samchain/econo-pairs-v1 huggingface dataset:
A two-stage strategy was proposed. The first stage is the current flexible inflation targeting. The second stage consists of monitoring credit developments and asset prices and, in special cases, overruling the signals given by the first stage. This is in line with the reasoning above. Statements by the Monetary Policy Committee in the Bank of England last autumn are an example of the emphasis placed on risk factors for future economic developments. In the minutes of the meeting on 9-10 October 2002, the Committee pointed to the build-up of financial imbalances as a factor which implied that the interest rate should be kept unchanged rather than reducing it. Considerable work remains before the available indicators of financial imbalances can be regarded as satisfactory. High credit growth or sharp rises in asset prices alone do not necessarily pose a threat to financial stability. Research conducted by the BIS has shown that periods of strong credit growth, a  3  See, for example, Borio, English and Filardo (2002): "A tale of two perspectives: old or new challenges for monetary policy? ", BIS Working Papers No. 127. BIS Review 25/2003  5  rise in asset prices and a high level of investment will almost always put pressures on the financial 4 system. Earlier banking crises may provide some indication of where the critical levels are. The IMF has shown that bubbles that burst in the housing market lead to a financial crisis more often 5 than stock market bubbles.

The analyses show that a credit gap of more than 4 percentage points can predict almost 80 per cent of banking crises in a selection of countries. In some cases, the indicator also signals some banking crises that do not materialise. Accuracy improves when other indicators are included in addition to the credit gap. The credit gap for Norway was above the "critical" level prior to and during the crisis in the 1920s. This was first due to high debt growth and later to a fall in GDP. During the Second World War, private sector debt fell sharply, but was followed by a catch-up period. The next episode of a high credit gap was in the 1980s, prior to the last banking crisis. The gap is also high today. 4  Borio, and Lowe (2002): "Asset prices, financial and monetary stability: exploring the nexus", BIS Working Papers No. 114. 5  IMF (2003): World Economic Outlook, April. 6  Source: Norwegian Association of Real Estate Agents, Association of Real Estate Agency Firms, FINN.no (Norwegian search database for classified advertising, including real estate, on the Internet) and ECON. 6  BIS Review 25/2003  More sluggish developments in the Norwegian economy have contributed to a sharp rise in the number of bankruptcies over the past year. In spite of the pronounced reduction in interest rates in recent months, we must expect a large number of bankruptcies and somewhat higher bank losses in the period ahead as a result of continued rather weak economic growth in Norway.
From the repeal of the Corn Laws onwards, the UK has acknowledged that impediments to free trade are seldom, if ever, “first best” responses to the many maladies from which market economies can suffer.4 Where the UK has led, others eventually followed. In time, every major advanced economy has come to embrace openness as a strategy to promote the well-being of its citizens. Today, the UK’s trade totals around two-thirds of its GDP (Chart 1). Its external assets and liabilities exceed ten times GDP. And its share of global Foreign Direct Investment (FDI) is around two times its share of global activity, accounting for the largest share of FDI into the EU (Chart 2). Its openness extends beyond the real economy to the financial economy. The scale, complexity and degree of global activity of the UK financial system are unmatched in the European Union (Chart 3). More foreign banks operate in the UK than any other EU country, and more than half of the world’s largest financial firms have their European headquarters in the UK. The UK has the largest global share of cross-border bank lending, foreign exchange trading, and OTC interest rate derivatives. It has the world’s third largest insurance industry and its second largest asset management industry. The UK banking sector is four times GDP and non-bank financial institutions are a similar size (Chart 4), while financial services accounted for 8% of output and around 3½% of employment in 2012.

4.2  Financial stability  The impact of EU membership on financial stability is more challenging. Given the close integration of the UK financial sector with the rest of the EU, it is imperative that the EU has a robust regulatory framework. This is in the process of being achieved. Through its membership of the EU, the UK is promoting a strong global regulatory framework, and UK authorities have worked in close concert with our European partners to find solutions to the fault-lines of the past. Examples include moves to end Too Big To Fail by enhancing bank recovery and resolution, a solution developed locally at the Bank of England, implemented regionally in the European Union, and now agreed globally through the Financial Stability Board. Given the scale of the UK’s financial sector relative to its economy, the Bank of England also has a special responsibility to the UK, to Europe and the world. The UK must ensure that the  11  See Broadbent, B (2011), “Rebalancing and the real exchange rate”, Speech at Thompson Reuters, London. BIS central bankers’ speeches  7  system is robust to shocks and that financial institutions can be resolved in an orderly manner. After all, financial stability is a national responsibility, with the UK taxpayer serving as the ultimate backstop of the UK financial system. The comprehensive reform of the UK’s institutional framework for financial stability since the crisis creates a coherent architecture of national macroprudential and microprudential regulators and supervisors.
Even so, targeted fiscal and monetary stimulus measures should support growth at close to 7% this year. •  Against this backdrop, overall growth in Emerging Asia will remain firm, at 6% this year. Banks in Emerging Asia will therefore not do badly. There are, however, downside risks that they need to watch. First, the divergence in monetary policy settings among the G3 economies could pose risks to financial stability that could also potentially hurt growth. The anticipated normalisation of interest rates in the US against continuing quantitative easing in the Eurozone and Japan will be reflected in sharp movements in exchange rates and bond yields. This is not a prediction, it is already happening. The scenario of a “double whammy” posed by a rise in US interest rates and a strong US Dollar could expose vulnerabilities among some Asian borrowers. •  Rising interest rates will increase the debt servicing burden of Asian households and corporates, especially those who have taken on high levels of debt at low rates. •  Asian corporates with large unhedged dollar borrowings could face increasing stress as a strengthening dollar undermines their ability to repay loans. Banks in Emerging Asia could face higher non-performing loans. They could also face reduced US Dollar funding if there are large capital outflows from Asia. But their liquidity and capital positions are generally sound and they should be able to weather this. What matters is the medium to long term, and here the outlook for Asia remains sanguine.

•  Basel III calls for an increase in both the quantity and quality of capital that banks must keep as a buffer against unexpected loss. •  Basel III will also put in place a new global liquidity standard. Banks will be required to hold enough liquid assets to survive a 30-day period of cash outflows. There are also efforts underway in advanced jurisdictions to reform banking structures. The details vary but the overall thrust is to separate retail banking from riskier activities like proprietary trading and investment banking. The objective is to simplify business models and facilitate the resolvability of large and complex banking groups. On the whole, the reforms will help to make banks safer and financial systems stronger. But they are not without some negative consequences, and their distributional impact is uneven. For many global banks, the new regulatory standards and reforms to national banking structures will mean a fundamental review of their organisation and activities. In fact, the international operations of global banks are already being affected. •  According to the IMF, direct cross border lending as a share of total banking assets has declined, mostly due to the retrenchment of Eurozone banks. For many Asian banks, the transition to the new regulatory standards will probably be less demanding. First, many of them had already bitten the bullet after the Asian Financial Crisis and built up their capital and liquidity buffers. They are thus starting from a stronger position to meet the new standards.
Four times a year the Riksbank presents a more comprehensive account; at present we are working on this year’s first Inflation Report. Let me remind you that for those who are interested, these reports are easily downloaded from our website: www.riksbank.se. Perhaps I should add that in addition to the text, the site provides the equally relevant statistics behind the charts. Two routes for a central bank Any central bank with an explicit target is faced with a choice that in its most extreme form looks something like this: either aim to keep inflation continuously on target or admit that there will be deviations that may last for quite some time. If inflation is to be kept close to the target all the time, there will be a constant need for sizeable repo rate adjustments, with the attendant marked fluctuations in market interest rates, output and employment. If temporary deviations from the central bank’s target are tolerated, on the other hand, monetary policy can be implemented more smoothly. A gradual adjustment of output and employment ultimately brings inflation back into line with the target. Both these routes have their drawbacks. Negative effects on employment and output from major changes in the repo rate are liable to erode public confidence in the central bank and the monetary policy regime. At the same time, undue acceptance of large deviations from the inflation target may weaken the target’s credibility and lead both to rising inflation expectations and to high costs for ultimately bringing inflation back on target.

Suppose such a price shock occurs in a particular month; it will then leave its mark on the annual inflation rate in the coming year and then drop out of the statistics. As we normally count on a time lag of more than a year before monetary policy has its full effect on inflation, countering such temporary price impulses is both difficult and not particularly meaningful. Monetary policy accordingly focuses instead on the forecast of inflation one to two years ahead. Occasional shifts in the price level can, however, affect inflation prospects more permanently if they alter the general perception of inflation’s path in the longer run. To put it briefly, if temporarily high inflation induces a general belief that inflation will also be high in the years ahead, then monetary policy must intervene. Even if the economic situation as such does not give grounds for worrying about inflation, in such a case resolute action may be called for so that the higher inflation does not become entrenched via inflation expectations. This is quite simply because, in terms of decreased output and employment, preventing inflation expectations from rising is less costly than pushing them down once they have become established at too high a level. BIS Review 15/2002  1  These, then, are the types of assessment from which we, as members of the Riksbank’s Executive Board, form a picture of the prospects for inflation. We look at them from various angles, consider the risks and opportunities.
Budget cuts will only lead to lower growth, higher unemployment and larger deficits. I see no contradiction between fiscal consolidation and sustainable growth. In fact, the one is a pre-condition for the other. I do not deny that there are negative demand effects in the short-term. But for the longer-term, sound fiscal policies are essential to lower borrowing costs and encourage investment. Moreover, in those countries experiencing severe sovereign debt tensions, fiscal consolidation is unavoidable to maintain market access. That said, there is clearly a need to take measures to strengthen the growth potential of the euro area’s economies. These measures also need to have effect in the short-term so as to soften the short-term impact of fiscal consolidation. Recognising this, the European Council on 28–29 June agreed on a “Compact for Growth and Jobs”. This Compact aims to free up to 120 billion euro for growth and investment, representing roughly 1% of euro area GDP. This comprises a 60 billion euro increase in the lending capacity of the European Investment Bank; 55 billion through the reallocation of structural funds to growth-enhancing measures; and 4.5 billion of investment financing through a “project bond” pilot phase. On top of that, the European Council took a number of measures to improve the functioning of the Single Market and facilitate adjustment within monetary union. The single market in services will be completed, which is expected to yield economic gains of up to 330 billion euro.

Undoubtedly, it must compete and present a viable alternative to the conventional insurance. At the same time, it has a unique value proposition that can meet the Muslim demand and Shariah requirements. The sustained demand for takaful, especially among Muslims, has contributed towards the industry’s steady growth – from 3% market share a decade ago to almost 18% in 2018. The growth potential for takaful industry remains clear and promising. In 2018, almost half (45.8%) of the Malaysian population have yet to obtain protection. Based on a recent demand survey, 46% of Malaysian households and 48% of businesses responded that they are unaware about the comprehensive range of solutions that the takaful industry is able to offer. To reduce this gap, as an industry, takaful operators must collectively elevate the prominence of takaful and its capabilities to be a solution of choice for Malaysians. I wish to suggest three pathways for this aspiration to be realised: First, by offering good value solutions to customers; Second, by adopting innovative tools and effective distribution strategy; Third, by inculcating sound understanding of financial protection and prudent financial behaviours among Malaysians. Allow me to elaborate on these . Firstly, the takaful industry has the advantage of a business model that is grounded on the values of mutual assistance and solidarity. Unlike insurance, which is premised on the buying-and-selling of risks at a premium, takaful advocates 2/5  BIS central bankers' speeches  for value propositions that consumers are likely to find unique and take comfort in.
Reports of the demise of cash are vastly exaggerated. Notes and coins have been with us a long time, and have served a crucial role in the growth of the modern economy. I suspect they will be with us for quite some time more. BIS central bankers’ speeches  1  Three “C”s of a good payment instrument But be it physical cash or electronic payment, the medium of exchange for transactions must satisfy three requirements. I will refer to these as the three “C”s of a preferred payment system – confidence, convenience, and cost-effectiveness. First, confidence. Businesses and consumers must be assured of the security of payment instruments. The widespread circulation of counterfeit notes and coins can impair confidence in a country’s currency. As John Maynard Keynes put it nearly a century ago, quoting Lenin, “There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency.” Keynes was, of course, talking about the deleterious effects of inflation. But it applies just as well to debasing the currency through counterfeiting. Ensuring the fidelity of notes and coins and the soundness of electronic payments is therefore a critical function. Central banks and currency issuing authorities must continually innovate and stay ahead of fraudsters. In electronic fund transfers, we have instituted more end-to-end security measures like two-factor authentication. Modern currency notes come with very advanced security features. I wanted to give some examples, but have been advised that it would be tantamount to giving away our secrets!

The conduits and SIVs are greatly diminished where they are not being wound up altogether. And the money market and other funds that stepped away from these off-balance-sheet vehicles are not willing at least yet to buy ABS directly. Finding new homes for these securities is bound to take time. So long as there are known to be reluctant holders, even long term real money investors will tend to hold back to see whether prices are driven lower in coming months by forced sales. On the other side many issuers are reluctant to accept the prices on offer today since they could become benchmarks for the future. Lessons from the crisis The story is far from over but it is still possible to identify some lessons. The past seven months have taught market participants a lot about the risks and limitations of the new markets and their business models; their responses will be the most powerful force for change. On the official side, a recent consultative document has set out proposed responses by the UK tripartite authorities. 3 Internationally, the Financial Stability Forum (FSF), which draws together central banks, supervisors and finance ministries from the main financial centres, is co-ordinating an action plan for authorities to develop and implement recommendations across a number of areas (Chart 7).
The sluggish consumption and investments were reflected in a low demand for loans and mainly oriented towards shorter-term maturities. On the other hand, higher prudence by banks in crediting was reflected in tighter terms of credit supply. Financial markets were generally stable and evidenced improved liquidity conditions and controlled risk premia. Money market interest rates pursued a downward trajectory, due to easing policy of the Bank of Albania and satisfactory liquidity levels. While costs for the private sector credit were lower than a year earlier, the sluggish performance of the economy and uncertainties about its outlook made the trend appear more moderate in interest rates applied on lending to this sector. BIS central bankers’ speeches  3  Pressures on foreign exchange market were low and the exchange rate of the national currency against the major foreign currencies was stable, being a supporting factor to controlling inflationary pressures at home and increasing the certainty in foreign trade relations. 2. Inflation and monetary policy  In 2011, average annual consumer price inflation was 3.5%, remaining close to the previous year’s average inflation rate. The performance of inflation was featured by a high volatility in the past year. Over the first and second quarters, annual inflation rate approached the upper limit of the targeted band, mainly driven by rapid and sharp price rise for food and primary commodities in international markets. These pressures were short-term and soon moderated; over the second half of the year, inflation started to fall gradually, marking 1.7% in December.

I should also stress that no formal decisions have yet been taken in this respect. As you probably know, the Committee will meet next month for the first time since the comment period closed. I can assure you that we will continue to do our utmost to ensure that you - the industry - can take advantage of the benefits of the new Accord at the earliest possible opportunity. Thank you for your attention. BIS Review 42/2003  5
BIS central bankers’ speeches  3  sustained basis, that would pose a risk to inflation and, thus, would have important implications for monetary policy. With respect to the inflation outlook, I think there are four important questions that deserve attention. 1. How much slack is there in the economy? In other words, how fast can the economy grow for how long until the economy is close to full employment? 2. Are there speed-limit effects on inflation? In other words, could inflation rise because the rate of economic growth was unusually high, even though plenty of slack remained in the economy? 3. Given the emergence of such economies as China and India, can commodity price pressures be safely ignored as temporary “noise” in terms of the long-term inflation outlook or are these pressures likely to prove persistent? If commodity price pressures persisted, this could undercut one rationale for focusing on core measures of inflation – the argument that core measures are better predictors of future headline inflation than today’s headline rate. 4. What can the Federal Reserve do to ensure that inflation expectations stay wellanchored? With respect to the first question, the economy retains a very large amount of slack by virtually all measures. For example, last month the industrial capacity utilization rate was 76.1 percent. This compares with a long-term average of 80.9 percent (Chart 21).

Zamani Abdul Ghani: Malaysia – seizing the opportunity to evolve Opening remarks by Mr Zamani Abdul Ghani, Deputy Governor of the Central Bank of Malaysia, at the Seminar on Financing for Overseas Project, Kuala Lumpur, 14 January 2010. *  *  *  I am pleased to be invited today to officiate this Seminar on Financing for Overseas Project. On behalf of Bank Negara Malaysia, I wish to thank and congratulate the EXIM Bank, the ICD and the CIDB for their efforts in organizing this important and invaluable Seminar. The continuous collaboration among Malaysian private and public related organizations with the IDB and its related organizations demonstrate the solidarity of the Muslim Ummah and the community at large towards achieving a strong and sustainable economic development. This also reflects the growing importance of cross border trade and investment among the OIC member countries. We, at Bank Negara Malaysia, are pleased to note that over 200 participants from more than 100 companies in Malaysia are participating in this Seminar. Today’s Seminar which brings together participants in the related industries, not only provide information on the business opportunities abroad, but also serves as an excellent platform to establish new networking links as well as sharing of innovative ideas and invaluable experiences. Malaysia has always accorded and will continue to accord a high priority on enhancing collaboration with the OIC member countries towards fostering intra-OIC trade and investment. Realizing the large business opportunities in the OIC countries, Malaysia entered into an MoU with the IDB in 2004.