samchain/econo-pairs-v1 huggingface dataset:
Stefan Ingves: Implementing the regulatory reform agenda – the pitfall of myopia Speech by Mr Stefan Ingves, Governor of the Sveriges Riksbank and Chairman of the Basel Committee on Banking Supervision, at the Federal Reserve Bank of Chicago Annual International Banking Conference, Chicago, 6 November 2014. *  *  *  The subject of this conference is indeed very timely – seven years after the outbreak of the financial crisis, there has been substantial progress in the post-crisis regulatory reform agenda, with a number of important milestones reached. Therefore, now is a good time to take a step back and ask how the different bits and pieces of the regulatory framework fit together. And, more specifically – have the vulnerabilities revealed in the crisis been adequately addressed? Are additional adjustments still necessary? Or, conversely, have we gone too far and created a regulatory Frankenstein’s monster that no-one has full control over and that stifles lending and economic growth? This latter view is one that I sometimes hear when meeting representatives of the banking industry. The feeling seems to be that we are overwhelming the financial system with a regulation tsunami with too many reforms being implemented too soon. This will lead to unacceptable consequences in the form of higher funding costs, reductions in market liquidity with market-makers pulling out of markets, collateral shortages; and many banking activities simply disappearing, or moving to the so called shadow banking sector.

This worked fine during the Great Moderation, but unfortunately with the collapse of Lehman Brothers another old truism suddenly came to life: “markets function the worst when you need them the most”. Against this background, it is quite embarrassing that so few could see the crisis coming. From a regulatory point of view, all the ingredients were there, or rather they were lacking. And this is the first point I want to make – the regulatory framework was unsatisfactory and becoming more so the more complex the financial system became. Then, turning to my second point, which is: The costs of financial crises are huge. This is true in general, but especially so for the recent one. For example, according to a recent study by  1  2  The figure SEK 17,000 =1,000,000*50%*3,4%, where 3,4% is the implied minimum core Tier 1 capital requirement under Basel I. The risk-weight for mortgages was 50% during this period. Under Basel II the implied minimum core Tier 1 capital requirement fell from 3,4% to 2% of risk-weighted assets, and was 2% in 2011–2012 when banks’ internal average risk weights for mortgages was 6%. SEK 1,200 SEK = 1,000,000*6%*2%. For more information see Sveriges Riksbank (2013) Financial Stability Report 2013:2, November, pp 21–24. BIS central bankers’ speeches  IMF economists, in a sample of countries representing just over 50% of world GDP, the total amount of government recapitalisation, asset purchases and guarantees during the period 2007–2011 amounted to nearly $ trillion.
Paulo Sergio Cavalheiro: Regulation of capital and financial stability Speech by Mr Paulo Sergio Cavalheiro, Deputy Governor for Supervision of the Central Bank of Brazil, at the International Seminar “The New Basel Capital Accord: Challenges and Opportunities for the Americas”, held jointly by “Centro de Estudios Monetarios Latinoamericanos - CEMLA”, “Association of Supervisors of Banks of the Americas - ASBA” and “Federación Latinoamericana de Bancos FELABAN”, in Mexico City, Mexico, 12-13 July 2004. *  *  *  The final version of the Capital Accord, also known as Basel II, has just been released. The document maintains the basic framework initially proposed, that is, three pillars, the first one dealing with the calculations of the capital requirements per se, comprising market, credit and operational risks (this last being the real novelty), the second describing the supervisory review process and the third detailing the market discipline to be achieved via disclosure. In Brazil, capital requirements were introduced by Resolution 2099, in August 94, which specified 8% of risk weighted assets as the minimum capital required. Following Resolution 2099, in October 94, Circular 2500 modified some values for minimum capital and net worth required for the establishment of banks, in accordance with the location and size of institution. The supervisory authority raised the minimum capital required to 10% of risk-weighted assets in June 97. In November 97, Circular 2784 again raised this value, this time to 11%, which is still the minimum ratio.

4  Perhaps I should point out that the academic discussion between advocates of the efficient market and those with somewhat different views is still in progress; the advent of the Behavioural Finance school has not left the former at a loss for words. 5  For an introduction to Behavioural Finance, see Shleifer, A. (2000), Inefficient markets, Clarendon Lectures in Economics, Oxford University Press. See also Shiller, R.J. (2001), Bubbles, human judgment and expert opinion, Cowles Foundation Discussion Paper 1303, Yale University. The senior economist at Föreningssparbanken has written an introduction to the subject that has also attracted attention: Fromlet, H. (2001), Behavioural finance – theory and practical application, Business Economics (July), pp. 63–69. 6  See Shiller, R. (1981), DO stock prices move too much to be justified by subsequent changes in dividends, American Economic Review 71, pp. 421–436. BIS Review 5/2002  3  explanation for these findings is that stock markets frequently over-react both upwards and 7 downwards. Something that no doubt helped to question the explanatory power of the efficient-market hypothesis was the stock market crash in 1987, when the Dow Jones index plummeted 22.6 per cent – the largest-ever one-day fall in the United States. This dramatic event demonstrated that share prices can fall even though nothing more fundamental has happened; a thorough search failed to detect any specific or unexpected development that might account for the crash.
It is manifested in exchange rate regimes that still permit relatively limited variability against the dollar. It is manifested in the extent of reserve accumulation, in part the consequence of resistance to exchange rate appreciation. And it is manifested in the remaining controls on capital movements and the occasional experimentation with the introduction of new controls. The search for durable insurance against future volatility is an understandable response to the searing experience of the crises of a decade ago. But there is risk in this as well. And the incomplete embrace of integration could contain the seeds of future vulnerability. In this sense, the policy agenda needs to move from a focus on creating stronger defenses against crisis to building a greater ability to adapt to change. This requires strong institutions for the management of macroeconomic policy so that the monetary and fiscal policies are able to respond to shocks in a credible manner. It requires strong financial institutions with a substantial capacity to absorb losses and cope with volatility. It requires regulatory policies that encourage competition and innovation, with strong protections for property rights, low barriers to entry and effective financial supervision. And it requires investments in a nation’s human capital, in education, healthcare and pension provision. This complement of policies improves the prospects for producing the mix of flexibility and resilience necessary for sustained growth in a more integrated world economy.

This reluctance can partly be explained by the fact that retail bank customers regard cash holdings as an attractive alternative to bank deposits, and could withdraw their deposits if interest rates turn negative, thereby depriving the banks of an important refinancing source. Thus, uncertainty over the collective behaviour of bank customers could be seen as a factor dissuading banks from passing on negative interest rates. As a result, banks’ liability margins – the difference between the interest on a maturity-matched alternative funding source and the interest on deposits – have dipped into negative territory.4 This is clearly illustrated in chart 6. Banks have responded to the pressure on liability margins by raising mortgage rates (i.e. by increasing the asset margin). In principle, the slight rise in mortgage rates is good news from a financial stability standpoint. So can negative interest rates even be regarded as a tool to combat imbalances on the  2  Cf., for instance, O. Jordà, M.HP. Schularick & A.M. Taylor, Betting the House, NBER Working Paper 20771, 2014, M.D. Bordo & J. Landon-Lane, Does Expansionary Monetary Policy Cause Asset Price Booms; Some Historical and Empirical Evidence, NBER Working Paper 19585, 2013, or L. Gambacorta, The Risks of Low Interest Rates, Ensayos Sobre Política Económica, 29, 64: 14-31, 2011. 3  The same applies to all bank loans. 4  The bank’s total margin is made up of three components: asset margin, liability margin and transformation margin, minus any hedging costs (so-called structural contribution).
In fact, even for countries such as the Republic of Macedonia, with relatively modest financial education and low utilization of modern technologies in the financial area, the question that arises is not whether, but when the digitization process will engulf the domestic banking system. In this light, I would like to point to the process of digitization and use of information technology not as a threat against the competition in banking, but as a new opportunity to bring financial services closer to as many clients as possible, to raise financial inclusion and literacy, and to ensure better allocation of resources, as phenomena of greater economic and social significance. 1/2  BIS central bankers' speeches  On the other hand, the application of new technological solutions brings changes in the range of risks that banks face and manage in their day-to-day operations. In addition to the conventional bank risks such as credit risk, interest rate risk, currency risk, the importance of non-financial operational risks will gradually increase. Increased use of modern technical solutions will mean greater significance of the risks related to the information systems security, the confidentiality of the data, the storage of information content, the access and the maintenance of the payment systems. At the end, before awarding the Best Counter Officers, allow me to express gratitude on my behalf and on behalf of the National Bank for their daily and painstaking work in the banks’ branches. Thank you for your attention and congratulations on the World Savings Day! 2/2  BIS central bankers' speeches

Last month, AMRO presented its first set of Economic Review and Policy Dialogue reports at a meeting of ASEAN+3 Finance and Central Bank Deputies. AMRO’s ability to deliver such comprehensive reports within such a short time of becoming operational speaks well of the quality of its leadership and staff. 24. Singapore is very pleased to serve as the base for AMRO’s operations. We are fully committed to supporting AMRO – in matters both financial and administrative. As AMRO expands over the next few years and builds up its capabilities, we look forward to active engagement and collaboration. To be effective, AMRO must be independent and objective in its assessments, and candid about risks and vulnerabilities. I am happy to note that, in its surveillance reports, AMRO has sought to clearly identify policy risks and areas for improvement in the ASEAN+3 economies. It is critical that AMRO sustains this effort and develops an effective consultation process with ASEAN+3 economies. BIS central bankers’ speeches  3  Conclusion 25. The journey of regionalism as represented by the CMIM is an ongoing one. Today’s official opening of AMRO is an important milestone in that journey that we can all take pride in. On behalf of my colleagues in ASEAN+3, I would like to congratulate AMRO and its director, Mr Wei Benhua, on your strong start and wish you every success. Let me also extend our warm wishes and full support to Mr Yoichi Nemoto, who will take over from Mr Wei as AMRO director later this year. 26.
First, there is the theological meaning of faith as “belief in religious doctrine”, “spiritual apprehension of divine truth apart from proof” or, more generally, “belief founded on authority”. Here, Blaise Pascal springs to mind as an advocate of a strict separation between faith and reason. In his view one could not arrive at faith by means of reasoning but only “through the heart”. On this first definition my answer to the question posed by the title of my lecture is “no”. I would prefer to confine faith, in the sense of unquestioned belief, strictly to the private and religious sphere. When it comes to central banking neither the central banker’s actions nor the public’s expectations can afford to just rely on faith devoid of proof or evidence. Moreover, I do not regard it as helpful to characterise central banking as some sort of mystical art that is to instil awe and worship. On the contrary, I consider that the public would be generally ill-advised to put “blind trust” into particular individuals or institutions. This is an important lesson to take away from liberal economic and political philosophy as well as from the overwhelming merits of the democratic system of government. Ultimately, trust must be earned, it is granted temporarily, it must be checked and it must be backed up by hard evidence, not be based purely on faith or belief.

Indeed as far back as the middle ages Nicolaus Oresme has argued in favour of stable money as a principle of natural law and has denounced the debasing of currency by the state as worse than usury and equivalent to robbery and exploitation. In our times another bishop, Karl Lehmann, the current chair of the German Conference of Bishops, has stressed a moral and ethical justification of price stability. In line with recent documents of catholic social teaching he emphasises the fact that inflation tends to hit the weakest segments of the population hardest and that it has contributed to impoverishment in particular in developing countries. On the whole, however, the world of faith and the world of money eye each other with a good measure of distrust and suspicion. Men of faith have often regarded money as the symbol of greed, sin and evil rather than as an instrument for mutually beneficial exchange and a foundation of prosperity. The Christian ethical tradition has in particular expressed moral reservations against the trading or lending of money against an interest charge. This sceptical attitude towards money and interest rates, which to an economist is simply the intertemporal price of money, was well-entrenched in the Scholastic tradition and goes back to Aristotle’s view that to “make money out of money” would go against natural law. Interestingly such moral scruples on lending against interest are also found in other religions and this form of lending is banned to this day in the Islamic world.
Zeti Akhtar Aziz: Malaysia’s experience in strengthening its market for global sukuk activities Keynote address by Dr Zeti Akhtar Aziz, Governor of the Central Bank of Malaysia, at the 2nd Malaysian Islamic Finance – Issuers and Investors Forum 2007 "Malaysia as Global Sukuk Centre: Towards Greater Vibrancy of Malaysian Sukuk Market", Kuala Lumpur, 13 August 2007. The original speech, which contains various links to the documents mentioned, can be found on the Central Bank of Malaysia’s website. *  *  *  It gives me great pleasure to speak at the 2nd Malaysian Islamic Finance – Issuers and Investors Forum 2007 that brings together industry practitioners and investors to discuss recent developments and key issues in Islamic finance. Islamic financial markets in particular, have experienced significant evolution and rapid expansion. We are now seeing the emergence of highly innovative products and services in sukuk market. My remarks today will focus on the vast growth potential of the global sukuk market and Malaysia's experience in strengthening our market for Global Sukuk activities. Vast growth potential for sukuk The growing role of Islamic finance in mobilising and channelling funds to productive investment activities across borders contributes to more efficient allocation of funds across borders and facilitates international trade and investment. Greater diversification of risks also contributes towards promoting international financial stability. The more recent developments in Islamic finance is the growing significance of the sukuk market to become an increasingly important component of the Islamic financial system.

For most observers, including politicians, this is the most striking issue: the Fed has a dual mandate, including price stability and maximum employment, and the strategy review shifted its emphasis to the latter. The ECB, meanwhile, has a primary objective of price stability, according to the Treaties. Of course it is our duty to stick to the Treaties and our strategic review won’t deviate an inch from them. However let me only remind you that our legal mandate is not, as often assumed, a purely “single mandate”: it is rather a twotiered one that includes at least two other objectives without prejudice to price stability: “to support the general economic policies in the Union” contributing among other aims to a “social market economy, aiming at full employment and social progress”iii; and “the stability of the financial system” iv Furthermore, I would argue that there is less of a difference between a dual mandate and flexible inflation targeting than people think: noticeably, the measures we have taken to offset the effects of negative shocks such as the Global Financial Crisis or the sanitary crisis have a direct effect on growth and employment. As far as demand shocks are concerned, the monetary policy prescriptions are the same. In principle there are conflicts when there are supply shock but inflation targeting central banks also tend not to react to temporary supply shocks but respond only if there are signs of second-round effects.
In the euro area, core inflation has been above 2% since October 2021 and above 4% since July 2022. Another feature of the inflation shock we are facing is its persistence. This may affect inflation expectations and lead to a de-anchoring. Current inflation levels require that we clearly show our monetary determination. We know, though, that the significant changes in monetary policy we have taken already will take at least a year or more to affect the economy. But it is our clear forecast and will to bring inflation back towards 2% within the next two to three years. I am not convinced either by the trade-off between fighting excessive inflation and avoiding a recession. There are at least three clear reasons to prioritize price stability (i) legal: our mandate is focused on price stability (ii) political: our fellow citizens care first and foremost about inflation and its impact on purchasing power (iii) economic: entrenched inflation would mean less confidence, higher risk premia, and greater price distortion, and hence less long term growth. Furthermore, the euro area economic starting point remains relatively favourable this year. The labour market is very strong with many vacancies and the unemployment rate stood at a historical low of 6.6% in July and August. Annual GDP growth in 2022 is expected to reach 3.0% according to the latest IMF projection – almost twice the US growth -, although a slowdown is forecast in the second half of the year after the robust growth of the first semester.

Anita Angelovska Bezhoska: The importance of savings for investment growth Speech by Ms Anita Angelovska Bezhoska, Governor of the National Bank of the Republic of Macedonia, on the occasion of the World Savings Day - celebration of the Macedonian Banking Association, Skopje, 30 October 2018. * * * Dear Guests, Ladies and Gentlemen, It is a great honor and pleasure for me to address you at today's event marking the World Savings Day - a day that banks and financial institutions around the world dedicate to promoting saving and raising awareness of the public about the benefits it brings. The saving is undoubtedly important from the aspect of both, individual and overall economic progress and maintenance of the macro financial stability. For each individual, or family, it is the principal and the most important step towards providing financial stability in a long run. By saving, we protect ourselves from unpredictable changes in the personal income dynamics, we more efficiently plan the longterm investments and we build sound foundations for maintaining stable finances throughout the lifetime. Saving is also beneficial for the entire society, as it is one of the key factors which the economy’s investment level depends on, which is a prerequisite for boosting the long-term economic potential. Usually, a significant portion of the savings is channeled into the banking system thus providing stable sources of financing to domestic banks, which is particularly important for the bank-centric financial systems, such as the Macedonian one, where the banks act as major financial intermediaries.