samchain/econo-pairs-v1 huggingface dataset:
Climate risks include the impact of climate change, uncertainty surrounding future climate policy and potential disruptive technologies. 3/6  BIS central bankers' speeches  Expected return and risk are influenced by firms’ response to potential structural changes. That is why many investors require companies to report on climate issues, as has the GPFG. Managing climate risk is part of the systematic work in the area of responsible investment. Financial investors must manage climate risk on a par with other risks. Virtually all economic activities lead to emissions, either directly or from complex production chains. Climate risks are therefore difficult to isolate and quantify, both at firm and sector level. Identifying the winners in the green transition is also a demanding exercise. The financial sector has to adapt to climate risk, but does not have effective tools to contribute to solving the climate problem. Also, it is doubtful whether defining emissions from sectors or individual businesses as unethical will make a difference. The responsibility for measures to combat global warming must rest with the authorities. The solution lies in economic instruments that promote structural change. Structural change generates growth A shift in consumption patterns and production methods towards lower emissions will reduce demand for fossil fuels. This can influence oil and gas activities in Norway. We have always known that oil and gas activities will be phased out sooner or later. Oil and gas are nonrenewable resources. A stricter global climate policy may mean that this will occur sooner than foreseen earlier.

Chart: Important role for Norwegian gas But Norwegian oil and gas production will, most likely, remain profitable for quite some time. The supply of clean energy is still limited. Today, coal accounts for a large share of global energy demand. Demand for natural gas may increase as countries move towards a greener economy. In Germany and Poland, phasing out coal faster than planned is being discussed. Norwegian gas can play an important role in a transition phase. There is still global demand for oil and gas. If we reduce production on the Norwegian shelf earlier than planned, other suppliers are ready to take over. The climate impact of an earlier reduction would therefore be marginal, while the costs to Norway would be substantial. The oil industry has been an economic engine for Norway for close to 50 years. The revenues from this industry have improved the welfare of today’s citizens and the citizens of tomorrow. The spillover effects from the oil sector to the wider Norwegian economy are substantial. Throughout our country there are oil-related jobs to be found. More than 10 percent of all employed persons in Norway are either directly or indirectly working for the oil industry. 3 Innovation and skills development in the industry have also benefitted other sectors. The oil industry has been through a demanding period of personnel cuts, cost savings and rationalisation. The restructuring in the industry that was already underway became even more pressing when oil prices collapsed in 2014.
Since last year, the evolution of Stock Exchanges has shown that the euphoria associated with the concept of a totally new economic era has vanished, but what remains true is that a remarkable potential of economic changes remains for the future. It may help to boost labour productivity significantly on a recurring basis, and, in so doing, to boost production while preserving the economy’s competitive edge. That strategy should be pursued whilst increasing the overall competitiveness of Europe’s economy. If I refer to what we observed in the past, the French economic strategy, based on a moderation in the increase of unit costs of production, gave us an important advantage: the considerable improvement in the cost competitiveness of the French industrial sector from the mid-1980s has contributed extensively to the growth of our economy. The French economy grew faster than the other major euro area economies in recent years, while repeatedly recording a large current account surplus. This was largely because, from early 1987, production costs, measured by unit labour costs in the industrial sector, have risen significantly less in France than in the euro area as a whole. That improvement in our overall cost-competitive situation has progressively materialised into growth, into job creations and into solid external accounts. This ongoing drive to keep prices and costs in check has been accomplished thanks to the economic and monetary strategy pursued over a long period.

Goh Chok Tong: Strengthening Singapore’s position as a leading financial centre in Asia Speech Mr Goh Chok Tong, Senior Minister and Chairman of the Monetary Authority of Singapore (MAS), at the 2005 MAS Staff Seminar, Singapore, 29 November 2005. *  *  *  Let me begin by welcoming you to the 2005 MAS Staff Seminar. It has been a busy but good year for the industry and MAS. Positive global and regional outlook 2. Globally, 2005 looks set to end on a positive note. The IMF has projected world economic growth of 4.3% this year and sees the potential for further growth next year. The US economy remains resilient. It has withstood progressive interest rate hikes and the devastation caused by Hurricanes Katrina and Rita. While the oil market remains tight and the US current account and budget deficits continue to be cause for caution, the Greenspan era should end positively. 3. Asia is doing well. East Asia's combined economy has been growing by an average of 3.4% per year between 2000 and 2004. Take away Japan, East Asia's annual growth rate is even more impressive - 6.4%, well above the global average of 3.8%. East Asian countries have accumulated massive foreign reserves and now account for nearly 60% of global reserves. Global investors looking for better returns have shown strong interest in Asian equities, bonds and alternative investments. 4. The blockbusters in Asia's growth story are China and India. I have spoken about them in some detail last year.
As a first step, Parliament has been debating: whose control? As control of the rulebook becomes a stronger reality now that we are moving away from the start-position in which we simply imported all the existing rules from the EU, what are the respective roles of Parliament, the government and regulators in this process? A lot has already been said on this by us and others so I will not repeat it here, but I will point out that we are busy preparing ourselves for whatever new role Parliament allocates to us. Indeed Parliament has already decided this for the latest round of Basel rules, and my colleague Vicky Saporta is leading our efforts to re-tool our policy-making function for this new era. We are also getting on with important reforms while that wider debate unfolds, rather than waiting for it to conclude. This is procedurally complex because the position we inherit from the onshoring of EU rules is one in which the location of rules sprawls rather uncomfortably across different levels of legislation and our rulebook. This messiness was necessary to get the onshoring done on time but it makes it complex and time-consuming to update rules – so I hope that we will be able to move to a more coherent structure through time, as proposed by the government in its Future Regulatory Framework consultation. In the meantime, it means that many of our reform efforts involve decisions not just for the PRA but also for government and Parliament.

But despite the benefits of a safe and orderly exit process for firms before they get to the point of resolution or insolvency, this strategy has not been set out as a prominent feature of our approach for firms. For instance, the team running our recent check-up of the PRA found that supervisors of smaller mid-sized firms generally spend a small fraction (3%) of their time on orderly exit planning in normal times. Perhaps partly as a result of this, the business of managing these exits often proves extraordinarily challenging and time-consuming when it comes to the crunch. The exception to this is credit unions, which can nearly always be exited without great difficulties by our team together with FSCS and FCA colleagues. We therefore intend to do more in the coming years to increase our confidence that firms can exit the market without disturbing it, in an orderly way and without having to rely on the backstop of an insolvency or resolution process.
People say: “things are looking down, so we'd better not spend,” so nobody spends, and it is this same public who, some time later, say: “I told you, things were looking down.” However, in this case, the loss of confidence has been definitely well-grounded on the relentless crisis the world is currently undergoing, but whose effects are being in turn worsened by this same loss of confidence. Confidence crises are hard to fight by using just traditional tools of economic policy. Confidence indicators of households and companies should bounce back up as months go by, as a result of sustainable and credible expansionary macroeconomic policies and objective communication about reality. In Chile, particularly, we are able to face this negative international scenario, thanks to our healthy economy and expansionary policies. BIS Review 41/2009  5  In our January monetary policy report (IPoM), we forecasted that, in the most probable scenario, the Chilean economy would grow between 2 and 3% this year. In such scenario, it was estimated that the GDP of our trade partners would grow 0.4%; however, after all the past months’ corrections, this figure is now estimated to have turned into a more than 1% decrease. As I said at the beginning, this is a major change of scenario, which will certainly affect the growth projections of our economy.

Quoting from his paper: “the future policy that one wishes for people to anticipate is one that the central bank will not have a motive to implement later, if it makes its decisions then in a purely forward-looking way, on the basis of its usual stabilization objectives.” (end  BIS central bankers’ speeches  1  quote) This does seem like a hard conundrum to get away from, and probably limits the traction of this type of tool as a strong driver of longer-term rates. Partly due to these limitations, Central banks have also directly tackled the term premium by purchasing large quantities of long-term assets. The idea is that by removing some duration from the fixed income markets, private investors’ aggregate exposure to interest rate risk is diminished, leading to a lower required compensation for bearing such risk. Of course, this logic relies on some form of imperfections and/or market segmentation, but there is by now significant evidence, including some excellent papers to be presented in this conference, that QE has had a measurable impact on long-term rates through this channel. A similar logic applies to the default risk-premium: to the extent that returns on safer debt are compressed by central bank purchases, investors are tempted to reach for yield into other fixed-income markets, such as mortgages, corporate bonds, and emerging market instruments.
5, Paris, 2003.; Philipp M. Hildebrand, “Wo bleibt das Produktivitätswachstum in Europa?”, Speech at the „Vereinigung Basler Ökonomen“, 28 october 2004. 3  Edward C. Prescott, „Why Do Americans Work so Much More than Europeans?“, NBER Working Paper 10316, Cambridge, 2004. 2  BIS Review 27/2005  Beside the labour market reforms, other reforms should not be neglected. Different conditions in other input markets, for example capital markets, have probably contributed to lower potential growth in Europe. Frictions between national EU capital markets and payment systems render financing more costly. This pushes the capital-labour ratio down, resulting in relative undercapitalization and lower labour productivity. The same line of argument of inefficient allocation of capital applies to non-economic restrictions on corporate mergers and acquisitions as well as on profit transfers. If firms are not allowed to transfer profits from investments ex post the same disincentive to invest ex ante leads to undercapitalization. As in labour markets, the same dynamic is relevant here: Exit barriers are entry barriers. Different regulations in the product markets represent another important obstacle to an augmented growth performance in Europe. Modern information and communication technologies (ICT) in essence provide leverage to an economy. Product market restrictions on the scope of the use of the technologies lead to undercapitalization and underinnovation ex ante. The potential of these growth dynamics may be grossly underestimated as the costs of the regulations are not easily visible.

In the United States, the largest productivity gains were not realized in the high-tech sector or from the IT investments itself but from the widespread use of information and communication technologies in traditional sectors like wholesale trade, financial intermediation and construction. The new technologies led to a complete reorganization of the value chain thereby enhancing total factor productivity, albeit with a lag. One cannot entirely exclude that this leverage effect will simply occur with a lag in Europe. After all, productivity growth is one of the least well understood phenomena in economics. While I do not want to exclude a productivity lag effect in favour of Europe, I suspect the story is a more complicated and a more challenging one. Structural conditions must be in place in Europe to allow maximum flexibility so that the full potential of the new technologies can be unleashed throughout the real economy. Conclusions The question of why the EU recovery is so slow implies a cyclical answer. The European track record of the last ten years, however, strongly suggests that there is a crucial structural dimension to the problem of weak European growth. The real challenge for the EU is to boost productivity growth and augment its potential growth rate. In the words of Mervyn King: “Raising productivity growth is the key to improving the prosperity of future generations.”4 It is therefore not particularly meaningful to analyze the growth weakness in Europe in purely cyclical terms.
I would add one other thought on the demand for banknotes, which is more to do with human psychology. I suspect most people, however much they use cards, feel a degree of comfort from knowing that they also have cash in their wallet or purse, even if it is as a back-up. What does this analysis tell us about future demand for cash? As a central bank responsible for the issuance of banknotes, two principles are at the front of our thinking: first, that we issue central bank money, in the form of claims on the Bank of England; and second, that in doing so we must meet the public’s demand for our notes. By issuing central-bank money, we are providing both a means of payment and a store of value. But I think we should recognise that the paradox of banknotes that I have described indicates that there may well be a limit to the growth of the value of notes in circulation insofar as the use of banknotes as a means of payment is not increasing. This is, though, a broad assessment, and I would not wish to offer a judgment on the level at which the demand of the public to hold more banknotes will peak. An important reason for this uncertainty is that, as recent experience indicates, the demand for banknotes as a store of value is dependent on the state of the economy and the financial system.

We can all observe around us the growth of the ATM industry, but it is worth considering how influential it has been on the circulation of banknotes. First, the rise of the ATM has fundamentally changed and modernised the distribution of what is sometimes regarded as an old-fashioned means of payment. Second, it is likely that the growth of ATMs may have led to an increase in notes in circulation for another reason. BIS Review 162/2009  5  When we talk to ATM operators about their business model they stress that the least acceptable outcome is for their ATMs to run out of notes. As a consequence, ATMs are restocked well before they run out. This means that the overall ATM estate is holding what could be described as idle inventory stock, but these are defined as notes in circulation. But I should be clear that I don’t have enough evidence to prove to you that the stock:output ratio for banknotes has gone up, which would run counter to the story in almost all other industries. I want to move on now to trends in cash usage (I am using “cash” here to mean banknotes and coin). Chart 8 shows survey evidence for the use of cash in retail transactions in the UK over the last 25 years. In terms of the share of the total volume of transactions, cash has fallen from over 80% in the mid 1980s to 60% currently.
These buffers would help protect the firm against having to liquidate assets under duress, and would therefore help prevent the probability distribution from sliding left toward the zero line in Figure 2. But there is a cost to the firm from holding greater liquidity buffers in terms of lower returns on capital. So, requiring greater liquidity buffers would also tend to drive up intermediation costs. And, just as in the case of higher capital requirements, banks could respond by taking greater risks. Third, regulators could implement changes that would reduce the degree of dispersion in the potential value of a firm, pushing the right tail of the distribution in Figure 2 to the left. For example, we could require greater transparency about the composition and quality of the firm’s assets and liabilities. Or, regulators could increase transparency by forcing greater disclosure of the sale price of assets and/or by pushing for greater homogeneity and price  6  This problem has been largely addressed in the banking sector by deposit insurance and by providing access to lender of last resort facilities. In addition, supervisory and reporting requirements address transparency issues. 6  BIS Review 143/2009  discovery for products such as OTC derivatives. We could improve the quality of regulation and supervision, which would increase confidence in regulatory measures of capital and financial firms’ soundness. Fourth, the central bank could provide a liquidity backstop to solvent firms.

This is especially the case if the collateral is lower quality and markets are already illiquid. Moreover, if creditors are left with the collateral instead of being repaid, fear of widespread collateral liquidation might further erode collateral values. If investors respond by seeking more collateral to ensure they will be secured – that is, that they will be made whole in a liquidation scenario – the firm may run out of high-quality collateral that the firm can borrow against. This is a significant risk when a financial firm is highly leveraged and equity is only a very small proportion of total assets.5 The risks of liquidity crises are also exacerbated by some structural sources of instability in the financial system. Some of these sources are endemic to the nature of the financial intermediation process and banking. Others are more specific to the idiosyncratic features of our particular system. Both types deserve attention because they tend to amplify the pressures that lead to liquidity runs. Turning first to the more inherent sources of instability, there are at least two that are worthy of mention. The first instability stems from the fact that most financial firms engage in maturity transformation – the maturity of their assets is longer than the maturity of their liabilities.
The increase in productivity and investments will contribute to sustain growth in the medium term. Hence, the increase in employment is also expected to continue in the coming periods. Graph 9: Employment (Index for those Employed in the Manufacturing Industry, 1997=100)  86,0 85,0 84,0 83,0 82,0 81,0 80,0 79,0 2001  2002  2003  2004  Source: SIS. 10  BIS Review 36/2005  A reflection of the high rate of growth recorded in 2004 was the increase in the current account deficit, as often discussed by the public. It is useful to point out before anything else that it is a natural outcome for economic growth above forecasts to widen the current account deficit. The realization of the rate of growth as 9.9 percent in 2004, which had been forecasted as 5 percent, led to a parallel increase in the current account deficit above forecasts. However, the rise in the current account deficit today should not be interpreted as resulting in crisis as in the past. The world trend also supports this assessment: Deepening of commercial and financial integration makes it possible for countries with macroeconomic stability to sustain higher current account deficits than before. Within this context, in order to have a clear understanding of the situation Turkey is in today, we need to reflect on what happened in the past. At this point, I would first like to give you a brief overview of what we experienced in the past.

Malaysia's Islamic finance journey Let me now turn to Malaysia's journey in the development in Islamic finance. Islamic finance in Malaysia first started as a strategy for greater financial inclusion, so as to have a greater outreach to the underserved segment of society to basic banking and insurance products that are compatible with Shariah principles. After three decades, the Islamic financial industry in Malaysia has evolved as an integral and competitive component of the overall financial system that operates in parallel with the conventional financial system. The Malaysian Islamic financial system is founded on three major strategies. Firstly, the Islamic financial system has been evolved as a comprehensive financial system that is diversified in terms of its institutions, markets and players. The Islamic financial system comprises the Islamic banking institutions, the takaful industry, the non-banking institutions and the Islamic money and capital markets. The supporting financial infrastructure includes the robust regulatory and supervisory framework that is reinforced by the legal and Shariah framework, the payment and settlement systems and the mechanism for the liquidity operations by the Central Bank. The assets of the Islamic banking system now comprise 16% of the market, while the takaful sector has garnered 7% market share. Significant progress been achieved in particular in the Islamic capital market where the outstanding amount of Islamic private securities amounted to USD79 billion or 54.3% of the total outstanding private securities in the market.