samchain/econo-pairs-v1 huggingface dataset:
These efforts have further enhanced the ability of the financial system to respond to the changes that have occurred. The banking sector recorded improvements on all fronts, enhancing the ability to compete effectively and strengthening the resilience to weather any potential adverse developments in particular, any external shocks to the system. The level of capitalisation remained consistently strong with the riskweighted capital ratio of the banking system above 13% for the period concerned with quality of portfolio continuing to improve further amidst sustained economic performance. The banking sector also continued to record strong profitability performance despite the increasingly competitive operating environment. In 2005, the banking system as a whole registered a pre-tax profit level of RM12.4 billion with a higher component of the revenue originating from service related activities such as the sale of wealth management products and remittance services, as well as from trading and investment activities. With this stronger performance and enhanced capability to manage risk exposures, several banking institutions have also taken the next step and moved forward to expand in the regional market to reach new sources of business opportunities. On the domestic front, there has been a narrowing of the gap as compared with the foreign banks. Further initiatives undertaken include enhancing the operational aspects and delivery of services to banking consumers through the rationalisation of the configuration within respective banking groups.

James McAndrews: The economy and the household debt and credit report Remarks by Mr James McAndrews, Executive Vice President and Director of Research of the Federal Reserve Bank of New York, at the household debt and credit press briefing, New York City, 28 February 2013. *  *  *  Good morning and welcome to the New York Fed. I am pleased to have this opportunity to talk with you about some of the exciting research we are doing here at the Bank. This morning my remarks will focus on national economic conditions and then I will introduce our special presentation today on household debt and credit conditions. What I have to say reflects my own views and not necessarily those of the Federal Reserve Bank of New York or the Federal Reserve System. National economic conditions It has been three and one half years since the end of the “Great Recession.” But, the pace of this expansion so far remains very sluggish compared with previous post-World War II business cycles: the level of real gross domestic product (GDP) in the fourth quarter of 2012 was only around 2½ percent above its previous peak in the fourth quarter of 2007. To put this into perspective, at this point in time following recessions in 1973, 1981, 1990 and 2001, the level of real GDP ranged from 14 percent to 18 percent above the previous cyclical peak.
2  BIS Review 79/2005  3. How have firms reacted to these changes? The banking industry has, not surprisingly, responded to these changes by paying greater attention to liquidity risk management. And, as well as day-to-day management, banks have given more consideration to how they would cope with extreme or ‘tail’ events. Banks have developed, or are at least in the process of developing, sophisticated scenario analyses, and are assessing the contingency arrangements that would be required to respond to these scenarios. It is certainly encouraging to observe the determination with which many banks are addressing liquidity risk, and it is at the same time noteworthy how efficiency drivers have led many banking groups to take a more centralised approach to liquidity management. But, despite the progress that banks are making in addressing liquidity risk, the framework that underpins their contingency plans makes a number of assumptions, particularly regarding access to funding markets. There seems, for example, to be a widespread view that, whatever has happened to a firm’s access to wholesale unsecured funding, it will be able to borrow secured against good collateral. Lying behind this is probably an expectation that national authorities, and in particular central banks, will be ready to provide liquidity against good collateral in the event of the failure of one or more of the markets for secured borrowing.

Secondly, there are certain features of the prevailing financial and economic environment that give us pause for thought. Market prices are at historically unusual levels: real and nominal returns on risk free assets are low and credit spreads are tight, both in traditional and structured products. It is of course hard to say definitively the extent to which today’s markets are merely reflecting changed fundamentals. But it is quite possible that some investors have unwittingly taken on higher levels of risk in pursuit of what they would consider to be “normal” levels of return. And it is certainly prudent to plan for the possibility of a sharp reversion of prices to historically more normal levels (or even beyond them, given the tendency of markets to overshoot). There could be a period of impaired market liquidity during any such correction. One could imagine a number of potential catalysts for such a correction, ranging from a geo-political event to some form of major operational disruption. The Bank concurs with the widely held view that the growth of markets in risk transfer should contribute to greater financial stability, by allowing a more efficient dispersion of risks. But the depth and reliability of the more recently developed markets in risk under stressed conditions has not yet been fully tested. Moreover, risk transfer markets can, and probably at present do make the ultimate destination of risks more opaque. This hampers our ability to assess the overall stability of the financial system, and, potentially, to react effectively in a crisis.
When Bank Negara Malaysia and the Bank of Thailand first operationalized this arrangement between our central banks in March 2016, we saw the potential and benefits for local currencies to play a more important role in enhancing regional trade linkages. The expansion of the arrangement today to include our close trade partner, Indonesia, underscores this potential. The signing of this MoU between Bank Indonesia and Bank Negara Malaysia represents another important milestone in the move to strengthen the relationship between Malaysia and Indonesia. Following the conclusion of the ASEAN Banking Integration Framework, we are confident financial institutions in both countries will be able to collaborate towards realizing the objective of facilitating greater cross-border trade and investments. Both Thailand and Indonesia share important links with Malaysia, forged through a long history of trade and investment activities, and close cooperation between our central banks. This occasion reflects how far we have come in this process. The cooperation arrangements between our central banks have now expanded to include clearly defined protocols and operational frameworks in a broad range of areas, including financial market development, supervision, surveillance, payment arrangements and crisis management. Bank Negara Malaysia has long been a strong supporter of financial and economic integration in both ASEAN and broader Asia – to unlock the region’s growth potential and support a stronger, more resilient economic community.

Being pragmatic means having the right reservation about it, taking a careful step toward it, and be willing to take the needed action to deal with the unintended consequence. This is not going to be easy, but it is probably the best that we can do for now. Thank you. BIS Review 142/2008  3
We do not need to implement Basel II formally to introduce or to strengthen the principles behind its three pillars. However, beginning to apply those principles can be an excellent way to lay the foundation for Basel II in the future. For example, supervisors could consider or continue to focus on internal processes and move toward a system of risk-based supervision, to complement and enhance traditional supervision. We can improve our capacity to look beyond the numbers and evaluate the quality and capabilities of a bank’s risk management and measurement. At the same time, supervisors can nurture a “risk management culture” by emphasising that banks are responsible for evaluating their capital needs and for developing a strategy to maintain their capital levels, in line with the principles of Pillar 2. Finally, to improve market discipline along the lines of Pillar 3, some supervisors may wish to begin by ensuring a basic level of disclosure across all banks. They could discuss with banks, investors, and other marketplace participants what information they need to understand a bank’s risk profile and then work to establish relevant reporting requirements. Clearly, we have many diligent preparations to make in the coming months and years as we prepare for Basel II. Later today, Nick LePan will share more detailed perspectives on the challenges ahead.

The narrow monetary aggregate M1 remained the main contributor to broad money growth. The growth of loans to the private sector strengthened further, continuing the upward trend observed since the beginning of 2014. The annual growth rate of loans to non-financial corporations rose to 4.3% in September 2018, from 4.1% in August, while the annual growth rate of loans to households stood at 3.1%, unchanged from the previous month. The euro area bank lending survey for the third quarter of 2018 indicates that loan growth continues to be supported by increasing demand across all loan categories and favorable bank lending conditions for loans to enterprises and loans for house purchase. The pass-through of the monetary policy measures put in place since June 2014 continues to significantly support borrowing conditions for firms and households, access to financing – in particular for small and medium-sized enterprises – and credit flows across the euro area. To sum up, a cross-check of the outcome of the economic analysis with the signals coming from the monetary analysis confirmed that an ample degree of monetary accommodation is still necessary for the continued sustained convergence of inflation to levels that are below, but close to, 2% over the medium term. In order to reap the full benefits from our monetary policy measures, other policy areas must contribute more decisively to raising the longer-term growth potential and reducing vulnerabilities.
In the forthcoming period, parallel to the fading effects of the global financial crisis, the employment creation capability of economies will be determined by structural features of the labor markets. The long-term unemployment of individuals who had lost their jobs due to the crisis or those who had recently joined the labor force but could not find jobs also poses the risk of permanent unemployment for such people. In this respect, the implementation of structural reforms to improve the labor market will prevent a permanent rise in long term  BIS Review 104/2010  3  unemployment during the global crisis and underpin the increase in the potential growth rate of the economy. 4. Productivity  After sharing my views on the labor market, I would like to move on to total factor productivity, the third factor that influences the potential growth rate. Total factor productivity in an economy arises from the interaction and combination of a number of elements. The leading one is the establishment of macroeconomic stability by alleviating the uncertainties that economic agents are confronted with. The prerequisite of macroeconomic stability is fiscal discipline and price stability. Public balances that have improved thanks to prudent monetary and fiscal policies coupled with the inflationary gains following the deep economic crisis in 2001 are noteworthy steps on the road to establishing macroeconomic stability. Economic welfare only increases along with sustainable growth. Sustainable growth implies price stability.

The global economy has displayed a mild recovery since the second half of 2009. Yet, European economies have recently shown signals of deceleration. Although problems in the credit markets of advanced economies have attenuated, they have not been completely eliminated yet. As a matter of fact, credit developments in the USA and the Euro area suggest no significant increase in credit volume. The unresolved issue of troubled assets in  BIS Review 104/2010  1  the banking sector of advanced economies impedes proper functioning of the credit mechanism. Meanwhile, soaring and persisting high unemployment rates in many countries reduce household expenditures and negatively affect the aggregate demand. Soaring budget deficits and public debt stocks stemming from loose fiscal policies implemented in developed countries are an important risk factor that may adversely affect private demand by increasing long-term interest rates in the years ahead. The risks that I have mentioned above also have the potential to affect the Turkish economy in a negative way. Considering that our largest exports market is the European Union, problems prevailing in European economies pose an important risk for our economy, too. As a matter of fact, external demand indicators have recently indicated a partial slowdown. Global turbulence also has the potential to affect the Turkish economy negatively through the channel of expectations. Problems in the global financial markets are likely to restrain the accessibility of external financing.
Compared to the Asian financial crisis twelve years ago, the dynamic of macroeconomic adjustment in this crisis also looks similar, although the trigger point this time is more bankled than currency-led. The real surprise, however, was in the timing, the scale, and the intensity of how the problem quickly deteriorated into a major global turbulence. According to the IMF, compared with the previous crises, the cost of the current crisis in terms of financial losses could be as high as 10 percent of US GDP. This implies a very substantial welfare loss. Is this the time of upheaval? My answer is both yes and no. The “No” part refers to the fact that, despite the magnitude of the current crisis, aggressive policy response and the willingness to do more by Governments have successfully contained the fallout to the extent that collapse of the global financial system has been avoided. Financial markets, to an appreciable extent, are stabilizing, risk appetite is returning, and signs of improvement in the real economy are beginning to emerge on a world-wide basis. Although it is still early days, they do point to the beginning of stabilization which is an important first step for economic recovery to take hold. The “Yes” part of my answer comes from what I see as a major challenge in the ideas and policies on how best to manage the global economy going forward in this era of globalized finance.

These changes will help reduce the likelihood of crisis and contain the impact of a systemic failure to the level that can be managed by conventional policies. In parallel with this, on the economic front, adjustment to the financial crisis will continue and, in the process, the global economy will likely move into a world of two halves. The first half is the corecrisis countries whose immediate policy concern will be to rebuild financial fundamentals and resume growth. The second half is the less-affected economies, including emerging markets in Asia, whose policy focus will be to sustain growth and avoid financial instability. This latter point is important because, given abundant liquidity, the shift in the pattern of global growth towards the less-affected economies will spark a new financial cycle driven by a resumption of large capital flows to emerging markets. The challenge for emerging markets, therefore, is to grow safely by managing all the attendant risk associated with the strong capital flows. In this context, it is important that the experience of the last ten years, when the fall in Asian  BIS Review 92/2009  3  demand after the Asian financial crisis was offset by a boom in US residential investment, must not be repeated. Otherwise, the crisis risk will remain high, and globalized finance will be seen only as a threat to long-term economic stability. Managing this risk and growing safely will be the stake of emerging market economies going forward.
India started introducing Islamic financial products and services last year. It has launched its first Islamic stock market index on the Mumbai stock exchange and also licenced a non-bank financing company to operate on Shariah principles. As more countries cater for Islamic finance, the scope for cross-border Islamic finance increases. We are beginning to see more cross-border sukuk issuance within Asia as well as between the Middle East and Asia. Singapore has benefitted from this favourable global environment for Islamic finance. •  Singapore is the only non-Muslim majority country among the top 15 countries for Islamic finance. •  Islamic assets under management have surged nearly fourfold over the last five years. More than 40% of the Islamic assets in Singapore are managed by our asset management industry. •  15 banks are involved in Islamic banking, double the number five years ago. They hold about a third of the Islamic assets in Singapore. •  The rest of the Islamic assets are in outstanding sukuk and takaful. Singapore has had nearly 30 sukuk issuances to-date, with seven in 2013 alone. The prospects for Islamic finance in Singapore look bright. •  More funds continue to be established here, to meet demand from clients in Asia as well as from the Middle East. •  Several corporations have established sukuk programmes in Singapore to tap the market over the next few years. BIS central bankers’ speeches  1  We can grow faster when we grow together.

With a four per cent return on the Petroleum Fund, the use of petroleum revenues will rise to almost five per cent of mainland GDP in 2010. The inflation target provides an anchor for expectations concerning future inflation and interest rates. The inflation target is set at 2½ per cent. Monetary policy affects the economy with a lag. The current level of inflation does not provide an adequate basis for determining the level at which interest rates should be set today. Our analyses indicate that a substantial share of the effects of an interest rate change will occur within two years. Two years is thus a reasonable time horizon for achieving the inflation target. Economic agents can act on the assumption that the inflation rate will be 2½ per cent. If it appears that inflation will be higher than 2½ per cent with unchanged interest rates, the interest rate will be increased. If it appears that inflation will be lower than 2½ per cent with unchanged interest rates, the interest rate will be reduced. There is symmetry here. It is equally important to avoid an inflation rate that is too low, as it is to avoid an inflation rate that is too high. The interest rate is the most important monetary policy instrument. It affects price inflation through two channels: demand for domestic goods and services and the krone exchange rate. Changes in labour costs influence the rise in prices for domestically produced goods and services.
The solution involves settlement of a large portion of the claims that the Central Bank received as compensation for deposits transferred to it, in accordance with the decision of the Financial Supervisory Authority (FME) on the disposal of assets and liabilities of Sparisjóðabanki Íslands hf. (SPB) in March 2009. The settlement of the compensation has not been finalised, however, and the matter is still being considered by the Financial Supervisory Authority. The Central Bank has concluded agreements with eight savings banks concerning the settlement of claims, and the agreements will be finalised soon after the Financial Supervisory Authority and other creditors have confirmed them. I realise that it is painful for guarantee capital owners and creditors to lose these assets, which were deemed quite valuable before the crash and were perhaps purchased recently with borrowed money. Nonetheless, it is necessary to face facts and try to salvage the value that remains. I have always viewed the savings banks as an important part of a healthy financial system, as they have a certain advantage in assessing local opportunities and risks and are generally trusted in their home communities. But this makes it important that the savings banks limit their activities to the areas where they can compete, and not extend into risky investment banking operations. With the financial restructuring currently underway, it will be possible to strengthen the foundations of important savings banks.

I would also like to thank the Minster of Economic Affairs and his Ministry for successful co-operation in recent months. I want to extend my thanks to other Ministries and institutions as well, not least the Financial Supervisory Authority and the Ministry of Finance. Other collaborators, including financial institutions and non-governmental organisations, and the staff of the International Monetary Fund, also deserve thanks for their co-operative efforts. And last – but certainly not least – I would like to thank the employees of the Central Bank for their work. Without them, there would not be much wind in my sails today. And in closing, I wish to say this: Iceland has been faced serious economic difficulties in the recent past, and there are certain dangers ahead. But we have the power to steer clear of them. We could be at the bottom, poised to rise up again and move forward, if we play our cards right. But we must ensure that we avoid turbulent waters and establish long-term stability. In order to do so, we must demonstrate the patience and resilience to allow the recovery of the economy and the financial system to play out. History teaches us that pride goeth before a fall – but it also teaches us that the darkest hour is just before the dawn. Let us bear that in mind as we welcome the spring. BIS Review 39/2010  9