samchain/econo-pairs-v1 huggingface dataset:
I wouldn’t want to meet the eyes of the European citizens and tell them that we knew this could happen, but we were too busy to do anything about it. Some different avenues have been outlined in the ongoing international discussion. So far, the focus for discussions in the EU has primarily been on crisis prevention in the form of regulatory reform and different organisational structures of supervision. However, similar options do exist both in the context of crisis management and in the subsequent resolution of the crisis. One of the solutions suggested is to let the home country take a leading position more firmly. In this case, the home country supervisor is responsible for the supervision of the overall group and in a crisis the home country authorities has the responsibility for managing and solving the crisis for the bank as a whole. With increasing emphasis on consolidated supervision, this seems to be where Europe is heading presently. It addresses the problem primarily from the cross-border bank’s perspective of minimising the regulatory burden. This is, of course, valuable but does not solve all problems. With the new Capital Requirements Directive, the consolidating supervisor of a banking group will have, for example, the principal responsibility for validating and approving the credit risk models in the entire bank, including its subsidiaries. But in most cases, the rules to be used are expected to be settled in negotiations between the supervisors.

From its inception, Malaysia’s and its founding members’ vision have always been for a strong and integrated ASEAN region. The “ASEAN Way” believes there is strength in diversity and no country should be left behind. ASEAN strongly believes in the concept of shared prosperity, where wealth creation within the region will be enjoyed by all. The spirit of cooperation and flexibility are amongst the principles which underpinned the success of Myanmar’s chairmanship of ASEAN in 2014. Under Myanmar’s leadership, we saw major strides in financial integration that culminated in the conclusion of the ASEAN Banking Integration Framework (ABIF) by the ASEAN Central Bank Governors. A framework of gargantuan achievement. Myanmar’s leadership in seeing this through was crucial and now ABIF represents the single most important agreement in strengthening the ASEAN banking system, driving deeper integration and enhancing the region’s growth potential. It is an agreement of momentous significance. I would also like to congratulate Myanmar for successfully advancing the Yangon Outcomes for Financial Inclusion during their tenure as Chair in 2014. The groundwork that Myanmar laid during their Chairmanship was key to the announcement by the Finance Ministers and Central Bank Governors in March 2015 that financial inclusion will be elevated to be an important policy priority for ASEAN. This has resulted in the establishment of a dedicated working committee in ASEAN to deliberate policy options, engage stakeholders and coordinate collective actions to advance financial inclusion. Malaysia also places a big priority on financial inclusion.
But the supply of bank lending to businesses during the recovery is likely to be more expensive than it was pre-crisis and possibly constrained in quantity. In 2009 we saw one of the consequences, with a record year for sterling corporate bond and equity issuance as investment grade corporates by-passed the banking sector. The loans market is a particularly important part of the system of credit provision. Syndicated loans allow firms to borrow in larger size and for longer periods, and facilitate the lenders in diversifying their risk. Given the highly concentrated origination of business lending in this country, it is useful that the syndicated loans market and the secondary loans market allow a wider group of firms to contribute to lending to UK businesses, including non-bank participation. Over the next few years there are a lot of corporate loans, made during the boom years of credit supply, which fall due for repayment or rollover. That is a particular challenge for subinvestment grade borrowers, including most SMEs. It is clear that the high-yield debt markets are very much more developed in the United States than in Europe and so a greater burden here falls on bank finance. But non-banks may also have a key role to play. The Bank has been engaging with market participants over policies or market developments in the loans market which would support lending by non-bank institutions. Some of that analysis was reflected in a discussion paper on non-bank lending, published by HM Treasury earlier this year.

A similar point can be made about debt issued under the Government’s Credit Guarantee Scheme – the Government provides a guarantee but it is still the market which buys the bonds and provides the cash. As these schemes come to an end, the challenge for the banks is not so much the sourcing of an additional quantity of funding. It is to roll over that existing market funding into different funding instruments. More generally, a central bank should not allow its liquidity operations to become, or even to be perceived as a source of sustained funding for banks or for any other form of mediumterm lending. The only medium-term source of commercial bank funding, and hence for their lending, is private sector savings, whether channelled through retail or wholesale markets. A central bank does not have access to those private sector savings. The grey area is that short-term liquidity support, in size and continually rolled over, looks and acts a lot like funding. That is why the Special Liquidity Scheme was designed to lend against legacy assets only and one of the reasons why the Bank has been so determined that it will end as scheduled. Suppose the scheme were to be rolled on indefinitely. What was intended and designed as system-wide central bank liquidity support would become instead a fiscal operation. We would be using government debt – and hence public money – to subsidise a group of private sector firms, with the public purse being at risk.
The banks’ progress and effectiveness of VBI-related initiatives would be captured through the VBI Scorecard. The underpinning thrusts of VBI are also gaining relevance in the takaful industry as takaful operators are taking initial steps in exploring value-based protection for their customers. Given the universal nature of VBI, I believe that its adoption by financial groups which comprise the conventional financial institutions, as well as issuers and investors would be a natural evolution in the financial ecosystem. Expectations on the next generation of Islamic financial institutions The next generation of Islamic financial institutions would thus be driven by values and not just profit. With a moral outlook for the ultimate good, strengthened by self-discipline, greater accountability and integrity, Islamic financial institutions will have stronger consideration of the impact of decisions made. There should be greater drive to continuously improve their offerings and treatments towards customers and employees, which include fair and transparent disclosure in order to increase the positive impact of their activities. Development of banking practices based on VBI concepts are also anticipated to encourage the creation of new business opportunities and provide the foundation for better returns for Islamic banks over the long term. An example is assessment of financing application by Islamic banks based on value-creation instead of mere credit scoring which would benefit business propositions from new sectors such as SMEs. Another example is refocusing, strengthening and repositioning of personal financing 3/4  BIS central bankers' speeches  by Islamic banks to best meet the needs and circumstances of customers.

The punch line, of course, was that if you didn’t believe a man could fend off a croc with his bare hands, then you yourself were in “de-Nile.” We are no longer in denial about our national economic plight. Our great country now finds itself in a very difficult predicament. It is true that the situation here in Texas is relatively better than that of the nation; Texas is an oasis in a national economic desert devoid of lifegiving job creation. We went into the Great Recession last and were one of the first to come out. As we have for the past 20 years, we continue to outpace the rest of the United States in employment growth by a significant margin. Since the Great Recession officially ended in June 2009, only North Dakota (a plucky state whose hearty population totals less than that of Collin or Denton counties) has seen faster job growth than Texas.1 As I speak, Texas has almost as many people employed as we did before the recession began. Our banks are in better shape than those in the rest of the country; we are benefiting from the blessings of nature, with copious amounts of oil and gas and abundant agricultural production; our fellow citizens have seen to it that our Legislature continues to hew to a tax, regulatory and legal environment that attracts job-creating investment and encourages business formation and growth.
Since the amount of required capital has a direct impact on business performance, it is therefore quite a challenge for supervisors to be requiring banks to hold different amounts of additional capital. For accounting standards, the most recent challenge is the accounting methods for sophisticated financial products, such as CDO and structured notes, in which differences in financial assets’ classifications can result in different financial impacts. For example, held-tomaturity classification conceals profit or loss until maturity, while trading classification charges profit or loss to financial statements in every accounting period. The interpretation for a suitable classification relies significantly on the intention of bank management as well as on the judgment of external auditors. The importance of this issue, as we know, has reemerged more demandingly following the sub-prime crisis in the US. Another practical challenge in implementing both standards is the use of complex financial models to measure risks in banks’ portfolio. In order to confidently use the models, there must be sufficient data, appropriate risk measurement techniques, and a rigorous validation process. At present, the most important concern is the lack of data. For example, for credit risk measurement, a certain amount of data on default is required. Such data typically are not readily available, and this is also the case here in Thailand. In addition to the lack of data, the IAS 39 also allows the use of fair value for all financial assets and liabilities, or the Fair Value Option.

In the fiscal area, our working assumption is that in 2019 the economy will receive a boost consistent with the approved Budget; from then onwards, the structural deficit will follow the path of gradual decrease defined by the authority (table 1). V.2. Inflation  In terms of inflation, given its lower level today and the estimate of somewhat larger capacity gaps, its convergence to 3% will take longer than we predicted last December. Thus, it is estimated that the CPI will end this year with an annual increase of 2.6% and return to 3% in the first half of next year. From then on, it will fluctuate in the vicinity until the end of the policy horizon, that is, the first quarter of 2021. The CPIEFE is projected to end 2019 at 2.4% and approach 3% in the second half of next year (figure 12). V.3. Monetary policy  As for monetary policy, the Board continues to believe that the evolution of macroeconomic conditions makes it necessary to reduce the monetary stimulus over the policy horizon. However, the change in the initial conditions of the baseline scenario caused by the lower inflation observed—in addition to other adjustments  6  mentioned above—implies that its convergence to the target requires the pace of MPR normalization to be slower than anticipated. in December. For short-term forecasting purposes, we use as a working assumption the MPR trajectory taken from our March Economic Expectations Survey, which foresees no changes in the MPR at least during the next two quarters.
The depreciation of the RMB, alongside a pullback of foreign funds from the region, triggered downward pressures on the region’s currencies. Since the RMB move on 11 August, Emerging Asia currencies have depreciated by an average of 3.2% against the US Dollar, with some falling by as much as 7%. 2  While markets seem to have calmed somewhat, a sense of uncertainty prevails and the risk of renewed volatility remains. What is happening? Financial markets are essentially coming to terms with four significant “re-pricings”. •  First, the stock markets in China are adjusting downwards from unsustainably high levels. •  Second, the RMB has become de-coupled from the US Dollar and is moving towards a more market-determined exchange rate. •  Third, oil and commodity prices have eased considerably this year, marking the end of what some have called a “super-cycle”. 1  Emerging Asia economies refer to China, India, Korea, Hong Kong, Taiwan, Singapore, Thailand, Malaysia, Indonesia and the Philippines. 2  Excluding the Hong Kong Dollar. BIS central bankers’ speeches  1  •  Fourth, the effects of an impending interest rate hike in the US – the first after seven years of extremely easy monetary policy – are being priced in across Asian markets. These are not necessarily unwelcome developments. The correction in China’s stock market is not surprising given the stretched valuations that had developed over the preceding year.

To a degree, the authorities have responded to this risk: last year the Financial Supervisory Authority imposed a ceiling on residential loan-to-value ratios, following analysis and discussion within the Systemic Risk Committee, which works for the Financial Stability Council, and upon receiving an opinion from the Council. Developments in the real estate market will continue to be monitored closely in this respect, and the possibility of applying additional macroprudential tools will be considered. Another risk factor that the Financial Stability Council has identified is uncertainty about future developments in the tourism sector and the potential impact that a setback in the industry would have on the position of the banking system. At the end of 2017, lending to the tourism sector accounted for 9% of the large commercial banks’ total lending, but because growth in tourism has eased recently, this ratio has held broadly steady. The Central Bank of Iceland conducts an annual stress test in consultation with the Financial Supervisory Authority, in which it examines the impact of macroeconomic scenarios on the commercial banks’ resilience. The results are published in the autumn issue of the Bank’s Financial Stability report. The last stress test assumed that there would be a recession in trading partner countries, plus a drop in major export prices and a steep decline in the number of tourists visiting Iceland. In this scenario, the banks’ capital ratios would fall by an average of 3½ percentage points, to a level close to the minimum capital ratios currently required by the Financial Supervisory Authority.
The government authorities, the Central Bank and the Financial Supervisory Authority (FME) have already made a formal agreement on joint monitoring of signs of weakness in financial institutions, and contingencies for responding to them. This agreement has been under preparation for a long time, is similar to those in effect in other advanced economies and has nothing to do as such with the current market unease. Developments following the structural changes in the housing mortgage market have left the arrangements for the Housing Financing Fund in an untenable position. Moves to rectify this situation have been unduly delayed. Interest rate formation in this market has become unrealistic as a result, which in turn has an adverse effect on the Central Bank’s efforts to cool the economy. The Prime Minister’s recent declaration concerning the Housing Financing Fund is important and has met a positive response. But the declaration needs to be followed through in practice, as soon as possible. A few years ago it was decided to separate the activities of the Central Bank and banking supervision, drawing on developments elsewhere, in particular in the UK, which had a widespread influence. This may well not have proved as successful everywhere as was hoped. Most of the banks in the UK are foreign banks, and the share of domestic banks is small. The opposite is true in Iceland. In spite of their large and growing activities abroad, all the Icelandic financial institutions are classified as resident companies.

The same applies in principle to consumers, who can search the internet quickly for inexpensive goods and services. It is still the case, however, that the price difference between products sold on the internet and in shops is relatively small. But this will probably change as the internet is developed and more people use it. Sweden, spearheaded by the telecom company Ericsson, is one of the countries where the IT sector is large. This sector is also contributing a growing share to our annual output. Sweden is, moreover, one of the countries that is spending most on the introduction of new information technology in various economic sectors. The introduction and development of information technology in Sweden is facilitated by a capital market that is efficient, particularly as regards the supply of venture capital. I mention this to underscore the part that the deregulation of capital and currency markets in the 1980s is playing for the path of growth today. Another crucial factor has been the removal of transaction taxes on equity and bonds after an experimental phase in the late 1980s; that, too, is worth recalling as the old idea of a Tobin tax is being revived in some quarters. Improvements in productivity and flexibility National accounts data from Statistics Sweden suggest that our economy is now capable of growing faster than in recent decades. It looks as though the higher productivity growth is not only attributable to rising activity.
On the demand side, should emerging countries decouple to a large extend from the United States, their contributions would then be sufficient to maintain a significant pace of commodity prices growth. On the supply side, unexpected climate or geopolitical disruptions may lead to shocks on production, as in the past few years. On top of both factors, in the current context of raising inflation and troubled financial markets, commodities attract a growing part of investment, speeding up sometimes rather artificially their price increases. Second, the triggering of possible second round effects is a well known source of concern for the Governing Council of the ECB. The common desire of firms and households to offset  BIS Review 32/2008  1  profit margin and purchasing power losses stemming from inflationary shocks may lead to a wage-inflation spiral, ending in deteriorated output prospects and welfare losses to all parties. One should however note that nothing significant has materialised at this juncture. On the contrary, remunerations have remained well in line with productivity gains with, to take an example, reference wages increasing by 0.3% in France during the fourth quarter of last year. From this point of view, protracted shocks to food and commodity prices put the anchoring of inflation expectations and the credibility of monetary policy to the test. The recent upward trend in European household and market expectations may be of some concern.

They are increasingly a source of finance for UK businesses. However, the ‘dash for cash’ in March 202011 led to a rapid deterioration in the functioning even of advanced-economies’ government bond markets and created market dynamics significant enough to raise the cost of lending. The episode clearly demonstrated the need to build resilience in market-based finance. 12  Given the global nature of market-based finance, the effectiveness of any policies in the UK will depend in part on policies implemented in other major jurisdictions. We are therefore working with international counterparts in the Financial Stability Board to take coordinated action to address these issues – including on open-ended funds, margins, the liquidity structure and resilience of core markets, to name a few. In the meantime, the FPC (and other UK authorities) need to continue monitoring them, starting by ensuring there is reliable data to do so. 2.The growth of cryptoassets and decentralised finance: regulatory frameworks need to evolve Another important challenge is seen in cryptoassets and decentralised finance (DeFi) which in recent years have grown to represent around 1% of global financial assets.13 Cryptoasset technology is creating new financial assets, and new means of intermediation. Many services now facilitated by this technology mirror those available in the traditional financial sector, including lending, trading and exchange, investment management and insurance. While that activity is currently small, if the pace of growth seen in recent years continues, interlinkages with the traditional financial sector are likely to increase.
New markets, new customers, new products, new technology: the risks of something going wrong are high if the industry's risk assessment procedures and control mechanisms do not keep pace. The impetus behind all these changes is intensified competition. This is good news for financial efficiency, and given that this is also one of the Bank of England's core interests, we welcome it. But there are undoubtedly some implications for financial stability, at least in transition. An increase in competitiveness may for a period increase the financial system's vulnerability to shocks; academic research suggests that the process of financial liberalisation can increase significantly the probability of a banking crisis. So how do we make this trade-off acceptable, given that we certainly do not want to exchange the overt costs of financial crisis for the hidden costs of financial protectionism? 2  BIS Review 43/2001  Policy response to the changing environment Well, a large part of the answer must be to strive for improvements in the financial and regulatory infrastructure – to 'risk proof' the system as it were. There are a number of very significant initiatives that are worth mentioning in this context. The proposed new Accord from the Basel Committee is deservedly the focus of a number of the papers to be presented at this conference. A large slice of our time here is also going to be devoted to evidence on the effectiveness of market discipline on banks.

The first one, which we may call the pan-European approach, has tended to produce a lot of numbers on aggregates and averages in the financial stability analysis. No country wants to stick out in the assessment; they hide behind these broad numbers. But you cannot identify weaknesses and vulnerabilities through averages. “On average”, banks’ credit portfolios and capital ratios may be robust but an FSAP should look for the outliers – the ones which will break first. Whichever approach you select, you would need to include a detailed analysis of those major financial groups which cross the borders between the European countries and sometimes also operate outside the region. These groups are in many cases so large that they could influence countries both positively and negatively depending on developments. Let me give you a recent example from my own country: Icelandic investors have bought large stakes in Swedish financial firms. The investments are rather small from the Swedish point-of-view but significant for their parents in Iceland. Recently, there has been volatility in the Icelandic financial and currency markets. Luckily, the investments in Sweden are doing very well and have rather contributed to strengthening the Icelandic financial system. But in another situation the reverse could have been true – had the Icelanders made these investments during the Swedish banking crisis in the 1990s the Swedish holdings would have contributed to weakening the Icelandic economy.