samchain/econo-pairs-v1 huggingface dataset:
BIS Review 39/2004  1  It is something of a paradox that the decline of the dollar has been concentrated against the currences of the least dynamic economies whose current accounts are relatively balanced, while it has held very stable against the currencies of the highest-growth countries which account for most of the US trade deficit. In any event, the contribution exchange-rate movements may be expected to make in correcting global external imbalances is limited; what are needed are economic policy adjustments by the main countries. Not only was no headway made in 2003 in this area, but economic policies remained oriented, in certain cases, in the opposite direction to what was needed to reduce the imbalances, especially as regards the US budget deficit. As mentioned, the international economic outlook has improved appreciably in 2003 and early 2004. In turn, the recovery will foreseeably take hold in those countries most ahead in the cycle, while those most behind are expected gradually to join the upturn. Nonetheless, certain risks remain and should be borne in mind when assessing the future course of the recovery. An initial risk is that the persistence of current-account imbalances may exacerbate volatility on international foreign exchange and financial markets. Achieving a distribution of world growth more in line with more balanced current-account positions without jeopardising the recovery is, therefore, one of the main challenges facing the world economy.

Moreover, the new accounting rules will alter the role traditionally played by the managers of the institutions and their auditors; the proposed framework is more open and gives them a greater degree of responsibility in relation to the information supplied to the market. The aims of the IAS relate, firstly, to the need for a single financial market within the EU and, secondly, to convergence between these rules and Anglo-American standards in the medium term, such convergence being an element that will strengthen the integration of the international financial system. The Banco de España certainly acknowledges the benefits arising from the objectives of the IAS; but it also detects a need, owing to the complexity of the process and calendar problems, to make the transition simpler and to give it a greater degree of certainty. Also, the Banco de España considers that, from a supervisory standpoint, accounting is an essential element of credit institutions’ regulatory  BIS Review 39/2004  9  and prudential framework. That is to say, accounting standards aiming to promote transparency and comparability among institutions must be compatible with good banking practice in relation to risk management. As a result, the Banco de España, in accordance with its regulatory powers, and taking as its starting point the positive experience of the Spanish supervisory model, based on prudent accounting standards, is drawing up a new accounting/prudential circular.
Thus, a weakening of Western exports to the emerging markets is being accompanied by a gradual increase in Western imports from these countries. For overall growth in the OECD area, however, the aggregate real economic effects are probably not all that large. So what about the effects transmitted by financial markets in the West? A falling stock exchange reduces the value of households’ share portfolios, which may influence the propensity to consume. It also increases the cost of capital procurement, which may likewise affect demand via a weaker propensity to invest. The recent global fall in share prices - more or less wiping out the increase in the past two years or so - should be seen in the light of the strong upward trend that share prices have followed in the 1990s. In Sweden the OMX Index is still around 300 per cent above the low in the autumn of 1992. In the United States the Dow Jones Index is about 200 per cent higher than at the beginning of 1991. This provides a perspective for the impact of falling share prices on international growth. It should also be borne in mind that the US economy is more sensitive than Europe to a falling stock exchange. When it comes to confidence, it is more difficult both to quantify and to arrive at more definite conclusions about consequences of the crisis.

One of the biggest misconceptions is on its usage. Waqf is to benefit all. While waqf land has traditionally been used to build mosques, cemeteries or tahfiz schools, nothing in the Quran or 1/4  BIS central bankers' speeches  Hadith prohibits wider use of waqf to meet the needs of the community. In fact, there is no requirement for a waqif or donor and beneficiary of waqf to be a Muslim. There are instances from past Islamic civilisation where the use of waqf extended beyond those that were directly related to the religion and specific needs of the Muslims. Waqf land and buildings were used to build schools, hospitals and infrastructure to benefit both Muslims and non-Muslims alike. The Al-Azhar University is an excellent example of a waqf asset. This makes a lot of sense. It is obvious that waqf should be prioritised to improve education and health, critical ingredients for social mobility and a productive workforce. There are an estimated 300 square kilometres of waqf land – the size of the main island of Langkawi – in the country, and unfortunately, most of this land remains undeveloped. Think about all the needs that can be met by developing this land – affordable housing, schools and universities, hospitals, sports facilities, research centres and industrial complexes. While I acknowledge the challenges in developing this land, including ownership and registration issues, as well as limitations in financial resources, these are surmountable.
Encourage banks to improve their management of risk  We’ve also attained the third goal: to go beyond a rules-based structure and instead encourage banks themselves to improve their abilities to identify, measure, and manage their risks appropriately. As you know, the most sophisticated approaches to credit or operational risk in the New Accord will permit banks to rely increasingly on their internal assessments of risk when determining how much capital to hold. At the same time, the New Accord will be flexible enough for banks to build their risk management functions on the best practices available in the industry, even as those practices evolve in the future. By promoting the improvement of the management of risk across the industry, I believe that we are laying a foundation for more stable markets. The milestones achieved square with banks’ and supervisors’ long-standing efforts All of us can take great pride in meeting the goals that the Committee set out to embrace: the three pillars of capital adequacy, enhancing the risk-sensitivity of the capital framework, and creating incentives for banks to improve their management of risk. And we should recognize that these proposed revisions square well with the efforts that banks and supervisors themselves have undertaken, independent of the Committee’s work. The banking industry has done much over the years to adopt a forward-looking approach to risk management – one that emphasizes flexibility in, and improvements to, the measurement and management of risk over time.

Naturally, as prudent supervisors, the members of the Committee know that it is easier to enforce a simple rule than a more complicated one. Wherever possible, the Committee has sought to provide simple alternatives that can be applied in many markets and settings. Consultations helped us to simplify or remove a good number of rules thought to be unnecessarily complicated. However, it’s important to recognize that we intend to apply the New Accord especially to large, internationally active banks, all of which are highly developed and complex institutions. One blanket won’t cover a mountain range. In fact, the New Accord’s complexity stems partly from the options it provides to address the wide range of risk profiles, strategies, and systems that banks maintain. Many options were created precisely because some banks felt disadvantaged under a proposed blanket rule. Yet each new option alters the balance between simplicity and complexity. I think the best example of finding that balance lies in the treatment we’ve proposed for exposures to small and medium-sized enterprises. Equating loans to small and medium-sized businesses with loans to large corporations ignores critical aspects of the risks associated with each type of lending; it also could lead to results that seem unfair to banks that lend primarily to smaller businesses. So the Committee developed a special capital treatment for exposures to small and medium-sized enterprises that recognizes the unique characteristics of that form of lending, but admittedly makes the rules more complicated, and perhaps a page or two longer.
As a statutory regulator, MAS will remain primarily responsible for the supervision of intermediaries who are our licensees in areas of capital and reserves, business conduct, antimoney laundering & counter terrorist financing (AML/CFT) and operational resilience. These are areas which have been stipulated in our regulations and notices, and are statutory obligations to be complied with. Starting from this year, MAS will no longer require exchanges to inspect their members in these areas as long as the entities are licensed by MAS. In other words, MAS will effectively be the “lead regulator” in these areas. 27. The need to form a separate SRO at this juncture for the purpose of member supervision is in our view, not compelling. It is unlikely to be an efficient model given the size of our market. In fact, it may require greater coordination since there will be more parties involved, namely MAS, the exchanges and yet another SRO. 28. The exchanges will remain responsible for areas affecting their respective market operations such as those relating to the priority of orders on a trading floor or risk management rules on margin requirements. In other words, these are business rules which members have to comply with, and may differ from exchange to exchange. Exchanges will need to supervise their members for compliance, in accordance with the risks these members pose to the markets or clearing houses, and undertake disciplinary proceedings for members who breach their rules. 29.

This is partly because the listings function is the more visible part of the SRO to investors and listed companies. But in fact, the SRO function is much broader. Besides functioning as a listing authority, the SGX’s SRO role also encompasses a market surveillance function to uphold the integrity of the market, and a member supervision function to ensure participants’ adherence to trading and clearing rules. 14. So removing the SRO function from the SGX – as some have suggested – could mean that the exchange will not need to undertake market surveillance; nor to regulate members for compliance with rules of the exchange. Others have suggested removing only the listing authority function from SGX. But the flip side is that this risks losing the synergy of its regulatory function with its other roles pertaining to the development of a viable and credible marketplace; and creates ambiguity as to who oversees proper conduct of listed companies – the separate listing authority or the exchange. 2  BIS central bankers’ speeches  15. It is worth noting that SGX’s SRO function is neither a new invention nor “uniquely Singapore”. Exchange self-regulation has a long history in financial markets and in many established markets. Most, if not all exchanges globally, perform a varying range of SRO functions.
Because of the long lag before monetary policy changes elicit effects, parrying this impact from import prices would have required the Riksbank to identify the Asian crisis’ damping consequences for commodity prices long before they actually occurred. But the weak development of import prices is not the only explanation. Inflation in this period was lowered still further by changes in interest expenditure as well as in indirect taxes and subsidies. On several occasions I have shown the Committee how monetary policy exerts direct effects on CPI inflation through house mortgage interest expenditure. Reducing the interest rate, in order to stimulate demand and thereby hold inflation around the target, has the initial effect of lowering the CPI because house mortgage interest expenditure decreases. This effect continues until after households have renewed the loans at the new, lower interest rate. The greater part of the difference between the CPI and UND1X in Diagram 1 is due to this interest rate effect. The Riksbank has considered the possibility of using some other index for targeting monetary policy but we concluded that there are grounds for continuing with the CPI as the overriding policy target. Among other things, the index is well known and relatively comprehensive. In the light of the problems I mentioned and the ensuing discussion, the Riksbank has chosen to present a clearer description of how the CPI target is to be interpreted.

Lars E O Svensson: Monetary policy, debt and unemployment Speech by Prof Lars E O Svensson, Deputy Governor of the Sveriges Riksbank, at a meeting at SNS – Centre for Business and Policy Studies, Stockholm, 14 November 2012. *  *  *  I would like to thank Karolina Ekholm, Kerstin Hallsten, Per Jansson, Christina Nyman, Ulf Söderström and Anders Vredin for valuable discussions and comments. Mikael Apel, Gabriela Guibourg and Staffan Viotti have contributed to this speech. The views expressed are my own, and are not necessarily shared by the other members of the Executive Board or by other employees of the Riksbank. It can scarcely have escaped the attention of those who follow monetary policy in Sweden that the members of the Executive Board have held differing opinions for some time now. Most people have probably also noted that a minority of the Executive Board members – consisting of my colleague Karolina Ekholm and myself, in case anyone was not aware of this – has advocated a more expansionary monetary policy than the one that has been conducted and that the Riksbank intends to conduct in accordance with the repo-rate path advocated by the majority during the coming period. However, I am not as convinced that everyone has a clear idea of exactly what the differences of opinion entail.
The vast number of bank branches around this part of the city also confirms the stiff competition in the banking sector and we hope that the public will be the ultimate winner though affordable products and services. Ladies and Gentlemen, it is a well known fact that bank branch expansion programs play an important role in increasing access to the unbanked. However, there is need to complement physical branch expansion with other product innovation programmes that will capture a lot more people in the remote areas of our country. The real challenge for all of us is how to enhance savings mobilisation, and effectively channel the public’s savings to its most productive use. I therefore encourage banks to offer an expanded range of innovative banking products in order to mobilise savings to support financing of economic activities in all parts of the country. Distinguished Guests, the banking sector in this country has, over the last few years, witnessed significant growth in consumer lending. As a matter of fact, on a sectoral basis the “personal loan” category has been the largest recipient of total credit and accounted for 24% of at end-October 2009. The resultant credit expansion has no doubt brought significant benefits to the economy. However, the secondary effects of the recent global economic crisis pose a real challenge to the banking sector through increased non-performing loans. For instance, non-performing loans were recorded at 7.2% as at December 2008 but has almost doubled as at September 2009 to 13.1%.

This year, we received 39 studies, ranging from monetary policy and economic and financial development of the country to topics related to aspects of management of production and financial activities, European integration, and technology innovations applied in the fields of virtual money and finance. These works are characterised by the use of contemporary research methodologies and make use of ample statistical information, to research, through theoretical arguments and cause-effect practical relations, various economic phenomena and the rules governing them. Despite the objective difficulties in selecting the most interesting studies, we have eventually come to a decision on the “Governor’s Award for the Best Diploma Theses” for 2019. Having said that, while limited to selecting only three winners, I take this opportunity to congratulate all the participants for their serious commitment and the ideas, methods and conclusions in their laudable research. I would encourage you to continue in your career, after this first step in scientific research, with many more ambitious ones. Let us now present the winning candidates. Thank you and happy holidays! 2/2  BIS central bankers' speeches
The same can and should be replicated in this region, with the presence of foreign global insurers driving this process. Major developments in Malaysia – Liberalisation of the life and general insurance sectors On the home front, two major developments are taking place; (i) the introduction of the Life Insurance and Family Takaful Framework and (ii) liberalisation of the Fire and Motor Tariffs. Both these initiatives will allow the industry greater operational flexibility to innovate, while ensuring that consumers’ interests remain adequately protected. Our goal remains unchanged – to ensure Malaysians have the opportunity to avail themselves of efficient and effective means to manage risks with insurance and takaful solutions that are appropriate for their circumstances. For the life insurance and family takaful sector, the focus remains to increase the penetration level, as measured by the number of policies in force per population, from 56 per cent currently to 75 per cent by 2020. This is envisaged in the Economic Transformation Programme and this target is certainly achievable. Product innovation remains key to achieve this target, particularly in the micro-insurance and microtakaful space which would expand the reach to the underserved segments of society. In the non-life or general insurance space, a more market-driven pricing structure will be introduced for motor and fire insurance. This will also pave the way for the development of products that can be more responsive to consumer and business needs in the two most dominant lines of business in the Malaysian general insurance sector.

And, as second-round effect, this could also impact the profitability and creditworthiness of financial institutions, and, if insolvency problems affect a significant proportion of firms, it could potentially trigger negative financial loops. Second, a high level of corporate debt, even if not leading to defaults, can still be a drag on investment in the years to come, lowering productivity and economic growth. The experience from the global financial crisis indeed shows that highly indebted firms are less dynamic in terms of capital investment and employment. And these two implications of high indebtedness can feed back into each other. The contraction of investment reduces future profitability and repayment capacity, and higher default rates make it more difficult to obtain additional financing, thus reducing investment. 1/2  BIS central bankers' speeches  These considerations can provide a rationale to use public resources to support firms with a high level of debt resulting from an exogenous shock, as has been the case with the pandemic, but which are nonetheless viable based on their medium-term perspectives in terms of profitability and productivity considerations. In this regard, the design of public support programmes to help viable firms improve their solvency position poses at least two fundamental challenges, related, first, to the selection of the firms targeted by the aid; and second, the design of a structure of incentives for those firms participating in these programmes.
9  As described, there is more to do in some of these areas. But increasingly the emphasis is on implementation and, with it, assurance – how we supervise firms against these regulatory requirements and hold them to account that identified barriers to resolvability are removed and stay removed. In describing the progress towards end-state resolvability, I want to pick out three areas that will be a focus in the period ahead. (a) Internal MREL The first is internal MREL. One lesson that the crisis brought home is that the distribution of resources within groups matters. While in life, firms might want to run themselves by business lines on a consolidated basis, failure and resolution occurs at legal entity level. It is understandable then that since the crisis that there has been a discernible tendency for host authorities to hold onto more resources, capital and liquidity, or to force activity in branches into subsidiaries. The aim at FSB level with TLAC was to lean against this tendency towards fragmentation of international groups by providing comfort to authorities cross-border, not only that groups would have sufficient external TLAC to be resolvable but also that resources would be prepositioned as internal TLAC in material subsidiaries in host jurisdictions. Previous international regulation of financial resources in groups has, like the Basel Accord, typically focussed more on the consolidated level. Now applying TLAC regulation at legal entity level has brought with it challenges.

With a flexible exchange rate regime, there is nothing new about some depreciation in connection with a cyclical downturn. Numerous examples can be cited from all over the world. Basically, in a small, open economy the exchange rate often functions as a sort of shock-absorber. The problem today is that the krona’s depreciation has occurred from a level that was already weak. This amounts to a further appreciable lowering of Swedish manufacturing’s relative costs and thus an increased profit share. Our experience from the 1970s and 1980s has shown that a weak exchange rate can generate inflationary tendencies. Let us not forget what happened in recent years. When the krona weakened in connection with the crises in Mexico, Asia and Russia, Swedish exports recovered quickly and strongly. During the autumn of 1998 exports dropped, order inflows were weak and forecasts where quickly revised downwards; but just a few quarters later production for export was booming again. So it is reasonable to expect that sooner or later, although just when is not clear, Swedish exports will pick up this time as well. But the terrorist attacks have probably postponed the recovery and perhaps even accentuated the slowdown in the short run. It is important to keep an eye on the exchange rate as well as economic activity. On the domestic scene there are some bright spots. Household disposable income, for instance, looks like rising strongly next year.