samchain/econo-pairs-v1 huggingface dataset:
My point of view is that the need for policy response is not so much about imposing more and heavier regulations, but instead about improving and developing existing ones. When doing so, two conditions must be met: first, some kind of market failure has to be proven, and second, the benefits of imposing new rules must exceed the economic costs. Given recent events, there are numerous regulatory issues to discuss within this context. In many cases work has already started. For example, how to achieve better management and supervision of liquidity risk as well as greater transparency in the financial sector are important matters currently under review. Further issues include regulatory treatment of the originate-and-distribute model and off-balance sheet entities, as well as procyclical elements in regulation. Of particular interest is the issue of clearing and settlement arrangements in the unregulated credit derivative markets. One partial explanation of the uncertainty that has prevailed in the financial system recently is the absence of a resilient infrastructure for these markets. No central counterparties have existed and there has been no common market place for exchanging these instruments. As a result, trading has been fragmented and opaque, which in turn has implied that nobody has really known where the credit risks are and few have realised that these risks – directly or indirectly – actually have remained on the banks’ balance sheets. Clearly, there are many issues on the agenda and the course of events over the past year has underscored the need to get to work.

Therefore, the agencies' incentives to do a proper job should be quite enough without regulation. Crisis management – preparedness needs to be strengthened Another issue that I believe needs particular attention is how to achieve better crisis preparedness, which means that I am now switching to talk about crisis management issues. As on numerous occasions in the past, many countries were ill prepared for this crisis and had to rely on ad-hoc solutions for handling it. In the case of the EU, member states quickly had to reach an improvised agreement on a co-ordinated and comprehensive financial support plan. We have had the same situation in Sweden, both when we had a crisis in the early 90s and, more surprisingly, even now. Despite the quite recent experience of a systemic crisis, legislators had not been able to get a proper framework for the management and closure of distressed banks in place. Thus, also this time we had to rely on improvised solutions. Even if these ad-hoc measures often seem to work out pretty well there is no guarantee that they will do so consistently. To let financial system stability become the hostage of improvised political processes is obviously not an optimal order. Experience from previous crises also shows that improvised crisis management measures often come too late, are inadequate, and ultimately turn out to be more costly then they would have needed to be. I would say that British Northern Rock is the perfect example of all this.
Furthermore, the general liberalisation of capital controls on domestic residents will take place once the largest obstacles have been successfully removed or neutralised and when certain economic criteria have been fulfilled, such as adequate FX reserves, market access for the sovereign and the banks, a wellbalanced and growing economy, etc. The aim is to minimise the risk of capital flight. 2  BIS central bankers’ speeches  The Icelandic authorities have emphasised public disclosure and transparency of relevant information about the liberalisation strategy. Last year, the solution to the failed banks’ estates, as well as the economic analysis on which it was based, was presented in a comprehensive manner. A few days ago, a bill of legislation on the treatment of offshore krónur was passed by Parliament. An English translation of the bill was posted on the website of the Ministry of Finance and Economic Affairs, along with the Explanatory Notes and a Q&A (with links on the Central Bank website). Yesterday the Central Bank published terms of a foreign currency auction directed at offshore krónur, to be held on 16 June. This speech is, of course, part of the process of disclosure and explanation. Furthermore, in a week or two, the Central Bank will issue a special publication on the economic analysis of capital account liberalisation in Iceland.

At the same time, we must also allow diversity in Shariah interpretation as to support product innovations to meet the needs of the industry. Over the last two days, we have heard about the need to accelerate talent development, which is key to the future progress of the industry. In this respect, the International Centre for Education in Islamic Finance or INCEIF offers the world's first professional certification program in Islamic finance. The response has been over-whelming. To complement talent development, a set of incentives will be formulated to attract the best foreign talents to work in the MIFC. The adoption of best practices in the regulatory standard by the Islamic financial institutions will be key in sustaining their soundness and resilience. In this regard, IFSB has developed the required regulatory and prudential standards, in which Malaysia will adopt these standards, and continue to provide the leadership in the implementation of these standards. Malaysia's strength in the Islamic capital market can be further leveraged upon by issuers and investors as a platform for origination, trading and distribution of Islamic financial instruments. The benefits of being a financial centre are tremendous. Besides enhancing services sector contribution to GDP, it will create job opportunities, contribute towards promoting greater cross border investment and trade flows, better quality and diversified products and services, and strengthen further the global economic and financial inter-linkages among countries. Malaysia has come a long way since it first introduced Islamic finance in the 1980s. We are now embarking on the next stage of development.
In addition, if longer-term viability is not an option, insurers should be mindful that in certain circumstances a managed exit from the market may be most appropriate. As communicated in our Dear CEO letter on 2021 priorities2, we are currently developing our approach to recovery and resolution planning. We will expect firms to demonstrate – in a proportionate manner for their size – that they have a suitable structure and business model, and adequate contingency plans to be able to exit the market smoothly. In some cases, entering into run-off could be in the best interest of existing policyholders. More than fifty insurers regulated by the PRA are currently in some form of run-off and we endeavour to take a proportionate approach, thereby minimising the burden of entering this regime for smaller firms. Diversity and inclusion Mutual insurers have a considerable strength to celebrate in social purpose, and that should provide them with a relative competitive advantage. Within firms, we – at the PRA and the Financial Conduct Authority (FCA) – believe that increased diversity and inclusion will advance our statutory objectives by resulting in improved governance, decision-making and risk management within firms, a more innovative industry, and products and services better suited to the diverse needs of consumers. We would like to see firms collectively consider how they can build a diverse workforce too. 3 in The PRA, together with the FCA and the Bank published a joint Discussion Paper (DP 21/2) July on diversity and inclusion in financial services.

The roots of insurance lie in those with mutual interests coming together to share risks, and mutuals continue to play a valuable part within the insurance sector. The pandemic has highlighted the risks of protection gaps and mutuals can play an important role in providing specialist cover and operating in markets under-served by other firms, such as sickness benefits or professional liability cover for those in unique occupations, from bus drivers to vets. Protection from risk, and a stable supply of such protection, is an essential service for individuals’ and companies’ security. It is also vital for the wider economy, and particularly important in supporting recovery from the impact of the pandemic. Both recovery from the pandemic and the transition to net zero will drive substantial restructuring of the economy, though, for example, change in working and travel patterns. This restructuring will lead to a decline in some existing sectors, and growth in others, the emergence of wholly new sectors. New or growing enterprises need certain insurance products to operate, and others to take away risk that they cannot efficiently bear themselves. Any protection gap slows investment and thereby impairs recovery and transition. Therefore the ability to eliminate any protection gaps is a clear opportunity for the insurance sector. Both the risks and opportunities from the post-pandemic recovery and the transition to net zero must be an important factor in determining your longer-term strategies.
To begin, let me acknowledge that the events of 1998, and the resulting recommendations of the private-sector Counterparty Risk Management Policy Group (CRMPG), and other groups, were followed by very significant improvements in risk management practices, including those related to hedge fund counterparty exposures. At a general level, these changes were significant because they offered the promise of limiting the overall hedge funds could take on, as well as the direct credit exposure of firms to hedge funds. Specifically, firms put in place stronger internal due diligence regimes to manage hedge fund exposures. They imposed stricter credit terms, required more collateral, adopted daily margining and more conservative practices for valuing collateral. They put greater emphasis on measuring potential future credit exposures, while adopting more sophisticated ways of measuring and stress testing those exposures. Firms have also sought to obtain more information from hedge funds about the risks the funds are taking on, although more often than not this seems to have taken the form of periodic onsite visits and informal discussions rather than through a regular and frequent flow of detailed risk reports. These improvements are notable, but a few qualifications are in order. First, progress has been uneven across the major dealers. Second, there are signs of some erosion in standards in response to competitive pressures, reflected in some lowering of initial margin requirements and a relaxation in other credit terms.

Those reforms have played an important role in reducing risk in the system, alongside the overall improvements in capital, risk  4  BIS Review 70/2004  management, and the financial infrastructure. Further progress in strengthening risk management practices is an investment worth making, particularly at a time when the markets appear to be pricing in a relatively benign view of risk in the financial system and in the economy overall. BIS Review 70/2004  5
GDP declined three years in succession and employment fell by over 500 000. This also pushed inflation down to a low level. When it was decided that the krona would no longer be pegged against the ecu in November 1992, a monetary and foreign exchange policy was introduced with a floating exchange rate and an inflation target of 2 per cent. Fiscal policy was tightened. The budget consolidation process of the mid-1990s was quite drastic in international terms and also helped to subdue inflation, even though the krona had weakened by approximately 25 per cent directly after the introduction of the floating exchange rate. This was something that Sweden did not manage to do after the devaluations of the late 1970s and early 1980s. The Riksbank was eventually given an independent position with the aim of increasing the credibility of the inflation target, which the Riksbank also managed to do. Improvements in wage formation have contributed to positive development Another important reason why inflation in Sweden has been able to stay in step with inflation in Germany, and nowadays in the euro area, is that wage formation has improved. During the 1980s, it became increasingly evident that Swedish wage formation did not function in a manner compatible with economic balance. Collective bargaining often began only when the previous agreements had expired, which meant that negotiations were conducted under more strained circumstances without the obligation to refrain from industrial action.

The current process of deleveraging in the private sector remains incomplete, while pressures on fiscal sustainability in these economies also continue to weigh on confidence and growth. Significant challenges continue to be faced in the implementation of the structural adjustments which in turn is affecting the process of fiscal consolidation. This has further restrained the policy flexibility to support growth. The extraordinary and exceptional monetary measures taken by central banks in these economies have provided support to their economies, but they have also come at a cost to savers with growing risks of market distortions and financial imbalances the longer these measures are held in place. BIS central bankers’ speeches  1  In efforts to build stronger defences against a repeat of the events that precipitated the 2008 global financial crisis, the global regulatory reform agenda has placed significant focus on addressing elements of the regulatory and supervisory systems that allowed the build-up of excessive leverage. These elements include the unfettered innovation by financial institutions and the prevailing incentive system. Financial engineering had led bankers and investors to lose focus on their risk exposures when they failed to understand the increasingly complex products that purported to reduce the risks. The weak regulatory regime and supervision also failed to rein in such unbridled innovation. Misaligned incentives then fuelled excessive risk taking both at the institutional and individual levels.
However, despite the label, too big to fail, the magnitude of these externalities does not depend simply on size. The extent of the externalities also depends on the particular mix of business activities and the degree of interconnectedness with the rest of the financial industry. One significant element is the importance of the services the firm provides to the broader financial system and the economy, as well as the ease with which its customers can move their business to other providers. Another element is the extent to which the firm’s structure and activities create the potential for contagion – that is, the potential that a problem at one firm could spread more broadly through the financial system. Contagion might occur along several different pathways, including the direct losses imposed by failure on the firm’s counterparties, the impact of the failure on the asset prices held by other leveraged financial institutions, or a loss of confidence spreading to other firms with similar business models. The presence of large negative externalities creates a dilemma for policymakers when such firms are in danger of failing, particularly at a time when the wider financial system is also under stress. At that point in time, the expected costs to society of failure are very large compared to the short-run costs from providing the extraordinary liquidity support, capital, or other emergency assistance necessary to prevent catastrophic failure.

The difference is that they are still not done and cannot hope for a rebound that might otherwise be there. 2  BIS central bankers’ speeches
Similarly, after an appreciation a situation may arise whereby a movement of the exchange rate back to the initial range may require that interest rates be reduced to such a low level that this results in higher inflation. However, this would weaken the basis for exchange rate stability over time. Hence, Norges Bank cannot with open eyes orient its policy instruments towards triggering higher inflation or a deflationary recession. If a situation arises whereby Norges Bank is not able to return the exchange rate to  BIS Review 51/1999  2  its initial range without such consequences, the Bank will inform the government authorities that measures other than those available to the central bank are required. The present exchange rate range has more or less prevailed for more than ten years. On the basis of its analyses, Norges Bank does not find grounds to maintain that this range is not the appropriate one. Interplay between policy areas There are considerable differences between Norway and other industrial countries in the structure of the economy, the organisation of decision-making processes and the formulation of economic policy. In Norway, income and wage determination is fairly centralised; a number of fora to foster cooperation between the social partners have been established, as has special legislation which makes it easier to resolve labour conflicts than in many other countries. The central government budget is used more actively to stabilise economic developments, partly because the Norwegian state has substantially greater economic leeway than other countries.

Mr Gjedrem focuses on monetary policy challenges in Norway Article by Mr. Gjedrem, Governor of Norges Bank, the Norwegian central bank, published in the Norwegian daily Aftenposten on 3 May 1999. In Norway, fiscal policy has a prominent role in stabilising growth in production and employment. The Government Petroleum Fund shall serve as a buffer so that fluctuations in the government’s oil revenues do not influence the mainland economy, but only have an effect on capital exports. The local and centralised income settlements determine wage growth. Monetary policy instruments are oriented with a view to maintaining a stable krone exchange rate against European currencies. If the government budget stabilises the domestic economy, wage growth is kept on a par with the level in Europe, and fluctuations in oil revenues are absorbed by the Petroleum Fund, Norges Bank stands a good chance of ensuring exchange rate stability through monetary policy. However, this has not been the case since 1996. The government budget has not made a sufficient contribution to smoothing growth in domestic demand and production, wage growth has been substantially higher than in other countries, and oil revenues have fluctuated widely. Furthermore, it seems that the krone is easily exposed to the contagion effects of turbulence in international markets. The krone exchange rate has fluctuated in spite of Norges Bank’s active use of instruments. Developments in recent years indicate that Norges Bank cannot fine-tune movements in the krone exchange rate.
Specific arbitration rules for Islamic banking and financial services have also been enacted to compliment the court system and enable disputes relating to Islamic finance to be dealt by the Kuala Lumpur Regional Centre for Arbitration. This infrastructure is unique to Malaysia and reflects the support and cooperation from the legal fraternity to keep up with the development of Islamic finance. Importantly, a supportive judicial system helps create an  BIS Review 102/2010  3  environment where players and consumers are able to execute financial transactions efficiently, with sufficient certainty and enforceability. In recent times, we have witnessed a number of legal disputes involving Islamic Financial transactions that have been brought to the common law courts for settlement. These recent cases tried in the English courts have highlighted the hesitancy on the part of the common law judges to deliberate on issues concerning Shariah principles in Islamic finance transactions. This is quite understandable given the lack of expertise on the matter. While evidence on Shariah matters can be admitted from subject matter experts but such evidence or advice is not binding. The scenario in Malaysia is different. We have a dedicated High Court for Islamic finance related cases and our judges shall refer to the SAC for questions or rulings relating to the Shariah and these rulings are binding. Malaysian courts, therefore are well equipped to uphold the sanctity of the Islamic financial contracts as they have the avenue to make references.

It is impossible to calibrate this precisely at this juncture, but I would guess this would be in the region of 4  BIS central bankers’ speeches  0.25 to 0.50 of a percentage point. It is important to note that the storm affected much of the Northeast Corridor, a densely populated area responsible for about 15 percent of GDP. Normal economic activity in the final days of October and the first few days of November was severely disrupted. The disruption then began to subside, but only recently has life begun to feel normal again. The negative effects of this disruption have already been noted in economic indicators such as industrial production for the month of October and initial claims for unemployment insurance during the second and third weeks of November. Yet, some of the economic disruption experienced here was offset to some extent by stronger than normal activity elsewhere. For example, plants in Ohio or South Carolina making portable generators may have worked overtime to fill the increased demand. Second, some types of disrupted activity, such as the purchase of a car or a housing start, can be made up before the fourth quarter is over. Lastly, as I mentioned before, repair and replacement of damaged property is already underway, offsetting some of the earlier disruption. This rebuilding will continue well into 2013, likely providing for somewhat stronger growth than otherwise would have been the case.
To sum up, our gates are open to those of you seeking a career at home. And even if you do not intend to pursue a career in Romania, there are other ways of collaboration. For instance, the NBR has been supporting the Annual Scientific Conference of Romanian Academic Economists Abroad (ERMAS), in partnership with major Romanian universities. A recent personal experience, during a trip I took to Washington DC, confirmed the interest that many Romanian experts abroad share in staying in touch with their home country. There are more than 60 Romanian economists working for the World Bank, the IMF or the Fed. I have met around half of them and I saw how keen they were to learn not only about the Romanian economy, but also about changes in the society. Many were even eager to engage themselves in various cooperation projects with those working back home in their respective fields of activity. I truly found their enthusiasm and readiness refreshing! Although idealism is not a trait one would usually associate with people my age, I confess that whenever I am addressing Romanians who are studying or have studied in the West, I cannot help but make the parallel with the revolutionaries of 1848, who engineered the rapid transformation of the Romanian society and created the modern state almost from scratch.

In closing, I would like to wish all of you successful and fruitful discussions during this two-day conference. I hope that the speakers and participants will reflect upon what Thailand has done right and what we can do more for the Thai economy. In particular, I believe it is equally important for the private sector, as much as the public sector, to play the role in strengthening Thailand’s long-term economic fundamentals, especially the priority areas I mentioned. Having done some of the right things does not mean that we can be complacent, since the economic challenges will not get any easier in the current and future global environment. Thank you. 4  BIS Review 94/2010