (2) Simple average between expected investments in manufacturing and trade. (3) Simple average of expected employment in manufacturing, trade and construction. Source: Icare/Universidad Adolfo Ibáñez.
Unit Real Wage Index in Manufacturing Industry (1997=100)  125 115 105 95 85 75 65  05-III  05-I  04-III  04-I  03-III  03-I  02-III  02-I  01-III  01-I  00-III  00-I  99-III  99-I  98-III  98-I  55  Source: SPO, TURKSTAT and CBRT. In 2006, in the event investments and employment in the manufacturing industry follow the same course as the previous period, the continuance of productivity increases may be expected. Meanwhile, the salaries of civil servants and minimum wage increases point to a rise in wages above inflation. The unfavorable course in raw material prices, another significant component of costs, still persists. Crude oil prices exceeded their historical peak figure experienced during Hurricane Katrina by the 25th of April and reached USD 73.3 per barrel. OPEC’s decision to leave its quota unchanged at its meeting of the 8th of March, the low level of unused capacity in the sector and uncertainties about leading oil producing countries such as Nigeria and Iran led to an increase in oil prices. Despite new production capacities are expected to be introduced, the International Energy Agency’s (IEA) expectations for the growth trend in crude oil demand, which are above those of 2005, strengthen the probability that oil prices will remain high throughout 2006.

‘Other’ includes: Reserve Bank of Australia, Banco Central do Brasil, Danmarks Nationalbank, Bank of Korea, Banco de Mexico, Norges Bank, Reserve Bank of New Zealand, Monetary Authority of Singapore, and Sveriges Riksbank. This was just the scenario for which the swap lines had been designed. Put in place after the GFC, the standing swap lines allow five major central banks (The Bank of England, Bank of Japan, ECB, Swiss National Bank and Bank of Canada) to lend dollars to their local banks, confident in the knowledge that they can back those loans with dollars secured from the Federal Reserve, short-circuiting any market dysfunction. Most of the standing swap line central banks, including the Bank of England, provide weekly dollar auctions backed by the swap lines. But take up is usually minimal, because the auctions are intended only to be backstops when markets are working normally, and priced accordingly. But that was not the situation we faced in March. Over the days following that first call, as market conditions deteriorated further, we agreed on a package of measures to mobilise the swap lines more fully: extending the maturity, reducing the price, and increasing the frequency of our operations to ensure that dollars 5  All speeches are available online at www.bankofengland.co.uk/news/speeches  5  continued to flow. The first part of this package was announced on Sunday 15 March, and further extended on 20 March. The Federal Reserve also agreed temporary arrangements with a further nine central banks.
The second drawback is that a nominal income growth target would probably mean less to the average person than does an inflation target. One virtue of an inflation target is it provides people with a simple heuristic for forming their expectations of how fast prices will rise. That would be muddied under a nominal income growth target. The bottom line from all this is that I do not believe that a shift to a nominal income growth target would represent a major change in the regime. Most of the time, policy settings would probably be pretty similar. The main consequences would instead lie in how the MPC explained and justified its decisions. The same cannot be said of a shift to a target for the level of nominal income, as recently advocated by Michael Woodford.8 As the incoming Governor of the Bank of England, Mark Carney, explained in a recent speech,9 such a target would ensure that past control errors have to be subsequently corrected. Bygones are not bygones, in other words. In the current context, this is usually taken to mean returning nominal income to a continuation of its pre-crisis trend line. As Chart 3 reveals, the nominal income shortfall in the United Kingdom is presently very large – in excess of 15% in fact. Such history dependence in policy is potentially of value when private agents are sufficiently forward-looking and the regime is fully credible.

That could potentially create some turmoil for international markets including ours and in the process we could see some potential for dislocation which is why Sri Lanka has decided to reach out to multilateral agencies like the IMF and the World Bank to assist us in terms of sheltering or protecting the economy against any adverse developments that may occur in the near future as a consequence of any turmoil in international capital markets if and when US policy makers decide to raise interest rates. That is one hurdle we have to look at. The second hurdle I would say is the lack of a structural change the way international, particularly developed countries of the world, are managing their economic affairs. A lot of the changes that we have seen in the last 5 years has had to do with monetary policy and the aggressive easing of the monetary policy. But on the fiscal side, you haven’t seen any structural changes in countries like the United States and most European countries that took the world into the great recession in 2008 as a consequence of their housing  2  BIS central bankers’ speeches  bubbles. That structural change in terms of improving productivity, reducing the size of social security programs and retooling their economies to become more productive has still not started and until that happens we don’t have a sustainable basis for global growth to grow apace.
Employed and persons absent due to illness, 1987:012002:05 Hundreds of persons Seasonally adjusted series expressed as moving three-month average  45000  2400 Absent due to illness (left scale) 2200  44000  Employed (right scale) 2000  43000  1800 42000 1600 41000 1400 40000  1200  39000  1000 800 1987  38000 1989  1991  1993  1995  1997  1999  2001  Source: Statistics Sweden (Labour Force Surveys)  2. Recipients of sickness allowance, 1974-2001  120000  120000 30-89 days  100000  90-364 days  100000  over 364 days  80000  80000  60000  60000  40000  40000  20000  20000  0  0 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000  Source: National Social Insurance Board  BIS Review 40/2002  7  3. Mean working time, 1988:1-2002:1 Percentage 4-quarter change  7  7  6  6  5  5  4  4  3  3  2  2  1  1  0  0  -1  -1  -2  -2  -3  -3  -4  For employees - Labour Force Surveys  -4  -5  For employed - National Accounts  -5  For employed - Labour Force Surveys -6 1988 1989 1990 1991 1992 1994 1995 1996 1997 1998 1999 2001 2002  -6  Source: Statistics Sweden (Labour Force Surveys and National Accounts)  4.

This means that the curve normally has a negative slope. An outward shift in the curve can be interpreted as deterioration in matching in the labour market, as the number of vacancies for each given level of unemployment is higher. Movements along the curve may depend on economic changes. When there is an improvement in the level of economic activity, the number of vacancies and recruitment rise, but at the same time the difficulties and time required to fill the vacancies increase. The large rise in the unemployment rate in Sweden at the beginning of the 1990s was followed by a reduction in the number of vacancies, which can be interpreted as a movement along the curve. During the mid-1990s, unemployment appeared to have stabilised at a high level, but in recent years unemployment has been held back, while the vacancy ratio has risen. The Beveridge Curve appears to lie further out than before, which could indicate that the matching process has deteriorated and that the labour market has become less flexible. One reason for a possible outward shift could be that the persons who became unemployed during the crisis years of the 1990s have had difficulty in returning to the labour market.