samchain/econo-pairs-v1 huggingface dataset:
New capital The second opportunity is in new capital. New or alternative capital continues to increase its share in the global reinsurance industry, as alternative risk transfer solutions in the form of insurance-linked securities (ILS) such as catastrophe bonds, collateralised reinsurance and sidecars, among others, gain acceptance. Alternative capital grew 6% in the first half of 2015 to $ billion, while traditional capacity fell by 3% to $ billion. While the influx of alternative capital may have led to excess capacity, softening rates and narrowing of profit margins, this same capital has the potential to unlock opportunities for insurers to access new products and markets. As I mentioned earlier, Asia, in particular, is especially attractive to insurers and reinsurers:  BIS central bankers’ speeches  3  •  Alternative capital, when deployed to markets in need of risk capital for protection against losses, will allow insurers and reinsurers to underwrite more risks and better serve society’s needs. •  As countries in Asia look to strengthen resilience to potentially debilitating events like catastrophes, it is not unexpected that alternative risk transfer mechanisms, such as catastrophe bonds and government pools, will increasingly feature as regional insurers leverage alternative sources of risk capital to complement traditional reinsurance. The management of catastrophe risks in Asia-Pacific is a priority for insurance players as well as governments in the region. A research by Lloyd’s has shown that a 1% rise in insurance penetration translates to a 22% reduction in taxpayers’ contribution following a disaster.

Jacqueline Loh: Managing risks in an uncertain world Keynote address by Ms Jacqueline Loh, Deputy Managing Director of the Monetary Authority of Singapore, at the 13th Singapore International Reinsurance Conference, Singapore, 3 November 2015. *  *  *  Opening Distinguished guests, ladies and gentlemen, good morning. It is my pleasure to join you today at the 13th Singapore International Reinsurance Conference. I believe the theme of this year’s conference, “Managing Risks in an Uncertain World”, is one which will resonate with many of you, as insurers, reinsurers and brokers alike navigate the crosscurrents in the reinsurance industry, in search of profitable growth and better returns. In keeping with the conference theme, I would like to share a few observations on how the Singapore insurance industry can capitalise on the opportunities created by new risks, new client segments, and new markets in Asia. Too much capital finding too little risks Those of you who attended the recent Monte Carlo Rendezvous would have discussed extensively the challenging conditions in the current reinsurance market, which some have warned would be the “new reality”, or the “new normal”. We have seen how structural responses – winning market share from competitors, and bulking up through acquisition of rivals – are largely built on a zero sum game. This becomes a problem when the pie is not growing, as could be the case if the industry does not innovate and create uncontested space.
Knowledge and information pass between workers in different firms, formally and informally, as they trade with each other, so innovation is encouraged and productivity improves. Fourth, clustering tends to promote both competition and cooperation. Clusters tend therefore to increase productivity, drive innovation and stimulate the formation of new business. In these ways the clustering helps to create and reinforce the comparative advantage which drives trade. In the case of the financial industry some additional factors promote clustering. In the past of course there was the physical need to be close to the market places but it appears that the centripetal forces remain strong even in a world of electronic trading and video conferencing. There is a reputational advantage of locating in an established financial centre, which signals you are part of the Premier League. And in wholesale finance where the firms can be both sellers and buyers, business is  4  “City type” jobs in London include securities dealing, international banking, corporate finance, derivatives and foreign exchange activity, fund management (including hedge funds), specialist insurance (such as Lloyds) and professional services such as legal, accountancy and consultancy directly supporting other City jobs. They include jobs in Canary Wharf and in the West End as well as those in the Square Mile. 5  See, for example, Fujita, M, Krugman, P and Venables A.J, “The Spatial Economy: Cities, Regions and International Trade” MIT 2001. 2  BIS Review 29/2007  attracted to liquid markets, in cash and securities.

Since July, this applies also to some of the larger euro area countries such as Italy and even Germany. Moreover, the model indicates that the spillovers from Greece are persistent and are thus likely to dissipate only slowly in the presence of favourable developments. Another model co-authored by ECB staff assesses the effect of an increased probability of default of one country on the likelihood of default of other countries in the euro area, controlling inter alia for the fact that the degree of interconnectedness in the system changes over time.8 Let me emphasize that these default probabilities are estimated strictly on the basis of the CDS premiums quoted in the market, irrespective of whether the probabilities priced-in by the market are in line with the assessment made by official institutions. On the basis of historical CDS data, these models, for example, find that a default in Greece increases the probability of Portugal defaulting on its public debt by 30 percentage points. The results of this model may be interpreted as providing some indication of sovereign contagion effects from Greece to other euro area countries. In sum, both descriptive and model-based evidence point to the presence of significant sovereign contagion in the euro area. Moreover, these contagion pressures have recently intensified, as they have spread beyond the euro area’s periphery and have started to affect larger economies. Following up on my earlier discussion on the policy-relevance of contagion, policy makers need to address this.
This has been reflected in the positive developments in real GDP growth, lower inflation, a downward trend in lending interest rates coupled with a stable exchange rate. It must be stressed here that the Bank of Zambia is optimistic that further progress will be made in lowering inflation to a single digit in the near future as appropriate monetary and fiscal policies continue to be implemented. This will be supported by the effects of the movements in the exchange rate of the Kwacha, which is reflected for instance in the adjustment of the prices of petroleum products and the expected improvement in food supplies following the favourable rainy season. Ladies and Gentlemen, beyond delivering on its core functions of attaining price and financial system stability, the Bank of Zambia recognises the importance of being a good corporate citizen. In this regard, the Bank has for many years been involved in providing financial and material support to the two state universities by sponsoring a Chair at each of these institutions as well as providing educational awards and scholarships to deserving students. In assisting the needy, the Bank of Zambia and its employees have on several occasions made donations to charitable institutions.

Your Honour the Mayor, Chairperson, Ladies and Gentlemen, there is a growing awareness world over on the importance of the role that business communities should take in contributing to the improvement in the overall welfare of the communities in which they operate. It is being realised that even though Governments are accountable to their citizens, business houses can also make valuable contributions to society without heavily compromising their corporate objectives. You would agree with me Ladies and Gentlemen that companies that practice good corporate citizenship are usually preferred employers, investment partners and neighbours in the communities they operate. To help achieve their nonfinancial objectives, many have adopted corporate creeds or ethical statements as integral parts of their behaviour. Such firms know that their acceptance into new markets could hinge upon their contribution to the social well-being of their environment. Ladies and Gentlemen, this is a phenomenon that has become generally known as ‘Corporate Social Responsibility’ and refers to the attention by companies to community involvement, environmental protection, socially responsible products and processes, and socially responsible employee relations. Put differently, Corporate Social Responsibility is the extent to which businesses meet the economic, legal, ethical and discretionary responsibilities imposed on them by their stakeholders. The world over, Corporate Social Responsibility has promoted activities in key areas, namely education, health, the environment, culture and the arts. Examples of the activities generated by good corporate citizenship include charitable donations and local community action, e.g. employee volunteering, youth projects, unemployment schemes, etc.
Muhammad bin Ibrahim: Malaysia’s experience in macroprudential policies and insights on financial inclusion Remarks by Mr Muhammad bin Ibrahim, Deputy Governor of the Central Bank of Malaysia (Bank Negara Malaysia), at the Meeting of Central Bank and Monetary Authorities of the Organisation of Islamic Cooperation Member Countries, Surabaya, Indonesia, 6 November 2014. *  *  *  Allow me to share the five broad principles which the design, deployment and calibration of macroprudential policies in Malaysia are premised upon: First, macroprudential policies introduced must be complementary to other microprudential, monetary and fiscal policies I will share on the measures we implemented since November 2010, where we introduced a series of macroprudential policies in concert with a package of monetary, fiscal, regulatory, supervisory and long-term structural measures (e.g. enhancing housing supply) to curb the excessive credit-fuelled speculation in the Malaysian housing market and to reign in the increasing level of household indebtedness. This required coordination with other part of the government. There was one particular measure that we introduced in November 2010, called a loan-tovalue (LTV) ratio where a maximum limit of 70% was imposed on the third and above outstanding house financing per individual. A cap of 10 years on the tenure of financing for personal use and 35 years on the tenure of house financing were also introduced in July 2013 together with gradual implementation of real property gain tax, consumer education and debt management measures.

In this case, we need to conduct a bit more research before we implement any macroprudential policies. The caps on financing tenure, together with requirements to comply with responsible financing practices (including adoption of prudent debt service ratio (DSR) threshold and  BIS central bankers’ speeches  1  definition of income and debt obligations for computation of DSR), were not limited only to banks. The caps were also imposed on non-regulated entities in order to avoid regulatory arbitrage or shifting of risks to these non-bank lenders. Third, preserving appropriate discretion for authorities to act is important, with respect to the timing, mix and calibration of measures. We do not adopt a rule-based approach to the implementation of macroprudential measures. The reason is that, it can avoid a “self-fulfilling prophecy” if the formula for determining the timing, quantum and criteria for the deployment of macroprudential policies are made public or applied in mechanistic way – unintended consequences could arise or systemic risk could suddenly build up right before the effective date as economic agents try to “beat the clock” by getting ahead of the implementation. This approach provides us with greater flexibility to use an optimal mix of macroprudential and other measures under varying circumstances – this is different from the UK where legal constraints limit the choice of macroprudential instruments that can be used, or compared to Turkey which uses quantitative triggers for the new reserve requirement framework.
When the National Bank intends to absorb more liquidity it could make the interest rate more attractive for the banks. But, if it considers that it should not sterilize such excess liquidity, it will make the interest rate less attractive or will restrict the amount allowed for the banks to subscribe. Distinguished ladies and gentlemen, At this very conference last year, I also said that the National Bank will not build its relations with the banks from the position of arrogance. Quite contrary, the banks are our partners. Therefore, the National Bank will keep on informing and consulting with the commercial banks about the regulatory measures. In this respect, presently we analyze the latest request of the Banking Association concerning the treatment of foreclosures and we will soon launch a dialogue to find solution in favor of the Macedonian economy. Hence, there should not be any doubt that in future the National Bank will “hear the voice” of the banks. But, also, it should be clear that the National Bank does not discuss the monetary policy measures with anybody, not even the banks, before it makes a decision to adopt them. They are at the absolute discretion of the National Bank. This is a worldwide practice. Neither the European Central Bank, nor the Czech Central Bank, nor any other central bank throughout the world consults or informs the commercial banks on the monetary policy measures before it makes the decision.

Indeed, the reduction in the use of banknotes for transaction purposes and the prospect of the development, within the networks of the major global players in digital services, of crypto-assets as a means of payment, whose link with central bank money is complex and fragile, to say the least, if not non-existent for some, are likely to call into question the integrating and anchoring role that central bank money plays in our payment system. These threats are reflected in a rise and a change in the dimension of the risks that any wave of innovation naturally carries, and which the health crisis has helped to amplify. First of all, there are risks of a setback in terms of efficiency. Two risks are likely to change in scope: - The risk of fragmentation of the payment system, both for everyday trading and between financial players due to a lack of secure and efficient structural interconnection, through convertibility at par between crypto-assets and central bank money, between old and new payment solutions. - The risk of concentration, or even the emergence of monopolistic situations for the benefit of global digital giants and their private settlement assets, and therefore of Europe’s increased dependence in terms of payment services vis-à-vis foreign players, with the associated issues of personal data protection and industrial and monetary sovereignty. Then there are risks of a setback in terms of security.
And today there are additional incentives for life insurers to offer new products that break away from the dual cash-liquidity guarantee, due to the lesser Solvency II capital requirements. And this brings me to the issue of regulation. Here too, insurers have an essential role to play, i n preparing the review of the Solvency II Directive’s new regulatory framework. The directive came into force almost two years ago now and you have implemented it with a great deal of professionalism. In many respects, Solvency II represents a very significant step forward for the insurance sector. But this does not mean that it’s perfect: we must analyse its impacts closely, particularly its effects on investment behaviour and the financing of the economy, in order to propose the adjustments that prove necessary. Progress has already been made on the financing of infrastructure projects and businesses, thanks to two amendments that came into effect in April 2016 and September 2017, respectively, which adapted the calibration of capital requirements. More generally though, the reviews of the standard formula and long-term guarantee package measures planned for 2018 and 2020, respectively, are important opportunities to make essential improvements. The work is already underway, and the more you 2/3  BIS central bankers' speeches  actively participate, alongside your European colleagues, the more our chances of success will be enhanced. III.

The role of insurers in the digitalisation of our economy It is essential for our economy to adapt to the digital revolution: it creates incredible opportunities, but with them, new risks against which the insurance sector, once again, can bring stability and protection. I would like to discuss two subjects in particular: Firstly, cyber-insurance. The cyber-insurance market is still underdeveloped. Insurers can and should take inspiration from their own experiences in tackling cyber-risk, and use it to develop a more mature French and European cyber-insurance offering. The coverage against cyber-risk is a very real concern that affects all companies – both small and large – as cyber-attacks are becoming increasingly frequent and costly: according to figures from Euler-Hermès, 57% of French companies were victims of these attacks in 2016, compared with 32% in 2015. We at the Banque de France, alongside the Eurosystem and our G7 colleagues, have made cybersecurity one of our strategic priorities. And secondly, personal data and big data. Naturally, the spread of connected objects that is triggering an exponential rise in the amount of data available on insurance policyholders represents an opportunity for the business of insurance, which consists precisely in collecting and exploiting data in order to quantify and put a price on risk. Nonetheless, I would urge insurers to take a responsible approach: we need to strike the right balance between segmentation and the sharing of risk between policyholders. The basic principles of solidarity and risk-pooling that are intrinsic to insurance are at stake.
These developments have continued to sustain our external balance with the current account of the balance of payments likely to continue to record large surpluses. Going forward, in the next 12 to 18 months, several external and domestic developments need to be taken into account in the assessment of our economic outlook. First, the slowdown experienced in a number of the major economies is likely to extend into 2009. This more prolonged period of slowdown is likely to have spill over effects on other economies including emerging economies. Global financial markets are also expected to remain volatile as the financial stress experienced by financial institutions in these economies continue to have an impact on credit conditions, the housing market and their overall economy. These developments have resulted in a number of institutions scaling back their global operations. The disruptions in the credit markets have already exerted some restraint in economic  BIS Review 71/2008  1  activity. While the adjustments are still taking place, there remains uncertainty about the full magnitude of the losses and its consequent impact on financial stability and thus on their overall economy. Despite these developments, indications are that growth remains resilient here in the Asian region, benefiting from the strengthened domestic demand and the increased trade activity within the region and with the non-traditional markets.

These mechanisms will become increasingly important as regional integration continues to deepen and as more Malaysian financial institutions venture overseas. The progress that has been achieved in the financial sector has surpassed the initial expectations outlined in the financial sector masterplan. The foundation of a vibrant, sound, stable and resilient financial sector accords the opportunity of advancing the sector to a new level where new opportunities with new formulas and strategies for success can be achieved. The financial sector has been key in supporting the transformation of the Malaysian economy, to increase its significance and to promote a more diversified economic structure. This has been achieved by the increased financing extended via the banking system and capital market. In particular, outstanding loans and private debt securities expanded by an average of 7.8% for the period 2001-2007. Malaysia is also ranked third in terms of access to credit amongst 175 countries surveyed by the World Bank in the Doing Business Report 2007. In an environment of rising incomes and expanding domestic demand, the further  BIS Review 71/2008  5  modernization of retail banking will be important going forward. With increasing financial literacy and growing consumer sophistication, product pioneering and cross-selling, the trend towards electronic financial transactions will gain significance. Increasingly, loans to the corporate sector will become less dominant with an expanding and efficient functioning capital market. In particular, the bond market presents opportunities for increased corporate advisory and debt and equity underwriting business. Private debt securities now represent 45.5% of GDP.
That includes: implementing decisions; monitoring market developments; identifying and, where appropriate, addressing risks to resilience and effectiveness. In many ways the November MPC decision was a historic change in policy – the first increase in Bank Rate in over a decade (Slide 9). I remember the previous increase in Bank Rate well as the July 2007 MPC meeting was the first I attended as the Treasury’s representative. A lot else has happened in the intervening 10 years, but from an operational perspective it was a relatively straightforward change for the Markets area of the Bank to implement. Bank Rate, which is the rate paid on reserve accounts held at the Bank by 183 financial institutions, was changed immediately after the MPC’s decision and used as the basis for calculating interest due for that day. Because reserves held at the central bank are the ultimate liquid and risk-free asset in any currency, the rate paid on them serves as the reference point for all other overnight interest rates in the money market. As a result a range of key overnight market rates increased on the day of the MPC’s decision including the Sterling Overnight Index Average (SONIA, a key benchmark for unsecured overnight borrowing and lending) and the Repurchase Overnight Index Average (RONIA, a key benchmark for overnight borrowing and lending secured against gilt collateral). In the period since the change in Bank Rate, both SONIA and RONIA have been on average 25bps higher than in the month preceding the decision (Slide 10).

While financial markets have improved significantly, real estate problems, bank closures, and significant non-performing loans on the books of many banks continue to provide financial headwinds to the recovery. And clearly – as the headlines of the past week have highlighted – financial problems abroad still have the potential to result in slower U.S. exports, and may hold potential further problems for global financial institutions. In sum, my view is that with inflation expectations stable, core PCE inflation rates declining, and significant excess capacity in the economy, accommodative monetary policy remains appropriate. Thank you. 6  See for example the remarks by Chairman Ben Bernanke at the National Commission on Fiscal Responsibility and Reform on April 27, available at http://www.federalreserve.gov/newsevents/speech/bernanke20100427a.htm. BIS Review 62/2010  5