samchain/econo-pairs-v1 huggingface dataset:
The merit of this regulation is that it introduces incentives for better risk management by banks, while at the same time attenuating the cyclicality of the financial sector and, thereby, swings in the real economy. In my concluding remarks I will try to summarise the main lessons we have learned in discussing, designing and implementing the new system, with an emphasis on the broader economic view rather than on the purely supervisory one. Let me bring forward my main conclusion: there are regulatory mechanisms, like dynamic provisioning, that provide incentives for sound risk management and are anti-cyclical by nature and can therefore moderate cyclical swings. ***** Recent experience in a number of countries shows that credit expansion and asset price increases - and bubbles - are mutually reinforcing processes (see Graph 1). Asset prices may start to rise in an economy because new investment opportunities appear or simply because of overly lax financial conditions. When asset prices rise so does the value of collateral, which makes financing easier, increasing the demand for assets. That in turn pushes asset prices upward. In the downturn, as the value of collateral drops, financing possibilities decline, as does thus credit growth, a process often reinforced by financial institutions pursuing much more cautious credit policies as they are incurring losses or making smaller profits in this phase of the cycle. Tighter credit policies reinforce recessionary forces and provoke additional reductions in asset prices.

However, in a slowdown, as the impaired assets rise, the specific provision requirements increase and the statistical provision becomes negative. This means that the statistical fund (accumulated in previous years) starts being used, its proceeds (the difference between the latent risk and the specific provision) being credited to the profit and loss account. Therefore, thanks to the mechanism of the statistical provision, the burden of credit risk on the profits of banking institutions is better spread over the cycle and more in accordance with the evolution of expected losses. The new scheme offers banks two options. First, to use their own internal measurements of the statistical credit risk and second, to use a standard method. The Bank of Spain expects that in the future an increasing number of institutions will be able to show robust computations, in the framework of an integrated credit risk management system. However, probably in the next year or two, most banks will use the standard method. In the standard system the supervisor sets the parameters. The portfolio is distributed in six blocks, according to the relative riskiness of the different assets, or off-balance sheet items with credit risk. A vector of coefficients (ranging from 0 to 1.5%) is applied to the exposures contained in the six blocks. The resulting figure is the estimated expected loss for the bank portfolio. The computation produces an aggregate annual gross burden (i.e.
Even so — or perhaps as a consequence of this — the euphoria led to growing imbalances. The rapidly rising stock markets in the late 1990s seem to have stemmed from unduly high expectations of future profits and incomes. Partly in view of equity capital’s appreciation, households stepped up their expenditure on consumption in excess of current income. Corporate investment expanded rapidly to meet the growing demand. High share prices stimulated the procurement of venture capital and generated a plentiful supply. The growth of demand and the expansion of the U.S. economy’s supply side were proceeding at a rate that was based on expectations that simply could not be fulfilled. American households pledged future incomes for current consumption to such an extent that their savings no longer sufficed to finance corporate investment. The saving deficit grew, as could be seen from the rising deficits on the current account, and large amounts of capital had to be imported. The apparently unending increase in expectations of rising share prices on U.S. stock markets stimulated the capital imports, which continued to such an extent that the dollar rose to high levels against other currencies. Together with massive investments in real capital, which involved considerable rationalisation, the dollar’s appreciation held back the price impulses that normally accompany growing pressure from wage costs. The question is whether the upward phase in the U.S. economy in the 1990s represents a cyclical pattern that differs from earlier post-war cycles.

If world economic activity had remained strong, it would have been reasonable to count on the Riksbank continuing to raise the repo rate. BIS Review 26/2001  1  A look at the threats we perceived in December as being liable to push inflation up above our forecast, shows that they have become less troublesome. At the same time, the clouds that were gathering over the U.S. economy have thickened and darkened. To date this year the Federal Reserve has cut its interest rate a total of 1.5 percentage points. The first cut, announced in January in between the regular monetary policy meetings, surprised the market by its magnitude as well as its timing. Another cut came at the end of January and a third last week, on 20 March. There has been a spate of negative news about the global economy in general and certain companies in particular and international stock markets have remained turbulent. US economy difficult to assess The focus at present is on the U.S. economy. Its future path is highly important for economic developments in Sweden. In order to arrive at a clear picture of the situation, we need to judge the effects of alternative outcomes. During the 1990s the United States experienced its longest economic upswing ever without any serious signs of accelerating price and wage increases. A more efficient economy, with strong competition and functional product and labour markets, accompanied by advances in computer and telecom technology, are said to have contributed to a higher rate of potential growth.
In principle, the three-pillar structure of the New Accord provides more precise directions to regulators to strengthen bank supervision and incentives to banks to become more sophisticated in risk management. Implementation of Basel II eliminates “one size fits all” methodology to assess risks and offers instead a wide range of methods to evaluate risks based more on failure likelihood. But the supervisory authorities in several emerging markets and many developing economies are concerned that Basel II puts a challenge they cannot meet. Probably our greatest concern relates to the need of the standardized approach to rely on external rating agencies for calculating minimum capital requirements. Currently domestic rating agencies are totally absent in Albania and not well developed as in many other non-OECD countries. On the other hand, in most of our economies many small enterprises cannot afford to be clients of international rating agencies. Since borrowers unrated from rating agencies will be assigned a 100% risk according to Basel II, initially most domestic credits may end up under this 100% category. This could reduce risk sensitivity of the new system brining it close or similar to that of Basel I. On the other hand, Albanian banks hold a significant share of government treasury bills and notes. Actually, under Basel I to this exposure of the banking system denominated in local currency is assigned 0% risk independently whether credit risk of the sovereign debt is rated or not.

On the other hand, its implementation may be a bit too ambitious and a difficult task for our countries. Therefore it is in our interest to find ways to make it more suitable to our needs by following a gradual approach rather than jeopardising its success through an uninformed adoption. 1  According to Basel II, the assessment of the borrower’s credit risk will depend on the performance of the economy, whether it is in a upward or downward trend. In the worst case, when the economy will be wholly swept in recession, banks will have automatically either to increase the level of capital, or shift towards less risky assets, that most intuitively calls for a slow down to provide loans thus engendering credit crunch and further recession.
In other words, if we want to see if policy works or not, or if the economy has become less sensitive to changes in interest rates, then we should examine the slope of the IS curve, and not only of the Phillips curve.11 Empirical research on the IS curve is scarce, however. And the few studies available are generally not encouraging from a monetary policy perspective. They typically find that output does not respond, in a statistically significant way, to the real interest rate. 12 Often they even find a positive relationship between real interest rates and output. These findings are at best disturbing given that much of mainstream monetary thinking is built on the idea that firms and households take the level of the interest rate into account when making economic decisions. 8 / 14  BIS central bankers' speeches  To illustrate the empirical failure of the IS curve, slide 7, column 1, shows the estimated coefficients of a regression of the euro area output gap on its own lag and a measure of the real “interest rate gap”, i.e. the difference between the real ex ante interest rate and the time-varying natural rate.

Therefore, the Basle Committee has quite rightly advised that regulators and banks should approach it with caution even with regard to the simplest approach to Basel II. We commenced our journey one year ago, together with the industry, and we will move slowly, but steadily, towards full implementation of the basic approach, hopefully in 2008. We will, however commence our test runs in parallel with Basle I in 2006, fine tuning our systems for full compliance as we go along. This would be in line with the widely accepted policy that countries should adopt the options and approaches that are most appropriate for the state of their markets, their banking systems, and their supervisory structures. In Sri Lanka, as in most countries, the banking sector enjoys predominance in our financial system. As is to be expected, the financial environment, domestically, is becoming more innovative and competitive to meet the sophistication of peer foreign banks and the needs of investors and consumers. This naturally increases their risk profile. Increasingly, therefore, our remit as regulators is to ensure an efficient risk management framework and the adequacy of resources to mitigate risk. Against this background, therefore, Basle II is synonymous with good risk management, not only of the core risk of credit default, but of a wider range of risks such as market risk and operational risk in Pillar I .
After that, I’ll be happy to answer any questions you have about what the Fed does and why, and about the economic outlook. As always, what I have to say reflects my own views and not necessarily those of the Federal Reserve System or the Federal Open Market Committee, also known as the FOMC. What the New York Fed does By way of introduction, I will briefly review what my colleagues and I do at the New York Fed on behalf of the Second District. I have the great fortune to serve as vice chair of the FOMC that meets eight times a year in Washington to set interest rates and make other decisions about monetary policy. The members of this committee all strive to set policy to advance the mandate given to us by Congress to promote the maximum level of employment consistent with price stability. Sometimes we have different views on the specific policy choice at hand, and you should view this as completely appropriate: these are hard questions – particularly during difficult economic circumstances such as we face today. In fact, I think we make better decisions as a committee because we don’t all think alike. But we are united in our commitment to our dual mandate and in our belief that Fed independence is essential to the public interest. That independence allows us to make tough decisions insulated from short-term political pressures. At FOMC meetings, each Committee member presents a current outlook for his or her region and the nation.

I urge banks to put in the necessary efforts. Insofar as we are concerned, I think we have developed, in a limited way, such ability and will, as in the past, share with the banking community our analyses so that banks can continually adjust their operations to meet changing market and regulatory needs. Technology risk The third set of forces arises out of banks’ increasing use of, or rather reliance on, technology. We have seen a spate of fake bank websites and attempted email scams over the past year: indeed, the rate of discovery of such cases relevant to Hong Kong has averaged about 1.4 per month over the past 13 months. It should be pointed out that we have no report of any customer in Hong Kong having been taken in by these attempts at fraud. Nevertheless, the proliferation of fake websites indicates that careful precautions and constant vigilance are necessary. And a further area of technology-related crime - ATM skimming fraud - has had its victims, both in Hong Kong and overseas. Increased security and heightened customer awareness, we believe, have helped defeat this form of crime: there have been no new cases in Hong Kong for seven months. Even so, the elementary, “low-tech” nature of these frauds demonstrates also that there are many dimensions of the banks’ vulnerability to technology. In addition to protection against technology-related crime, the IT framework of banks also requires business continuity planning (or BCP).
They probably do, but given the distribution of financial and real capital in the world, it is likely that the global equilibrium interest rate is to a large extent affected by developments in the US, the EU and Japan. However, viewed from the perspective of a very small, though very open, economy such as ours, it is clear that equilibrium interest rates and required returns do not reflect specific Norwegian conditions, but are determined externally, and we must adapt to this situation as well as possible. BIS Review 46/2003  9

In this connection, a more flexible capital framework that promotes an enhanced degree of capital sensitivity to actual risk intricacies is indeed appropriate for the governance of an Islamic financial institution. An Islamic financial institution's asset profile is characterized by a diverse spectrum of Islamic financing structures ranging from the low risk sales and lease-based modes of finance to the higher risk-equity-based modes. Each of these modes of finance has a distinct intrinsic characteristic dictated by its underlying Shari'ah principles and thus, entails different risk profiles. Ladies and Gentlemen: As the Islamic financial services industry ascends to maturity, it will be desirable to achieve a gradual increase in equity-based finance as this is deemed to be a more equitable financing structure in the eyes of the Shari'ah. It is therefore important to design an appropriate capital requirement that is commensurate with the associated risks. While equity-based finance may involve higher risks and therefore attract higher capital requirements, this, however, should not deter Islamic financial institutions from venturing into equity-based finance. A similar approach is needed to balance between regulatory requirements and financial innovation. Given that the Islamic financial services industry is still in its early stages of development and with the degree of flexibility accorded by the Shari'ah, there.15 vast potential for financial innovation to expand.
In conclusion, I would like to express the hope that the deliberations of the Forum, conducted on a confidential basis, will focus attention on the identification of potential systemic risks and on the promotion of effective risk management. I said earlier that complacency must be avoided. It has taken several years of hard work at both the political and technical levels to put Malta on the map as a reputable financial centre. A rigorous but non-intrusive regulatory regime based on international best practice combined with easy access to the single regulator has been a major plus. Other contributory factors are a legal framework based on common and civil law, 55 double-taxation treaties and a competitive fiscal regime, and, not least, membership of the euro area. Malta’s tradition of commercial banking based on a conservative funding model in which loans are entirely financed by retail deposits is a source of additional strength. Our banks, moreover, maintain capital and liquidity ratios well above the regulatory minimum and their resilience is confirmed by stress test results. We undoubtedly have reason to be satisfied. There can, however, be no letup. There is need for both a greater awareness about systemic risks and for enhanced efforts at risk mitigation and resilience building. We should not forget that there is a relatively high concentration of risk on both sides of bank balance sheets, in particular a significant exposure to the real estate sector, both in the form of loans and collateral held against them.

Chart 2 Exposure concentration and insurance as a mitigating factor  Sources: AnaCredit, 427 data, EMDAT, OECD and ECB calculations. Notes: Left panel: credit exposures to non-financial corporations (NFCs) above € are considered; € trillion of exposures overall; NFC location used to assign risk levels refers to the corporations’ headquarters; country breakdown refers to the bank’s country of residence. Right panel: sample includes 45 countries for which the OECD provides quarterly GDP data from 1996 to 2019. The chart shows the impact of large-scale natural disasters (i.e. with total damage larger than the third quartile at 0.1% of GDP) when the share of insured losses is high (above the median of 35%) on the left, and low (i.e. below the median of 35%) on the right. The estimates are obtained using a panel regression model where the dependent variable is the year-on-year difference in the log of GDP and the explanatory variables include two dummies capturing large-scale disasters with a high and low share of insured losses respectively (included with up to three lags), and country and quarterly fixed effects. For the quarter including the date(s) of the disaster (t=0) and the three subsequent quarters, the y-axis measures the percentage point impact of the disaster on the year-on-year annual growth rate at the end of that quarter. In principle, one mitigating factor may be insurance, which in the past has helped support aggregate demand and hastened reconstruction following disasters, reducing the overall impact on economic activity (Chart 2, right panel).
With its open approach of considering, adapting to, and applying fintech across the breadth of its mission, including through its own investments, the Bank will play its part. 14 15  Bank of England (2017b) The proof of concept connects firms to a specifically built, offline version of RTGS so that the live RTGS system is protected.

The Open Banking standard and PSD2  11  introduce changes to access of account  information and initiation of payments, requiring banks to make customer data available to authorised third parties if customers so choose. This may change the way that customers access and operate their bank 12  accounts, such as by making them accessible via a single smartphone app developed by a third party . As the prudential regulator of UK financial services firms, the Bank of England needs to be open in how it considers and responds to changes arising in retail banking from this reform. In fact, increasing competitive pressures in retail banking, enabled in part by an increase in the use of fintech, formed part of the biennial 13  exploratory scenario in our 2017 stress test . As well as looking at these infrastructure changes impacting the firms we regulate, we are also opening ourselves to change by experimenting with new technologies when we think about enhancing how we work – including for the infrastructure we are responsible for. 10  Hauser, A (2017) Europe’s second Payment Services Directive Cunliffe, J (2018) 13 Bank of England (2017a) 11 12  4  All speeches are available online at www.bankofengland.co.uk/speeches  4  14  The Bank of England is currently investing in its RTGS service , a critical piece of national infrastructure, renewing the heart of the UK’s overall payment system to meet the challenges posed by a rapidly changing landscape.
Ravi Menon: An economic history of Singapore – 1965–2065 Keynote address by Mr Ravi Menon, Managing Director of the Monetary Authority of Singapore, at the Singapore Economic Review Conference 2015, Singapore, 5 August 2015. *  *  *  It is always wise to look ahead but difficult to look further than you can see” – Winston Churchill. Everything about the future said here is pure imagination. It does not represent in any way a forecast or projection by MAS or by me. My intention is merely to paint a plausible scenario for Singapore. I can only be sure that someone reading this in 2065 will view it as totally lacking in imagination or realism or both. Professor Euston Quah, ladies and gentlemen, good morning. This year, Singapore celebrates 100 years as an independent nation. The Global-Asian Economic Review, or GAER, is relatively young, at 25 years old. But the GAER comes from a long tradition that goes back to the very beginnings of Singapore. •  It began life as the Malayan Economic Review in 1956, was renamed the Singapore Economic Review in 1969, and took new birth as the Global-Asian Economic Review in 2040. •  As the leading journal on economic issues that lie at the intersection of the world and Asia, the GAER’s evolution has mirrored that of Singapore itself – starting life as part of Malaya, becoming independent, and then expanding its vision to become a Global-Asian entity limited neither by geography nor history.

Ravi Menon: Islamic finance – continued growth Remarks by Mr Ravi Menon, Managing Director of the Monetary Authority of Singapore, at the 5th World Islamic Banking Conference Asia Summit, Singapore, 3 June 2014. *  *  *  Distinguished guests, ladies and gentlemen, good morning. And to all our foreign guests, a warm welcome to Singapore. The sun is shining on Islamic finance. Let me highlight three promising global developments. First, Islamic finance continues to grow rapidly. The industry grew at double digits last year, as it has for the previous five years, despite global economic uncertainties and market volatility. Global Islamic financial assets are estimated to have reached $ trillion by the end of 2013, from $ trillion in 2012. Second, global regulatory standards and best practices are being established for Islamic finance. The Islamic Financial Services Board (IFSB), the Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI), and the International Islamic Financial Markets (IIFM) have been at the forefront of this effort, helping to narrow differences in market practices and regulatory treatment. Common standards are good for facilitating cross border transactions. They help to address risks that are idiosyncratic to Islamic finance, such as Shariah non-compliance risk. In so doing, these standards serve to bolster confidence in the safety and soundness of the Islamic finance industry. Third, more countries are catering for Islamic finance. In Asia, Indonesia has set out to significantly grow its Islamic banking sector and develop its Islamic capital markets.