samchain/econo-pairs-v1 huggingface dataset:
Lack of transparency can result in delay in tackling the problem and erode public confidence in the soundness of the banking system. Innovation and technological change 21. Asset quality is thus one main issue which Asian banks have to tackle. But one of the results of globalization is that even banks in relatively undeveloped banking systems are now having to cope with the challenge of product innovation and new technology. This can accelerate the transformation of such banking systems: modern computer systems can be installed and banks can make the jump straight from cash to smart cards. The downside is that banks may have less time to build up the skills properly to use the new technology and the new products which their counterparts in developed banking systems have taken many years to BIS Review 55/1997  -5-  acquire. Derivatives are a case in point. While the derivatives markets in the region other than Tokyo are still quite small, these products are certainly being sold to, and in some cases being traded by, local banks in the region; and a number of them have suffered losses as a result. 22. Looking further ahead, the opportunities provided by new technology will pose important strategic challenges for the banks. To what extent, for example, should they invest in new delivery mechanisms such as telephone or internet banking? These channels offer the potential to bring down dramatically the cost of transactions compared with the traditional branch network.

But turning back to banking in the region, even if this scenario is realized, and there must of course be much uncertainty on this, the amount that banks would be called upon to finance would remain very substantial in absolute terms. For the foreseeable future, therefore, the banks will still be playing a key role in mobilizing savings in the region and channeling this into investment. And this makes it even more important that banking systems in the region remain healthy. Of course, foreign banks will play an important financing role, in particular those based in Hong Kong which is the major centre in the region for the arranging of syndicated loans. But within most of the banking systems of the region it is the local banks which predominate in terms of share of assets. The position of Asian banks 10. So let us take a look at the current position of the Asian banks. It is in fact very difficult to generalize because the banking systems in the region are not homogeneous. But certainly if we look at what the World Bank has called the eight “high performing Asian countries”, the Asian banks have been at the heart of the Asian success story2. This is partly due to the emphasis laid by governments on trying to ensure the stability of banks, through prudential supervision and other means, to encourage confidence among savers.
The National Accounts show that productivity on average fell by 0.5 per cent in the first three quarters, compared with the same period in the previous year. The downturn was broad and covered almost all sectors. The Riksbank was therefore forced during the course of last year to revise down its short-term productivity forecast. One important explanation for the slowdown in the productivity increase is linked to cyclical developments. When the economic cycle has peaked, productivity usually slows down. The Riksbank assumed in the third and the year’s final Inflation Report in October 2006 that GDP would increase by 3.1 per cent in 2007 and that employment would increase by 1.1 per cent in 2007. In the most recent Monetary Policy Update published in December 2007 the GDP increase was calculated at 2.6 per cent and the increase in employment was calculated at 2.5 per cent for the whole year 2007 (see Figure 6). Employment has thus continued to increase more quickly than we had estimated, while GDP growth has slowed down. The fact that employment is increasing can thus be regarded as natural in this phase of the economic cycle, but the increase has been unexpectedly rapid, which is possibly a reaction to the weak growth in employment during the first years of the 2000s. There are also other factors that may have contributed to the severe slowdown.

William C Dudley: The national and regional economic outlook Remarks by Mr William C Dudley, President and Chief Executive Officer of the Federal Reserve Bank of New York, at the Center for Economic Development, Syracuse, New York, 12 April 2012. *  *  *  Good morning, I am pleased to be here in Syracuse at the Center for Economic Development. It is always a pleasure to speak with business and community leaders because of the important role you play in helping to shape the economy of the region. I thank you all for inviting me here today. I try to get out of my office in New York City as much as I can to get a sense of regional economic conditions across the second Federal Reserve District. I was last here in Syracuse in 2010 and, more recently, I traveled to West Point and the Capital region and Long Island. These visits are just as important as any trip I might take to Washington, D.C., to help formulate monetary policy, or to Switzerland, to help shape international bank regulation. Each visit within the region helps me to deepen the relationships with the people I represent. I believe that the understanding of issues and concerns that I gain today will help ensure that the Fed’s policy decisions reflect the public interest. Today, I want to talk a bit about the Fed – what we do and why we do it. Then I’ll provide some thoughts about the economic outlook nationally and locally.
The output gap is a measure that expresses our assessment of total capacity utilisation in the economy. The output gap is defined as the percentage difference between actual output and potential output. Potential output indicates the level of output that is consistent with price and cost stability. The estimate for the output gap is uncertain, partly because the level of potential output is unobservable and must be estimated. Since official statistics on overall activity in the economy are not available immediately and are subsequently revised, the level of actual output will be uncertain. Our overall assessment is that capacity utilisation has picked up over the past two years and is now slightly higher than normal. In our estimation of the output gap, the result of technical calculations is compared with other sources of information about capacity utilisation in the economy. Information from Norges Bank’s regional network may indicate that overall mainland capacity utilisation is close to a normal level. However, there are signs of bottlenecks in production in some sectors of the economy. For example, capacity utilisation in the construction sector is very high, particularly in the southwest  BIS Review 79/2005  1  region of the country. There are signs of some skills shortages in the construction industry, in manufacturing and in some service industries. Even though growth in the Norwegian economy has been high for a long period, substantial labour shortages have not yet emerged in the economy as a whole.

These effects can be achieved at the zero lower bound8 and in conditions of a debt overhang9. The key issue is therefore which set of forces dominates. And what matters here is not whether structural reforms are implemented, but how. This is where two further lessons of the crisis come in, which relate to our experience in Europe during the crisis: both the pace and the composition of reforms matter crucially for achieving positive effects in the shortterm. Why the pace of reforms matters Before the crisis there was an active debate about the appropriate pace of reform implementation, which had its origins in the liberalisation of Central and Eastern European economies in the 1990s. Some argued that reform was best conducted through a “big bang” approach, while others argued for more gradual reform implementation.10 More recently, studies of reform implementation had suggested that outcomes might be better if reforms were sequenced, with product market reforms preceding labour market reforms, so that lower mark-ups can support the purchasing power of households.11 There was also a political economy argument in favour of gradualism: as governments have a fixed amount of political capital, they would be most effective if they allocated their scarce resources to one set of reforms at a time. These arguments were however not always applicable to the euro area as, again, they lacked our specific context.
When inflationary pressures are looming or building up, the Central Bank raises its policy rate in order to make credit more expensive and reduce investment and consumption, encouraging saving at the same time. The policy rate is not applied to achieve other objectives than the inflation target. Thus it is pointless to set other objectives for monetary policy except by abandoning the objective of price stability, which would be particularly imprudent. Steady enhancements have been made to the conduct of monetary policy. Forecasting has strengthened with a new and much more powerful macroeconomic model. A landmark was reached this year when the Bank began publishing its staff’s projection for the policy rate path that is compatible with attaining the inflation target within an acceptable timeframe. Previous interest rate assumptions had proved unsatisfactory and even misleading. Publication of the policy rate path has been welcomed and has facilitated the Central Bank in exerting the impact that it intends to have on market expectations. International agencies and foreign analysts who monitor economic developments in Iceland have praised the Central Bank’s monetary policy implementation, transparency and professionalism. It is interesting to note that these assessments are at odds with widespread attitudes in Iceland at the moment. In the climate that has prevailed recently, the Central Bank’s policy rate hikes have admittedly affected the exchange rate of the króna first, then demand much later. Among the explanations is that policy rate hikes have not had what should have been their normal effect.

It is perhaps inevitable that as time passes and memories fade, there is less political focus on these issues and less will among jurisdictions to ensure governance keeps pace with the risks. Fatigue sets in. For example:   Before the crisis Basel II, which was not particularly ambitious, took 10 years to agree.   By contrast, post-crisis the key elements of Basel III, which was a significant step-change, took just 2 years.   But as the crisis receded and fatigue developed, it took a further 5 years to finalise Basel 3.1, which implemented less sweeping changes. The lesson fades that in an integrated global economy we are all ultimately in the same boat or in the words of Benjamin Franklin that “if we do not hang together we will most assuredly hang separately”. This had led to fragmentation in the way we implement the reforms we have agreed. Moreover, the circle of players has grown. The governance reform efforts of the last 50 years have been predominantly led by the advanced economies whose financial institutions dominated the global economy. That is changing with the increasing importance in the global economy of emerging markets – indeed much of the financial innovation we see today is happening in the emerging market and developing world rather than in the advanced economies. We are now in short having to work harder to generate the consensus to keep the governance necessary for financial globalisation moving forward in line with the risk. And we can see major challenges emerging.
Widespread consultation would be needed, and due account taken of confidentiality rules, before any reporting framework can be implemented.”  7  See Communique Meeting of Finance Ministers and Central Bank Governors Washington, DC, April 18–19, 2013 “We also call for a feasibility study on how information from trade repositories can be aggregated and shared among authorities, so as to enable comprehensive monitoring of risks to financial stability.”  8  See CPSS / IOSCO. Report on OTC Derivatives Data Repository and Aggregation Requirements. January 2012. BIS central bankers’ speeches  7  The goal of financial stability will remain elusive so long as we have financial firms that are judged as “too big to fail.” Some might argue that this is reason enough to break up these firms. I do not believe that this is the best course of action. As I have outlined here today, I prefer a multi-faceted approach that strives to: (1) minimize the risk that a large complex financial firm faces default, (2) have in place a credible resolution regime if a default becomes imminent, (3) improve the resiliency of our financial system so that any shocks resulting from a resolution are not amplified across the system, and (4) build out a global data model for effectively monitoring global financial markets.

For a beneficiary who has an account within the same bank with the payer, which is known as Intrabank, the funds will be credited instantaneously. The program for today includes the showing of three video clips on online banking and IBG, which can be downloaded through YouTube and ABM and AIBIM’s website, including presentations by two banks. In addition, 17 banks and MyClear (the national payment system operator) have also set up exhibition booths to showcase their respective electronic payments and funds transfer solutions. This is indeed an opportunity not to be missed as you will be able to learn and ask questions about online banking solutions and sign up for the special offers such as free security tokens or waiver of monthly subscription fee for business Internet banking as provided by some of the exhibitors today. BIS central bankers’ speeches  1  In conjunction with today’s roadshow, I am pleased to announce that 2 banks namely, Bank Simpanan Nasional and OCBC Bank, together with 8 banks in Temerloh1 in Kuantan will hold their “Open Day” from today, 2 December until this Friday, 6 December. During the weeklong “Open Day”, visitors can enquire and learn more about e-payment solutions from the branch staff. The “Open Day” event is open to all businesses and the general public to complement the efforts of the roadshow to reach out to smaller towns and I encourage all participants to take this opportunity to visit the bank branches in Kuantan and Temerloh.
As soon as the euro was adopted, they ceased to differentiate between countries and sovereign yield spreads narrowed, even aligning themselves at the lowest levels, i.e. those of Germany and France. For the first decade of EMU, the single currency appeared to play a buffer role that in addition to protecting countries against monetary instability – which the euro successfully did and was its raison d’être – also protected them against the economic reality. Member States were labouring under the illusion that they could, without ever suffering the consequences, allow themselves to flout the rules for budgetary discipline or make no efforts to remain competitive. The crisis came as a very severe wake-up call. 3. The third cause of this crisis, interlinked with the other two, is institutional: monetary union was not built on sufficiently robust economic, fiscal, financial and political institutions. The fiscal discipline mechanisms were insufficient, there was no mechanism for the surveillance of macroeconomic imbalances, nor was there a crisis management mechanism; financial union worked when times were good: banks held the bonds of other Member States, but it very rapidly fragmented when the crisis erupted, due to the lack of institutional soundness. 2. The causes of the crisis are being addressed  I will now explain how the euro area is dealing with the three fundamental causes of the crisis it is facing.

The principle underlying this single supervisory mechanism is that the severity of the crisis in the euro area has largely been due to the vicious circle that developed between banking and sovereign risk. To break this link, we need to have a genuine institutionalised banking union that ensures not only the same supervision throughout the euro area, but also identical rules, an integrated bank crisis resolution mechanism and a common deposit guarantee scheme. We are moving towards the banking and financial union that was missing from monetary union. 3. The Eurosystem is providing valuable support during this period of necessary reforms  It is clear that the ultimate responsibility for exiting the crisis lies with governments, at national level – implementing reforms, consolidating public finances and restoring competitiveness – and at the collective level – agreeing on and implementing a more coherent and comprehensive institutional framework around monetary union. These reforms are obviously – and fortunately – the fruit of a democratic process and can only be that. But  BIS central bankers’ speeches  3  the corollary to this is that these necessary reforms cannot be immediate: they take time, first to be implemented and then to yield their effects. And the time of the markets is not that of democracy, as you know. Doubts and delays create nervousness, volatility and worry in financial markets, which often leads to sharp rises in interest rates for countries deemed to be vulnerable.
But I am also very clear that really  2  BIS central bankers’ speeches  achieving the objective of avoiding a no failure regime requires a fundamental change of mindset both inside the PRA and in society more broadly. Fear of failure is an important conditioner of behaviour in a financial regulator, and achieving a change on this front depends on establishing a wide acceptance of our approach that orderly failure that does not compromise our public policy objectives is an acceptable outcome. To be clear, we should be criticised where failure compromises those objectives and we could have taken steps to avoid it, and we will be required to report on such failures. But if failure is orderly, and does not compromise our public policy objectives, the responsibility should rest with the board and management for failing to serve the private interest of their shareholders and creditors. Last on the theme of failure, having firms that are either too big or too important to fail is bad for competition in the industries that we regulate. An industry where exit is too difficult is one where entry is likewise inhibited. Put simply, if we don’t know how to deal with a failed firm, we will inevitably set a higher barrier to entry. This is what we see in the banking industry.

This is a lesson of history, and one that should not have been forgotten. But, forgotten it was. At present the FPC is pursuing two important objectives: seeking to increase the resilience of the UK banking system, including to the threats emanating from the euro areas; and, subject to being content with the path towards greater resilience, supporting the creation of credit in the UK economy. I am in no doubt that if banks take reasonable steps to enhance their resilience, they will be better placed to sustain the availability of credit to the economy by lowering their cost of funding and reducing their vulnerability to unanticipated events. Macro-prudential regulation takes a system-wide view of the risks we face and the buffers of capital and liquidity that banks should hold against possible stress events. This is very clearly the resilience objective for the system, to which the FPC attaches great weight. Banks in the UK have made substantial progress over the last four years in building that resilience, from of course a very low base. We believe that there is further to go on capital, and the FPC has set this position out, but in doing so we should not forget the distance that has been travelled. We should also remember that more capital cannot be conjured from thin air, particularly as there are at present quite severe constraints around the rate of return earned by banks due to low interest margins and redress for past misdeeds on conduct issues.
I would also like to emphasise today that regulation needs to adapt to the evolving financial system. In that vein, I will discuss what remains to be done in developing macroprudential and other policy tools in response to evolving risks in the investment fund sector. Financial stability risks in the euro area In the euro area, we have now seen 22 consecutive quarters of economic growth and declining unemployment – a development which has also been bolstered by our accommodative monetary policy and which has supported financial stability overall. Notably, banks’ profitability has improved somewhat, though it is still at low levels, and they now have higher capital and liquidity ratios, making them more resilient than they were before the global financial crisis. Indeed, the results of the recent EU-wide stress test show that the banking sector has a good level of resilience overall, albeit with some pockets of vulnerability. However, while the fundamentals for solid growth rates over the next two years are still in place, some risks are building up in the financial system. We are currently paying particular attention to three major developments that could trigger financial stability concerns globally and in the euro area. First, the current expansion of the US is now significantly longer than historical norms and the second longest in US modern history. Looking ahead, a down-turn in the US macro-financial cycle could trigger a reassessment of riskier asset classes.

The way the term ”normalise” is used in this context usually means that the policy rate is being increased after having been very low for a period, that is, it is simply a way of pointing out the natural direction for the policy rate in future. At the same time, there is an implication in the term “normalise” that there is a level for the policy rate where it normally should be. Some analysts appear to have interpreted this to mean that the Riksbank’s increases in the repo rate point reflect that there is an end in itself to achieving such a "normal" level now that the economic upturn is well established and most curves are pointing upwards, quite regardless of how inflation may develop. However, this is not the way we reason. The fact that the interest rate is below the "normal" level is not in itself a reason to increase the rate, even if real economic developments are favourable. It is not an argument that can stand for itself. The decisive factor for future interest rates is the result of our forecasts and assessments of inflation and economic developments as a whole. It may be the case, for instance, that different factors are expected to hold back inflation over a relatively long period of time and that there may thus be reason, even in an economic boom, to allow interest rates to “normalise” – if we are to use this term – at a slower rate than would otherwise be justified.