samchain/econo-pairs-v1 huggingface dataset:
Malta has also adopted the European Directive of 4th April 2001 on the reorganisation and winding up of credit institutions and their branches in Member States, which should facilitate the harmonisation of any eventual measures that may have to be taken in this regard. In compliance with EU legislation on the promotion of international payments, the Central Bank has meanwhile brought into force the Directive on Cross-border Credit Transfers. Another Directive, on Electronic Payments Services, which seeks to ensure a high level of consumer protection in the field of electronic payment instruments, came into force on May 1st this year. Looking forward, we believe that Malta’s financial system is well placed to benefit from EU membership. While the banks may face some challenges from increased competition, there will also be opportunities for growth. In particular, Malta is well positioned to serve as a bridgehead between Europe and North Africa, and some Maltese banks have already been exploiting this market niche, participating actively in the Mediterranean Bank Network set up after the Barcelona Declaration of 1995. The recent emergence of Libya on the international scene, a country with considerable potential with which Malta has long maintained close commercial ties, should also open up further opportunities in this direction. Malta’s inherent qualities, moreover, make it an attractive location. The island has a stable economic and political environment as well as a highly qualified and motivated workforce in the legal, accounting and consulting services professions and in banking and finance.

In addition, the level of non-performing loans has been on the high side, and certainly higher than the EU average, even though it has recently started to decline. Here I should perhaps point out that in Malta we adopt a relatively conservative definition of non-performing loans. The expanded economic role of the banks has been accompanied by significant progress in creating an independent and effective regulatory framework in line with international standards. In 2002 the Malta Financial Services Centre was renamed the Malta Financial Services Authority, and took over from the Central bank the responsibility for supervising the banks and the Malta Stock Exchange to become the single supervisory and regulatory body. The division of responsibilities between the Authority and the Bank requires effective cooperation, and for this purpose a Memorandum of Understanding has been signed. At the same time, the Central Bank was given formal independence in the conduct of monetary policy, in overseeing payment systems and in safeguarding the overall stability of the financial system. The Bank uses a number of approaches to identify possible threats to the system. It analyses data from prudential returns submitted by the banks and other financial institutions. This, coupled with further analysis of the corporate sector in terms of leverage, profitability and liquidity, complements the monitoring of credit risk within the banking system. Stress testing is also carried out in order to identify potential losses resulting from abnormal market conditions.
That is why no-one is forced to cast their vote for a particular level of Bank Rate until they have heard the views of the whole Committee. As a result, there is often some suspense as to the final outcome. In January, for example, when the Committee raised Bank Rate by five votes to four, that outcome looked unlikely when at one stage opinion was four to two for no change with only three people to speak. The greatest debate among the Committee usually occurs during the quarterly forecast round which often stimulates fresh thinking. So it is perhaps not surprising that this is when many, but by no means all, changes in interest rates are decided – see chart 6. Changes have been twice as frequent in Inflation Report months as in other months. But it is changes in economic conditions which are more important in determining the timing of our decisions. 7  Including one emergency meeting following the events of September 11 2001. 8  On 20 occasions the MPC has met with fewer than the full complement of nine members. 12 of those occasions were before the Bank of England Act came in to effect and the ninth member could be appointed. Since June 1998 it has also been short of its full complement on 8 occasions. 9  The role of uncertainty and learning in monetary policy was discussed in my 2005 Mais Lecture. See King (2005).

But there is a need also to reduce vulnerability by building bigger, deeper, more robust and diversified capital markets. While the interesting subject of monetary integration, which would provide a long-term solution, has been receiving some nascent attention, efforts to enhance the efficiency of financial intermediation within the region should be stepped up. Asia as a whole is one of the largest exporters of capital and, at the same time, also one of the largest recipients of foreign direct investment and foreign portfolio investment. The underlying process of capital flows associated with this roundabout phenomenon involves much greater financial volatility and instability for the region than the situation where a greater proportion of savings in the region could more readily find their way into investments in the region. This underscores the importance of greater efforts to enhance the efficiency of financial intermediation within the region. Indeed, capital market reform is high on the agenda of most Asian economies. There has also been considerable progress in the diversification of financial intermediation channels, specifically in the development of the bond market. At the end of last year, the amount of domestic bonds outstanding in eight economies1 that we have surveyed was equivalent to 47 percent of the combined GDP, more  1  Hong Kong, Indonesia, Korea, Malaysia, Philippines, Singapore, Taiwan and Thailand. BIS Review 30/2004  1  than double the 20 percent at the end of 1995. Over that eight-year period, the bond market’s share in total financing grew from 11 percent to 19 percent.
Kuttner and Shim (2013) have made a panel study covering 57 countries and stretching across more than three decades, which investigates the effect on debt and housing prices of various tools. According to their study, the tools that appear to have the most obvious effect on debt include the elimination of tax relief on interest payments and the introduction of a mortgage cap. Let us try to estimate what effects these measures would have on our standard households here. Say that the tax relief for mortgages was abolished. Changes to the tax relief are nothing new – at the end of the 1980s, the tax regulations were changed so that tax relief was almost halved for certain groups of households. For the family in Luleå, with loans worth SEK 1.1 million, the loan costs would rise, if they did not adapt their level of indebtedness, by around SEK 1,100 per month, or almost 3 per cent  18  The calculation is based on assumptions of unchanged yield requirements for the banks of 15 per cent, unchanged borrowing costs for the banks and the allocation of the banks’ costs on the basis of risk weights. 8  BIS central bankers’ speeches  of their disposable income. And for the family in Upplands Väsby, the abolition of the tax relief would increase their loan costs by SEK 1,750, or around 4 per cent of their disposable income.

The crisis gave rise to a new policy area – macroprudential policy – which partly works by influencing the volume of credit in the economy, in roughly the same way as monetary policy. To me, it is fairly obvious that these two policy areas need to interact. If monetary policy is to carry out its tasks well, then macroprudential policy must function properly and most likely also vice versa. The crisis also made necessary a monetary policy that was in many leading countries more expansionary than ever before, and which was conducted in ways not previously tested. Given this, the debate that has arisen on international monetary policy spillover effects is perhaps not particularly remarkable. We do not yet know what our final conclusions will be with regard to these two areas. These are a couple of the loose threads that I am not able to tie up here today. However, a certain amount of new thinking will probably be required, both with regard to monetary policy and financial supervision and the regulation of the financial markets – but also concrete  31  See Ostry and Ghosh (2013). 32  A further possibility that I will not take up here, but which has been tested in emerging markets in particular, is to use capital regulation. For a detailed and partly critical review of the efficiency of capital regulation, see Klein (2012). BIS central bankers’ speeches  15  measures.
In the medium term, the region is expected to benefit from the deeper regional financial integration agreed by the leaders of ASEAN and recently reported concluding of TPP negotiation. These agreements would result in a more efficient allocation of regional savings to meet the region’s large investment needs which will support growth and consequently financial well-being and soundness. The improved income arising from the economic developments will spur greater demand for insurance services in the region and present immense growth opportunities for the insurance and takaful industry. The Asia Pacific region offers high growth prospects over the long term underpinned by potential demand arising from structural changes and evolving risk exposure. This will have the implication of increasing wealth and shifting preferences, but challenged by a rapidly ageing population and frequent incidences of catastrophic events. First, increasing wealth and shifting preferences in Asia Pacific Rising incomes have increased the spending power and affluence of consumers in Asia Pacific. GDP per capita for the region reached 15,242 US dollars as at end-2013, well above the world average of 10,613 US dollars for the same period. Reflecting higher standards of living and enhanced purchasing power, demand for insurance products in the region has evolved to encompass a broader range of protection and investment solutions that are more responsive to differing risk and return preferences. This has also been Malaysia’s experience, with the significant growth of investment-linked insurance premiums over the last decade alone.

Another important area is to raise the professional standards of the industry that reflects the highest standards of professional conduct, knowledge and competence. In this regard, the grand design of the industry, the Financial Sector Blueprint, clearly emphasized on the need to develop talents across all levels of an institution, spanning from the entry level to senior management and the board of directors. Indeed, a holistic talent development and management is a good example of an initiative that combine art with science which a visionary institution must be able to master to achieve its goals. The second imperative is the ability of the industry to effectively leverage on technology to build strong, innovative and competitive businesses. This includes developing a deep understanding of how changes in technology impact people’s lives and transforming how consumers and investors behave and view the value proposition of businesses. For instance, mobile phone penetration in Asia alone makes up 52 per cent of total global penetration. The highly developed telecom markets of Asia with 3.6 billion people across Asia having mobile phones spread across a diverse range of markets, capitalising on mobile data/wireless broadband services would mostly likely chart the way of the future. Growth across Asia in high speed access to the internet by mobile wireless devices has been largely driven by highly competitive markets combined with a general population who are prepared to embrace new mobile technologies.
So, as regards net investment, in other words the contribution to capital formation, this was more than halved as a percentage of GDP in the mid 1970s. This meant two things. First, capital growth per employee, or per hour worked, fell. For a number of years, investment dropped so much that capital per employee in the business sector actually declined. In other words, each employee worked with less capital. In order to illustrate what capital per employee means, we can take an extreme example, namely what a lone worker can accomplish when digging with a spade and iron bar compared with a hydraulic excavator. The latter represents considerably more capital per employee than just digging with a spade, as well as substantially less physical effort for the worker. Therefore, we should expect productivity growth to fall when capital per employee declines. But there is also another indirect effect. With new capital, new technology is introduced into the production process. Investment is the means for putting new technology and research into practical production. Through investment, new methods and new technology are ushered into production processes. For this reason, we should expect less technological progress in production when capital formation falls. An excavator is so much more than a large number of spades; it represents entirely new technology that affects the whole production process. Figure 1 shows that capital formation, net investment as a percentage of GDP, fell in the mid 1970s from around 15 per cent of GDP to about 5 per cent.

In short, he needs much more depth. Second, cross-functional adaptability. Job functions and business lines are no longer as static and predefined as they used to be. It is increasingly important that finance professionals are exposed to a broader range of business areas. Movement across business lines generates fresh perspectives that could in turn help to drive innovation and identify new areas of competitive strength. A compliance professional, for instance, may start off on compliance matters that pertain to credit activities. Over time, it would be useful to widen his compliance knowledge in other areas of business such as capital markets. This broader exposure will help him to think about compliance and risk management issues across different functions of the bank in a more consistent and coherent fashion. Such a capability will be a key asset when taking on larger functions and responsibilities in the bank. Third, Asian knowledge and expertise. Asia is a diverse mix of economies. They are at different stages of development, with different financing needs and different regulatory and governance structures, not to mention different cultural norms. To operate a successful regional business franchise, finance professionals will need a deep understanding of these differences and know how to navigate the different terrain. Take for example, a corporate banker, who may be advising the treasurer of a Singaporebased multi-national corporation with operations in the region. Each jurisdiction may have different rules and regulations that could impact the cash management and credit needs of this client.
The FOMC also indicated that it anticipates that these caps will remain in place once they reach their respective maximums. Over time, as the Fed holds fewer securities, the private sector will gradually hold more. At the same time, Fed liabilities held by the private sector, in particular reserve balances, will decline equivalently. Panel 2, which draws on a July 2017 update to the System Open Market Account annual report, illustrates how the caps will evolve in relation to anticipated maturities of Treasuries, on the left hand side, and agency MBS on the right. As can be seen, once the caps are fully phased in, in many months the caps are not expected to be binding, and so there would be no reinvestments 3/7  BIS central bankers' speeches  in those months. However, the caps will be exceeded in months with large Treasury maturities, and we would reinvest the amount above the cap. For agency MBS, a change in conditions could encourage faster MBS repayments than are shown here, producing monthly paydowns larger than the 20 billion cap and thus some reinvestments—an issue I will return to later. Policymakers have indicated that they want the portfolio’s size to decline “in the background,” and that the federal funds rate will be the primary instrument of monetary policy. Balance sheet normalization is expected to continue until the FOMC judges that the Federal Reserve is holding no more securities than necessary to implement monetary policy efficiently and effectively.

When banks would have identical response functions, economic cyclicality would increase, potentially creating additional instability. At the same time, excessive variation in risk measurement is clearly undesirable. Finding the right balance is the key. The preliminary work suggests we may not have the balance right in the current set-up. But as with all of our work on implementation, it is necessary to identify problems before we can set about correcting them. The on-going analysis has generated a wealth of information about risk modelling by banks. This is useful for international policymakers. The Committee has not yet decided what actions it might take in response to the analysis, but some of the possible policy options could comprise improvements in public disclosure practices, limitations in the modelling choices for banks, and further harmonisation of supervisory practices. These ideas will also feed into the current fundamental review of the trading book. In addition, our international study provides national supervisors with a much clearer understanding of how the risk models of their banks compare to those of international peers. This means that national supervisors are much better equipped to discuss the results with their banks and take action where needed. The Committee will be doing further work on the trading book, in addition to the banking book work, to explore the outcomes in more depth. I am confident that it will generate additional insights in the modelling of risk-weighted assets and to explain better why modelling results differ across banks.
Alongside that evidence, we could see that the sum of the projections for lending in the two years ahead for the UK banks was substantially negative. The case for acting was therefore strong, but the challenge was also that in its first year, success for the FLS was in some ways to prevent the most negative outcome for lending, which in an absolute sense would not look great. What we have seen over the last year is quite a substantial change in the funding costs of banks which has fed through into lower lending costs, but more so in terms of the amount of lending in the mortgage market than for small firms. Funding for the major banks have also become less disposed, which has probably increased the willingness of banks to compete on lending. But the uneven pattern of lending meant that we thought it was sensible to increase the incentives for banks to lend to small firms. We cannot say that this will conclusively deal with the question of whether the problem is a lack of loan supply or demand, but we can say that we have used our toolkit to create a big incentive for banks to lend to small firms. In summary, there is a strong public interest in the banks, which has been sharpened by the crisis. One element of that public interest is permanent – the role of banks in supporting the real economy.

The crisis has been a searing experience for banks and regulators, precisely because at times they have both failed to fulfil this central objective of maintaining safety and soundness and hence the continuous supply of critical services to the public. For what is now not far short of three years we have been working to change the approach to financial regulation in the UK. We are still working to do that of course, but the difference is that for the last four and half weeks we have been doing so within the new regulatory framework of regulation – we are doing it now as the Prudential Regulation Authority and the Financial Conduct Authority. The prompt for this change of approach has been the severity of the financial crisis, a crisis that has been through a searing phase of prudential problems – failing banks – and more recently a conduct phase as the misdeeds and unacceptable behaviours of the past have been revealed. On a personal note, recently when my appointment was announced, I was described a number of times as a veteran of the Bank of England. It was for me a moment of home truth; 28 years is quite a long time in one place, even if the term veteran sits uncomfortably. But it reminded me that the UK is on its fourth system of financial regulation during that time.
Ladies and Gentlemen, In the Turkish context, the Islamic finance practices are embodied in a uniquely defined compartment of the banking system. These banks are called as the “participation banks” in Turkey and they constitute an integral part of the Turkish banking system. There are four Islamic banks categorized as participation banks, and 45 conventional banks in Turkey as of  BIS Review 124/2009  1  September 2009. It is crucial to highlight that the participation banks are not considered as an alternative to the conventional banks. While they are functioning similar to deposit banks, their fund collecting and lending processes differ significantly. Participation banks are authorized by the Turkish Banking Act to collect funds from the public under the “profit and loss participation accounts” and the “special current accounts”. The profit and loss participation accounts are essentially a version of the Islamic financial instrument, where the bank utilizes the funds deposited by account holders to fund specific business activities. Any profits earned are shared between the account holder and the bank, in proportion to an agreed ratio. Participation banks in Turkey mainly offer two types of lending. The first type of financing is Murabaha, which is a transaction consisting of two sales contracts. The first contract involves a bank client requesting the bank to undertake a Murabaha transaction and promising to buy the commodity specified by him or her if the bank acquires that commodity.

Although, Islamic finance institutions are mainly founded in the Middle East and South-east Asia, the interest has extended to Europe and the United States. Today, the size of Islamic banks around the world is estimated to be more than USD 250 billion and expected to grow by about 15 percent annually. Due to the growing importance of the Islamic finance, the Islamic Development Bank (IDB) was established in December 1973. The purpose of the Bank is to foster economic development and social progress of Muslim communities individually as well as jointly in accordance with the principles of Islamic Law. The number of members to the Bank is steadily enlarging and currently consists of 56 countries. The primary functions of the IDB are to participate in equity capital and grant loans for productive projects and enterprises besides providing financial assistance to member countries in other form for economic and social development. The Bank is also required to establish and operate special funds for specific purposes including a fund for assistance to Muslim communities in non-member countries, in addition to setting up trust funds. The Bank is authorized to accept deposits and to mobilize financial resources through Shari'ah compatible modes. It is also charged with the responsibility of assisting in the promotion of foreign trade especially in capital goods, among member countries; providing technical assistance to member countries; and extending training facilities for personnel engaged in development activities in Muslim countries to conform to the Islamic Law.