samchain/econo-pairs-v1 huggingface dataset:
Several antecedents point to investment significantly outperforming our September estimate, including important upward revisions in the Corporation of Capital Goods’ (CBC) Project Survey, the behavior of capital goods imports, the evolution of more expansionary conditions of credit supply and demand (Bank Credit Survey) and qualitative information from our Business Perceptions Report (IPN). Thus, for 2019, our gross fixed capital formation (GFCF) growth forecast rises to 6% (4.5% in September), and for 2020 the near 4% figures are maintained. The case of mining investment is analyzed in detail in Box III.2 of the Report. According to the latest survey of the CBC—released in mid-October—for the period 2018-2021 investment expenditure of the mining projects it covers went from about 5.40 billion dollars to 10.60 billion. The greatest differences are concentrated in the years 2019 and 2020, when the surveyed investment is about 3.5 billion dollars higher than previously expected. This leap is the result of including a small number of projects that have advanced in their realization, but whose scope causes ripple effects in the baseline scenario. For 2018, where the incremental effect of the new survey is more limited, it is expected that Mining GFCF will increase 18% annually (just over 3 percentage points more than projected in September). For 2019, its annual expansion rate is revised from 7% in the September Report to 16% in our current estimate.

I will not name the bank here, because the HKMA is currently a tenant in a building that bears its name. To avoid giving the impression that the HKMA is a subsidiary of that bank, we have always tried to pretend that the building is called something else, by refraining from mentioning the name on our stationery, or to deliverymen or taxi-drivers, or to anyone else. It is sufficient to say that the bank in question is this year celebrating its 100th anniversary in Hong Kong. Steve has gone to the opposite end of the two-corner solution by entering the floating world of academics and consultants. Since leaving the Reserve Bank of Australia six months ago, he has taken up an appointment as Adjunct Professor at the National Centre for Development Studies at the Australian National University. He also works as an economic consultant, mainly, I understand, on Asia-related topics. Whatever corner Stan and Steve have chosen, the important thing is that they will continue to give their expertise to the region through organisations which, though very different, have an important presence in Asia. They are also here to share that expertise with us today. So without further delay, let me welcome them both and call first upon our speaker, Dr Stanley Fischer, to deliver the Fifth HKMA Distinguished Lecture. Dr Fischer, please. 2  BIS Review 33/2002
Creating the right incentives, consistent with good market practices and sound risk management, appears to be an important way of promoting the safety and soundness of the financial system and therefore a good way of sustaining both the stability and growth of the economy. This is not only relevant for prudential regulation; other areas such as accounting should also be consistent with this broad perspective. This consideration underlines the importance of taking seriously certain concerns such as procyclicality. In my view Basel II goes in the right direction. I am convinced that when banking systems are adequately capitalised, well-managed and risks are correctly assessed within the appropriate time horizon and the financial system becomes more stable, less procyclical, better able to promote sustainable growth, and more resilient during periods of distress. My second reflection is that one of the most significant conclusions of the analysis of the recent economic and financial evolution of the world economy has been the resilience of banking systems in most countries. In my view, this resilience has been the result not just of the presence of sufficient capital in the system, but also of improvements in banks’ risk management systems. I think we owe the industry a special vote of congratulations with respect to the latter, but we also owe it a commitment on the part of supervisors to continue to support such developments. This is exactly what we are all trying to do with the proposals for a new Capital Accord, which I would like to address now.

As you will have gathered from my earlier summary, many comments have focused, as in the past, on the minimum requirements laid out in Pillar 1, but as we get closer to finalisation, comments about implementation are becoming more important. I would like to take a few minutes now to talk about these other aspects of the New Accord that deserve equal consideration. Let me address four specific issues: ·  Pillar 2 and consistency  ·  Home / host implementation issues on a world-wide basis  ·  Accounting Standards and Basel II  ·  The recognition of diversification  Pillar 2 and consistency On the first of these subjects, as you well know, the innovation of the New Accord does not rest solely on the refinements to the quantitative measures of risk. Another innovation, and one of the most beneficial, is the incorporation of supervisory review into the international framework. This represents a real breakthrough for all of us, since supervisors in each jurisdiction have until now found their own ways to evaluate the adequacy of a bank’s capital base. That is an unsatisfactory solution since it can lead to inconsistencies in the way that a global banking organisation’s operations are supervised at a local level. By incorporating into the New Basel Accord the requirement for supervisors to evaluate the internal processes behind a bank’s view of its need for capital, the Committee expects that bankers and supervisors will engage in a more focused discussion of risk management.
The SNB will continue to enforce the minimum exchange rate of CHF 1.20 per euro with the utmost determination. It is prepared to buy foreign currency in unlimited quantities for this purpose. The target range for the three-month Libor remains unchanged at 0.00–0.25% and the SNB will continue to maintain liquidity on the money market at an exceptionally high level. The SNB has taken these decisions in a context of mixed developments in the global economy. While growth in the United States was surprisingly positive in the fourth quarter, GDP fell in the euro area and in Japan. In Switzerland, growth has slowed significantly in the past year. Added value declined in the fourth quarter in those sectors most affected by exchange rate movements. While the high value of the Swiss franc continues to present enormous challenges to the economy, the minimum exchange rate is having an impact. It has reduced exchange rate volatility and given business leaders a better basis for planning. There are growing indications that the Swiss economy is stabilising. For 2012, the SNB is now forecasting moderate growth, at close to 1%. The situation on the financial markets has also eased a little of late. It remains very uncertain, however, whether the advances made in solving the European sovereign debt crisis will succeed in defusing the situation permanently. Moreover, there is a risk that geopolitical tensions will lead to a further rise in the price of oil.

Though the current liquidity levels in the Swiss franc money market are still extremely high, and interest rates are fluctuating around zero, conditions on the money markets have slowly started to normalize and extremely negative rates have disappeared. This is reflected in the recent increase of the three-month Libor, which can be ascribed to a normalisation of the rate’s risk premium and should therefore not be seen as a change in monetary policy. Though few loans are currently being concluded on the interbank market, the Libor remains an important benchmark for many credit transactions in the economy. Concluding remarks The period of low interest rates in which we live is the outcome of cyclical and secular circumstances which are unlikely to last forever. Even if we accept the “savings glut” hypothesis, the demographical and regional factors to which it refers could soon lose relevance. While the call for deleveraging should prompt increased savings in advanced economies, the demographic forces in the west are likely to have an opposite effect on the supply of savings. Similarly, the maturing of emerging markets in the east should lead to smaller current account surpluses and to a gradual reduction in the build-up of precautionary reserves by public authorities. It is also clear that the increased risk appetite associated with the “Great Moderation” was, at least to some extent, based on over-optimistic assumptions.
Emerging markets in particular will need to ensure that supervisory interpretations of the framework are contextualised to the local conditions, and the preconditions for its effective implementation are adequately developed to avoid the potential market distortions. At the institutional level, Basel II provides a unique opportunity for banks to integrate risk considerations with their business strategies. Indeed, several leading financial institutions have successfully taken Basel II beyond the narrow and mechanistic risk applications to a more strategic implementation of the framework across the organisation. Such institutions have leveraged on the upgraded risk infrastructures that have been established for Basel II to create competitive advantages through the application of new business and management tools. This enables the risk function to have a central role in forming strategic moves into new markets or products. In the process, this will ensure that the strategies are aligned with the bank's risk appetite and policies. The benefits of Basel II cannot be achieved with just a strict regulatory compliance approach. While Basel II serves as a powerful catalyst to reposition the role of, and the attention to, risk management in banking institutions, significant efforts need to be directed at strengthening the financial structure, corporate governance, risk management and data capabilities within the banking institutions. The approach adopted by Bank Negara Malaysia has been for these efforts to complement and reinforce the positive outcomes of Basel II. These are important preconditions for, and not automatic outcomes from the adoption of Basel II.

Sustaining recent progress is a key priority for the Bank of England as I know it is for the SPE. People often ask me what my professional responsibilities in the Bank are. The most formal description is contained in the Bank’s Senior Managers and Certification Regime return. The SM&CR is a critical element of the post-crisis regime for accountability in the whole financial sector, ensuring there is a clear public line of sight running from the senior leadership through to every key function carried out by a financial institution. 2  The SM&CR is an essential part of the soft infrastructure underpinning improved conduct and therefore fairer and more effective financial markets in the UK and globally. 3  The SM&CR entry for me is long, and so I will just flag a few of my key responsibilities. What these boil down to is that among the Governors I have operational responsibility for the Bank of England’s balance sheet. It is the Bank’s balance sheet that is going to be the focus of my talk today. The balance sheet is integral to the operations undertaken in the areas I oversee, Markets and Banking, Payments and Financial Resilience. And it is central to the Bank’s mission for monetary and financial stability: the balance sheet is the hard infrastructure that supports much of the Bank’s policy activity. For most of the time it may not be as newsworthy as some of the tools it supports, like Bank Rate, QE or “lender of last resort”.
In summary, we decided that it was necessary to: •  require banks to maintain substantially higher levels of capital, with the minimum common equity requirement increasing from 2% to 7% of risk weighted assets;  •  require banks to hold higher quality forms of capital, with common equity at the core of the requirements, and standards to ensure other types of capital instruments are truly loss-absorbing. It is worthwhile emphasising that these reforms also go a long way to simplifying banks’ capital structures, as well as making them more transparent and comparable;  BIS central bankers’ speeches  1  •  introduce an additional capital buffer (the capital conservation buffer) designed to enforce corrective action when a bank’s capital ratio deteriorates.

Nevertheless, to ensure visibility of the implementation of reforms, the Basel Committee has been regularly publishing information about members’ adoption of Basel III. We will continue to do this so as to keep all stakeholders and the markets informed, and to maintain peer pressure where necessary. It is especially important that jurisdictions that are home to global systemically important banks (G-SIBs) make every effort to issue final regulations at the earliest possible opportunity. But simply issuing domestic rules is not enough to achieve what the G20 Leaders asked for: full, timely and consistent implementation of Basel III. In response to this call, in 2012 the Committee initiated what has become known as the Regulatory Consistency Assessment Programme (RCAP). The regular progress reports are simply one part of this programme, which assesses domestic regulations’ compliance with the Basel standards, and examines the outcomes at individual banks. The RCAP process will be fundamental to ensuring confidence in regulatory ratios and promoting a level playing field for internationally-operating banks. It is inevitable that, as the Committee begins to review aspects of the regulatory framework in far more detail than it (or anyone else) has ever done in the past, we will find aspects of implementation that do not meet the G20’s aspiration: full, timely and consistent. We are going to find parts of the framework that have been implemented only in part, or late, or inconsistently. The financial crisis identified that, like the standards themselves, implementation of global standards was not as robust as it should have been.
Benchmark indices such as the Dow Jones Islamic Market Indexes and the Financial Times Stock Exchange Global Islamic Index Series in the international equity market and the listing of Islamic financial instruments on international exchanges have all contributed to enhance the depth of the Islamic financial markets as an attractive asset class for investment. On the regulatory front, the standardised international rules and regulations for the Islamic financial institutions now being issued by the Islamic Financial Services Board (IFSB) will be important in effectively ensuring the stability and soundness of the system. Two important standards, the standards for capital adequacy and risk management have been approved by the Council of the IFSB in 2005. The two standards have taken into account the aspects of risks associated with the different contracts in Islamic banking business. Proper assignment of capital charge on profit-sharing arrangement and the introduction of profit equalization and investment risk reserve are risk-mitigating elements to ensure the soundness in Islamic banking business. The on-going work in the area of supervisory review process, market discipline, corporate governance and transparency will complete the range of the prudential and supervisory standards of Islamic financial institutions. The increased participation in the IFSB from across the globe reflects the growing interest of the global financial community to be involved, at the onset, in the development of regulatory standards in Islamic finance.

Briefly, the important components of the solution for the financial sector were as follows: 1. The Government, later confirmed by Parliament, issued an unlimited guarantee stating that no depositors or other counterparties to Swedish credit institutions would suffer any losses. This was a fundamental measure in order to restore confidence in the Swedish banks both from domestic and from foreign depositors and other counterparties. The results showed themselves rather quickly, e.g., in the form of renewed interbank credit lines with foreign banks. Also the Swedish public remained calm and there were no runs on the banks. However, the government (Parliament) guarantee and the other measures must also be made known to all interested parties. 2. The mandate to implement the support policies was given to a new agency, the Bank Support Authority, which was at arm’s length from the political sphere but accountable to the Government. To avoid conflicts of interest, it was found appropriate not to have the Support Authority in either the Ministry of Finance, the Central Bank or the Financial Supervisory Authority. BIS Review 65/1998  -5-  3. A common framework of measures was constructed for support of the banking system. A strategy for deciding which banks to reconstruct and which to liquidate was developed and explained to the general public. The measures were designed to minimise costs for the Government and the risk of moral hazard.
But these possibilities are very little used, as there are other alternatives that are more advantageous for the banks. 4  BIS Review 160/2009  Something that has attracted relatively great attention internationally is the fact that the low repo rate and the application of an interest rate corridor of plus/minus 50 basis points for the Riksbank's standing facility means that the Riksbank in principle applies a negative interest rate for deposits in the Riksbank. In practice, this is of little significance, as only a very small part of the banks’ liquidity surplus is invested in the standing deposit facility. Instead, the banks invest most of their liquidity surplus at a positive interest rate in the daily fine-tuning transactions or the weekly Riksbank Certificates. Initially, the banks invested the majority of their large surpluses in autumn 2008 in the Riksbank as “fine-tuning”. As a result of the crisis the banks had a substantial need of immediate access to liquidity. More recently they have invested most of their surplus in the weekly Riksbank Certificates, which is a sign that market conditions have improved (Figure 5). Figure 5 Riksbank Certificates and fine-tuning SEK billion 400  400 Riksbank Certificates  350  350  Fine-tuning  300  300  250  250  200  200  150  150  100  100  50  50  0 Jul-08  0 Oct-08  Jan-09  Apr-09  Jul-09  Oct-09  Source: The Riksbank.

The gold reserve is a remnant of the days when banknotes and coins could be redeemed for gold at the Riksbank. This link no longer exists and gold is now regarded purely as a financial asset. The foreign currency reserve should primarily be used to allow the Riksbank to carry out its tasks with regard to monetary policy and financial stability. It consists of securities in foreign currency that are easy to sell and have a low risk. During the financial crisis the Riksbank has increased its lending to the banks to a great extent. As a result, the size of the Riksbank’s balance sheet has increased dramatically. Lending to the banks prior to the crisis was negligible, but during the crisis it has grown into the most prominent item on the assets side. The increased lending in turn results wholly in increased deposits in the Riksbank by the bank system as a whole, to which I will return later. This has meant that deposits from the banks have become the dominant item on the liabilities side. The Riksbank’s balance sheet increased in autumn 2008 within the space of three months from around SEK 200 billion to around SEK 700 billion (Figure 2).
5 The Bank’s tasks were to issue Norwegian notes and coin with a stable value measured in silver, perform banking services for the government, provide loans and take deposits. Equity capital was procured by introducing a silver tax. The silver standard was replaced by the gold standard in 1874, and the following year saw Norway’s entry into the Scandinavian Currency Union. The Norwegian krone became the new currency unit. Norges Bank as the bankers’ bank Norges Bank became a more modern institution with the Act of 1892. 6 It became a bank for the banks that had emerged and a common national discount rate was introduced. The note issuing rules were also changed to enable Norges Bank to meet bank demand for liquidity more easily. It was legally established that Norges Bank would be the government’s treasurer. The Bank remained legally independent of the government authorities in its use of instruments: the Act of 1892 reconfirmed that Norges Bank could not be given instructions by the government or the Storting and Bank decisions could not be reversed by other authorities. The contemporary ideal was an independent central bank. 7 At the same time, a permanent chair and deputy chair were assigned to Norges Bank’s board, both appointed by the government. The other board members were appointed by the Storting, as were the members of the Supervisory Council who were responsible for supervising the Bank.

Other elements were:   Fiscal policy oriented towards full employment    Credit regulation within limits specified in a separate credit budget    Channelling of loans through state banks    Regulation of capital movements    Low nominal interest rates stipulated by the government authorities    A fixed, though adjustable, krone exchange rate    Use of price regulation    An active business policy through state ownership and state grants and subsidies  The proposal to establish an incomes policy council did not receive support. Government regulation and coordinated wage regulation became excessive. 29  25  The collaboration between the authorities and bankers’ associations did not disappear completely. In the economic policy tightening of 1979 and 1980, the “konsumlånsforståelsen” (consumer loan understanding) played an important role. Banks undertook to reduce lending to households. This led to a marked rise in saving. 26  In Økonomisk Rapport Magasin, 12 January 2002: “Graver Gjedrem sin egen grav?” [Is Gjedrem digging his own grave?]. 27  Knut Getz Wold (1972): “Norges Banks samarbeid med statsmaktene, bankene og utlandet,” [Norges Bank’s cooperation with government authorities, the banks and bodies abroad],Kristofer Lehmkuhl Lecture, Norges Handelshøyskole 20 September. 28  See NOU [Official Norwegian Report] 1973:36. Om prisproblemene [On price problems]. 29  See NOU [Official Norwegian Report] 1983:36 Om prisproblemene [On price problems].