samchain/econo-pairs-v1 huggingface dataset:
Consequently, I am afraid that my paper about improvements of the mechanisms of the financial and banking markets might turn out rather boring and conservative as I will only talk about some improvements, not about radical changes. But as we, bankers, have to put up with the stress test, I ask of you to be resilient during my presentation. The second reason is because peering into the future is based on our capacity to assess risks. We do this by using our inbred capacity to weigh probabilities, which is, in our modern times, supported by mathematical models. Nevertheless, our capacity to assess what lies ahead is impaired when facing uncertainty, as it was the case since the outbreak of the current crisis. However, we are fortunate. As Alan Greenspan noted, “there is a degree of historical continuity in the way democratic societies and market economies function.” This means that there is a “persistent stability” that can be used for inferring what the future might look like. All we have to do is learning the lessons of the past. II. Historical overview  Looking carefully at the economic history, we see two sorts of changes. Some legal and economic institutions change slowly enough to allow us to anticipate future outcomes fairly accurately. But from time to time, there are some very rapid or significant legal or institutional changes. Such events usually emerge in the aftermath of a deep crisis. This seems to be the case these days.

Confronted with against-efficiency regulations, financial markets started to seek ways out. This is a lesson we should keep in mind. II.2. The ‘70s and beyond  These ways out primarily took the form of the emergence of competitors to the US dollar as a settlement currency, the collapse of the Bretton Woods system and the establishment of international syndicate banks which began in 1964. Under the pressure of market forces, starting in the `80s, financial sector deregulation gained ground by loosening up legal and administrative restrictions. Almost all restrictions imposed up to the ‘60s were removed. A new era dawned, with markets enjoying more freedom. One important result worth mentioning is that lending was no longer constrained by the volume of deposits or holdings of liquid assets. Banks could borrow on the interbank market at any time. Under the new circumstances, capital became the only factor containing the size of banks’ books (Goodhart, 2010). Setting appropriate requirements for bank capital was challenging to regulators and it remained so. On the one hand, a strong capital base is associated with the soundness of a bank. On the other hand, that comes at a price in terms of profitability. Capital adequacy requirements were unified under the Basel I Accord, which set them at 8% and established risk coefficients. But they were quickly watered down by the Basel II Accord, which allowed banks to assess their own risks, through sophisticated models. 2  BIS central bankers’ speeches  Starting with the ‘80s, credit expansion was relatively rapid.
A related achievement has been the spread of usage of the euro for invoicing and financing trade, not only within Euroland but also by firms in other countries trading or competing with Euroland or involved in supply chains leading there. This is a phenomenon that is perhaps less evident in Asia than in countries nearer to you here. Even less evident to us in Asia is the impact which the euro may be having on competition and internal pricing within Euroland, now that the single currency has stripped away exchange costs and other impediments to price comparison. I must emphasise that I have not had the opportunity to test this thesis for myself, so I can only rely on what others tell me. Some claim that this will prove to be one of the most emphatic benefits of the move to a single currency. I could well believe that, but I am unsure what progress may yet have been recorded. Thus, you will appreciate how in Asia we may not be aware of the various benefits that the euro is delivering, whereas we are relatively well served by the sceptics. There may be a marketing job to be done here. And it is one which, to carry conviction, must be performed as much by businessmen or 5  BIS Review 23/2000  bankers who actually use the euro and experience the benefits, as by central bank, government or European Commission officials, or by politicians and their aides.

Very recently we informally polled ten leading financial institutions in London. Their forecasts for the dollar/euro exchange rate by the end of this year ranged from $ down to 90c. This is a considerably wider spread than the trading range already experienced and suggests a huge measure of uncertainty, to a horizon of only ten months. Of course, one might argue that this represents uncertainty over the dollar as much as the euro. Yes indeed, and I apologise for analysing things very much from a dollar base. Over time, all currencies have experienced considerable volatility - the dollar, the yen, the euro and its ancestors, sterling and so on. Yet in all of these, investors have been able to enjoy significant positive real rates of return over the long term. That may not be good enough for everyone: some seek short-term gains; others may be worried by mark-to-market volatility in the short term even if they are there for the long haul. But long-term investors will give considerable weight to the overall economic and monetary management of the economy. As I mentioned earlier, there are a number of aspects of the management of the Euroland economy about which perceptions from Asia may be somewhat sceptical. As for monetary policy, I would suggest that it is perhaps natural for outsiders to be rather hesitant in their assessments, in view of the new infrastructure for monetary policy, but as the ECB beds down one would expect confidence to grow.
Only that can improve export competitiveness and underpin consistent increases, rather than falls, in real wages. To generate needed productivity growth will require recent strong business investment growth –10% over the past year – to be sustained. The MPC is supporting investment through clear guidance that it expects increases in Bank Rate, once they begin, to be gradual and limited. From my own experience visiting businesses up and down the country, including some in Glasgow earlier today, I know that businesses understand this message. This guidance puts all the short-term noise about when the first rate rise will be into its proper context and it encourages firms to hire and invest with an eye to the medium term. Why does the MPC expect Bank Rate increases, once they begin, to be gradual and limited? This is in part because the headwinds facing the economy are likely to take some time to die down. These headwinds include public balance sheet repair, a highly indebted private sector likely to be particularly sensitive to interest rates, as well as the drag from a 12% appreciation of sterling over the past year and the persistent muted demand from our main export markets. Over the medium term, several dynamics are likely to keep rates lower than in the past. UK rates could be restrained by continued imbalances between global saving and investment, together with potentially lower rates of global productivity growth.

In short, to be effective, markets must also be fair. And we need to invest in social capital just as we invest in economic capital. That is why the Bank, Treasury and Financial Conduct Authority are undertaking a major review to secure true markets. Markets:  3  4  Adam Smith (1789), The Theory of Moral Sentiments. BIS central bankers’ speeches  •  that are open and transparent;  •  where access extends beyond a privileged few;  •  where all who wish to trade have common information and commonly accessible prices; and  •  where the informational integrity of key benchmarks is beyond question. Some of this will require changes to the way markets work. Some can be delivered by bringing more activities within the scope of regulation. And some may require new codes of conduct. We need a simple approach that recognises that the actions of a few to manipulate, game or profit from unfair access weakens the effectiveness of markets for all. Such actions hold back prosperity. They should therefore have clear consequences. Our approach should deliver true markets which are the greatest source of dynamism, prosperity and progress. Completing this agenda will reinforce the G20’s efforts to rebuild an open and resilient financial system, and in doing so it will support underpin global trade and investment to the benefit of all. Conclusion The UK, the Commonwealth and the world have always drawn inspiration from great Scots.
Robust technology and strong internal controls must be in place to protect and preserve the integrity of the financial system. In line with this objective, our banking institutions have successfully replaced the magnetic stripe ATM and credit cards with chip-based cards to ensure a more secure environment for payment cards. This move has effectively eliminated counterfeiting and fraud involving ATM and credit cards in Malaysia. This has provided Malaysia with the platform to further enhance payment card services by maximising the chip infrastructure. The conclusion of this year will see the completion of the industry-wide migration to Europay-MasterCard-Visa (EMV) standards with all of the point-of-sales terminals being fully EMV-compliant. With this, Malaysia will become the first country in the Asia-Pacific region to successfully migrate on a national scale from the magnetic stripe environment to the EMV chip-based credit card infrastructure. Ladies and Gentlemen, For Malaysia to fully adopt e-payments, the task ahead requires great determination and commitment from all sectors. From the Central Bank’s perspective, a strong motivation for promoting e-payments is in the eventual savings from the reduction of paper processing and printing, and the more efficient distribution of money in electronic form in the financial system that generates immediate economic value. Research studies have shown that shifting from an all paper-based to an electronic-based payment system will generate annual savings of about 1% of the GDP.

On this note, Ladies and Gentlemen, I have great pleasure in declaring open the Payment Systems Forum and Exhibition 2005. Thank you. BIS Review 84/2005  3
This dialogue will provide an opportunity for the industry to discuss with the Central Bank these developments and their implications, important issues that have emerged and the Central Bank's policy initiatives. As the year 2005 unfolds, it is important for us to reflect on our progress achieved, the new challenges that have emerged and the actions that need to be taken to drive performance in the period ahead. The banking system in Malaysia today is vibrant, strong and profitable. In fact, the banking system is at its strongest position since the financial crisis. The high level of capital, improving asset quality and strong profitability have also been reinforced by substantial enhancements in the areas of corporate governance and risk management standards. Large investment has also been made to strengthen internal systems and processes, to improve delivery channels and to acquire talent. Cumulatively, these enhancements have enabled the banking institutions, particularly the domestic banking institutions, to remain competitive and to offer differentiated products and value-added services. Undoubtedly, the competitive environment has also driven domestic banking institutions to strive for greater efficiency as well as to venture into new areas of businesses, tapping new sources of income and entering into alliances with regional banking institutions. Most of all, these advancements have enabled the banking institutions to assume an important role in facilitating the increased role of the private sector in the economic growth process. The foundations for strong performance have now been well established for the domestic banks.

But this partly reflects the weight of past decisions and specific factors relating to the reintermediation, by banks, of previously securitised loans. •  All surveys point to a tightening of credit standards going forward. “Tightening” does not mean that credit will dry up, but rather that it will be more expensive and more selective. Banks are gradually passing on to their customers the increase in the cost of financing that they incur. •  We are closely monitoring this development that, at present, does not appear to be, in itself, a threat to growth. Indeed, the recent period had been characterised by an extremely high credit growth rate. As you know, the government has implemented measures to facilitate the financing of SMEs. To conclude, in the longer term, and in accordance with the guidelines laid down by European governments on 4 and 12 October 2008, I believe that it would be useful to revisit the foundations of our financial regulation. This should be done without haste, but no stone should be left unturned. We must be willing to address all the questions and challenges that this crisis has raised. These include the role of credit ratings agencies, the management of risk, market infrastructures, the scope of financial regulation and the question of remuneration. As regards the latter, we should not seek to over-regulate or punish, but rather to instil a sense of responsibility. Pay structures should not encourage short-termism or, as was the case, excessive risk taking. BIS Review 129/2008  3
Japan is experiencing renewed vigour. Prospects for ASEAN on the whole are good, though there are occasional hiccups. Asia is integrating through trade, tourism, people-to-people exchanges, investment flows and production chains. If there are no mishaps, by 2050, half of humanity – the more than 3 billion people in Asia – will enjoy a standard of living which their grandparents did not even dream of. Naturally, Asia's growth trajectory will not be a straight line. Asia has its share of problems too – the North Korean nuclear issue, tensions across the Taiwan Straits, Kashmir and terrorism. But these issues can be and are being managed. Many countries in the Middle East are keen to engage Asia but I have been told that their businessmen are not so familiar with doing business in China and Southeast Asia. This is where Singapore can play a role. As a key financial and commercial hub, Singapore is well-positioned as a gateway for Middle East companies to expand in Asia. Middle Eastern investors can leverage on Singapore's networks and knowledge to venture into Asian markets. There is much that Asia and the Middle East can do together, as we embark on this journey of rediscovery. Although there are significant differences between Asia and the Middle East, we also share common interests and common challenges. We both want to reconcile tradition with modernity and change, to develop without losing our core values. Both Asia and the Middle East can profit by sharing experiences.

Non-Muslims have benefited from waqf as proceeds have been used to purchase medicine for needy Singaporeans, regardless of race and religion. The Malay/Muslim community in Singapore, while holding fast to the values of Islam also maintains an open and progressive attitude in the practice of its faith in our multi-racial and multi-religious society. The Singaporean Muslim's identity stresses the importance of contextualising one's beliefs to the environment, but without compromising the tenets of faith. The environment required to ensure the growth of waqf is similar to conventional charitable trusts. Singapore has established itself as a strong centre for the administration of charities and trusts. We have introduced several initiatives to make Singapore a more conducive jurisdiction for trusts, a vehicle commonly used for philanthropic purposes. This includes measures to modernise our trust laws, update our regulatory framework and make our tax regime more conducive for the establishment of trusts. This will help Singapore to become a centre for the development of waqf. Conclusion Let me conclude. Asia and the Middle East are becoming more interdependent. With our destinies intertwined, it is critical for Asia and the Middle East to continue our efforts at engaging each other, strengthening our bonds and enhancing mutual understanding. To overcome the common challenges we face, we should continue sharing our experiences. I hope that this conference is the first of many in bringing together interested parties from all over the world to explore new and innovative ideas, and to learn from each other.
Another culprit is high subsidies provided by many governments in the developing world to at least partially protect consumers from the cost of high food and energy prices. Fast-forwarding to the recent period, the observation that the central banks of developed countries still keep real interest rates negative in the face of financial risks may hamper a correction in commodity prices. On the other hand, many developing countries, mainly China, India, Malaysia, Indonesia, and Egypt have decided to gradually reduce subsidizing energy prices and pass the true cost to consumers. This is a favorable development that will eventually help to control demand pressures on commodities. Dear Guests, As you may all know, the commonly accepted practice in inflation targeting regime is that monetary policy should not react to supply-driven shocks that are temporary in nature and should allow temporary increases in inflation in the short-term, unless they create deterioration in inflation expectations. Otherwise, undesired fluctuations might arise in economic activity and relative prices. The increase in commodity prices would trigger a selfcorrecting mechanism. By changing the relative prices, it would provide valuable information on how the resources of the economy should be distributed. While high food and energy prices curb consumption on these products, they would also encourage investment and increase supply in the long-term. In short, the common view is that central banks have nothing to do but wait for the supply-driven shocks to work out their natural course.

Lars Heikensten: Reforming a central bank Speech by Mr Lars Heikensten, First Deputy Governor of the Sveriges Riksbank, to the CEPR/SNS Roundtable, Stockholm, 8 June 2001. *  *  *  Thank you for inviting me this evening and for the opportunity of addressing you all. I should like to begin by stressing how much we value the cooperation with CEPR. Creating arenas for an exchange of ideas in Europe is an important task to which CEPR is making a valuable contribution. Today you have been considering a variety of issues and this evening I want to raise yet another, namely how a central bank can be reformed. I do so against the background of the major changes that are currently taking place in our national economies and financial markets. These changes clearly have consequences for the work at central banks. The challenges we in Europe face are particularly great, above all now that EMU is a reality and the single currency imposes new requirements. Work on changes at the Riksbank has been very intensive in recent years and I should like to tell you something about it. What I have to say will no doubt be familiar to many of you in managerial positions in either the private or the public domain. The operations of central banks are really not all that different from those of other enterprises. Issues recur but methods have changed a lot Sveriges Riksbank is the world's oldest central bank. Threadneedle Street's Old Lady is our younger sister.
Likewise, if banks incorporate the risks arising from the ecological transition into their analysis, they will become an engine for change: they will help financing reach those activities which, in addition to being economically profitable, contribute to the sustainable transformation of the economy. In turn, as a central bank we are also in the process of incorporating the environmental factor into the internal ratings used to evaluate the eligibility of banks’ collateral, and into the criteria used for taking own-portfolio investment decisions. Conclusions That brings me to the end of my address. The crisis has been severe and has had consequences at all levels. We have overcome its acute phase, but its legacy remains present. In response, regulation and supervision have changed radically, taking on board lessons we must never forget and equipping supervision with a set of tools necessary for preventing future crises. Society has also changed. Specific values, such as growing awareness about climate and inclusion, have become more important. The demands made of financial institutions, supervisors and the public authorities have increased, along with society’s financial knowledge. However, we must continue to boost education, as a tool for fomenting stability and balanced economic development in society. We must all take note of these changes and rise to the demands being made of us. What we do today will determine the type of future we will have. As Woody Allen said, the future is where we will be spending the rest of our lives, so we should all take an interest in it.

A good reflection of this new manner of conduct is in the recent real estate credit legislation. The financial crisis has given rise to more demanding legislation that calls on banks not only to inform but also to act impartially, transparently and professionally, taking into account the rights, interests and needs of their customers. It may be said that the regulations now transcend mere transparency in form. One very positive aspect of the legislation is the improvement in legal certainty. Clearly, by properly protecting the customer, the risks of litigation are being significantly reduced. And such risks are one of the main costs the sector has been bearing. Let us not forget that the cost of litigation far exceeds any potential benefit that some banks might have obtained in the short term through questionable conduct. Moreover, improper conduct does not only affect those banks guilty of it, but the reputation of the sector as a whole. To conclude, this new type of customer-bank relationship must be the starting point for any sustainable banking business model. Naturally, if it is to be successfully set in place, a topto-bottom cultural change is essential in the organisation. This change will be headed for 10/13  failure if the bank’s senior officers and management do not offer their resolute support. Once again, we are talking about governance as a precondition for change to occur. Financial education I have highlighted how society’s demands with regard to banks’ behaviour with customers have increased considerably.