samchain/econo-pairs-v1 huggingface dataset:
Heng Swee Keat: Corporate governance developments in Singapore Keynote address by Mr Heng Swee Keat, Managing Director of the Monetary Authority of Singapore, at the 2009 Asian Investors' Corporate Governance Conference, Singapore, 19 November 2009. *  *  *  Mr. Tan Chok Kian, Chairman, Securities Investors Association (Singapore) Mr. David Gerald, President & CEO, Securities Investors Association (Singapore) Distinguished guests Ladies and gentlemen Introduction Good morning. I am very happy to join you today at this inaugural Asian Investors' Corporate Governance Conference. Thank you for inviting me to speak at this event. I congratulate SIAS and your partners on bringing together such a wide range of investors and corporate governance practitioners from across Asia. I applaud your commitment to hold this event annually, as it is necessary for practitioners to stay abreast of the latest corporate governance developments and to reflect on how we can do better. Corporate governance as an on-going concern Good corporate governance is a key pillar underpinning Singapore's reputation as a trusted financial and business hub. Over the years, we have sought to continually improve corporate governance in Singapore. This includes a review of the Code of Corporate Governance in 2005 by the former Council for Corporate Disclosure and Governance ["CCDG"], chaired by Mr. JY Pillay. In the last two years, following the transfer of oversight of corporate governance of listed companies to MAS and the Singapore Exchange, we have focused on strengthening the practices of corporate governance in Singapore.

The National University of Singapore Corporate Governance and Financial Reporting Centre, as well as the Singapore Management University Sim Kee Boon Institute for Financial Economics both publish useful indices that assess the standards of corporate governance in Singapore. Professional associations such as ICPAS, IIA, SAICSA and SID have also been playing their roles in this area. Conclusion In closing, let me reiterate the point that good corporate governance pays – if not in immediate share prices, at least in the resilience of the firm in a crisis. Indeed, one key conclusion from the study by the Senior Supervisors Group3[3] is that financial firms that best rode out the recent crisis were ones with good corporate governance standards, demonstrating "a comprehensive approach to viewing firm-wide exposures and risk, sharing  3  William Rutledge et al. (March 2008), "Observations on Risk Management Practices during the Recent Market Turbulence", Senior Supervisors Group. 4  BIS Review 147/2009  quantitative and qualitative information more effectively across the firm and engaging in more effective dialogue across the management team." Better governance per se does not guarantee that there will never be a crisis, but it can minimise its probability and its impact if it does occur. Singapore has made good progress over the years in our corporate governance practices, but we must press on with continual improvements. As regulators, professional bodies, investors, academics and the media, we each have a role – let us work closely together in this journey.
This seems especially germane in the current environment in which very low longterm government bond yields in Europe and Japan appear to have been an important factor in pulling U.S. long-term yields lower over the past year or so. •  Given the uncertainties about the current and future levels of the equilibrium real short-term rate, an inertial policy rule may lead to better outcomes. As a consequence, the process of normalization of monetary policy should proceed cautiously, with short-term interest rates more likely to rise only gradually toward the equilibrium real short-term rate. BIS central bankers’ speeches  1  That said, I think the paper leaves some open questions worthy of further exploration. First, although the equilibrium real short-term interest rate, which I will refer to as r*, is only loosely related to real potential GDP growth, could we do better if we were to decompose real potential GDP into its components – such as the growth rates of labor input and productivity – and examine the relationship between r* and each component separately? Second, accepting the principle that an inertial monetary policy rule performs better as uncertainty about the level of the equilibrium real short-term rate increases, what does this imply for monetary policy under current circumstances? Third, in light of the evidence on the volatility of the equilibrium real short-term rate, what are the implications of adopting a Taylor-type rule as a benchmark for monetary policy evaluation?

As the Riksbank’s reporate changes have a major impact on inflation measured in terms of the CPI, it is in this context most relevant to look at inflation measured in terms of the CPIF, that is the CPI with a fixed mortgage rate (see Figure 3). As can be seen in the figure, CPIF inflation was around 3 per cent when the Swedish economy was hit by the fall in demand at the end of 2008. It is now down to levels of around 1 per cent. The fact that Sweden has a substantial surplus on its current account, as shown in Figure 4, also indicates that domestic demand is relatively low. BIS central bankers’ speeches  3  Figure 4. Current account as a percentage of GDP Per cent 10  10  8  8  6  6  4  4  2  2  0  0  -2  -2  -4  -4 Spain  -6  -6  Ireland USA  -8  -8  Sweden  -10  -10 90  94  98  02  06  10  Source: IMF WEO, October 2012. The current account reflects the difference between the value of what is produced and the value of what is absorbed in the economy through consumption and investments. It also shows the difference between total saving and total investment in the economy.
Looking ahead, I wish to take this opportunity to state that despite the bad experiences in the past, the Bank continues to extend an arm of friendship that aims to foster better relationships between the exemployees and the Bank. We shall continue to regard you as members of the Bank’s extended family. As retirees, we consider most of you as persons with vast experience and expertise coupled with a huge reservoir of institutional knowledge, which if natured well, can be a great source of information for future generations. The Bank will Endeavour to invite you to various functions as retirees whenever opportunities arise, especially when we organize historical events. We consider you as an important part of the Bank’s history. Ladies and Gentlemen, there are many ways of leaving employment including dismissal, discharge, resignation or even death. In my view, retirement is the most admirable of them all. It is the ripe way of leaving formal employment, and therefore, a goal that every employee strives for. I congratulate you for achieving this. Retirement should not be viewed as an end but rather as a beginning of a new life. It is my hope that you will find life after retirement fulfilling and a fitting reward for many years of hard work. It is my earnest appeal to all retirees to utilize all the skills and knowledge you have acquired during your working life most especially in the Bank, to use your retirement resources wisely by investing prudently.

Forecasts for a low inflation level in the period ahead have dictated the implementation of an accommodative monetary policy in the last quarters. The policy rate cuts have already been passed through to interest rates in the interbank and deposits market, and to most of government securities’ yields. Interest rates on loans have also reflected the expansionary stance of the monetary policy of the Bank of Albania, but they continue to contain high risk premiums for credit risk and other risks related to long-term investment. The slow performance of the economy is also reflected in the monetary indicators. Money supply continued to increase at low annual rates, standing at 2.1% in March. This performance has reflected the decrease in credit to the private sector and the lower financing needs of the public sector. Credit to the private sector shrank 2.4% in March. Besides the weak demand from businesses and households, the sluggish performance of credit reflects the banks’ conservative lending policies. This approach is reflected not only in the interest rates on loans, but also in other lending standards applied by the banking system. In this regard, the Bank of Albania deems that the banking system in Albania has room for and should adopt a more appropriate behaviour towards crediting the Albanian economy. The country’s economic and financial reality, on-going monetary policy easing and our liquidity-injection operations, as well as the adaptation of our regulations to the market situation provide the premises for faster crediting to the economy.
However,  4  See, for example, Ljungqvist, L and T J Sargent (2006), ”How Sweden’s unemployment became more like Europe's” in Freeman R, B Swedenborg and R Topel (ed), ”Reforming the welfare state – American perspectives on the Swedish model”, SNS Förlag. BIS Review 52/2007  5  it is not exactly easy to assess the level of resource utilisation in the labour market. There are many indications of fairly large labour reserves in total, although this may not be reflected in the recently agreed wage increases. Employment appeared to be developing in line with the forecast we made in February. However, the labour supply was showing weaker development than we had expected. Altogether, this means that unemployment has been slightly lower than we assessed in our forecasts in February and the labour market situation is therefore slightly more strained. Our assessment in May was that on the whole, the repo rate would need to be raised gradually and by more during the forecast period than was indicated by the forecast we made in February. I did not consider the changes in the economic outlook to be so great that they required an immediate adjustment in the repo rate. The reason for this was that inflation is low and there are still factors holding it back. What we must do is to balance the pace of our interest rate increases so that inflation does not accelerate more quickly than expected, but so that growth in production and employment are not slowed down too soon.

It also contributed to a growing central government debt. The economy was fuelled during economic upturns, which led to overheating and inflation. The Riksbank’s task was to try to defend the fixed exchange rate. The social partners were instead to contribute to low inflation by ensuring that wage increases were not too high. Soaring wage costs and poorer international competitiveness meant that the system broke down in the mid-1970s. To safeguard the objective of full employment, the krona was devalued by a total of around 40 per cent on five different occasions between 1976 and 1982. Each devaluation held unemployment down temporarily, but instead contributed to kindle the inflation fire until it was time for the next devaluation. Unemployment was also held down in that the number of employees in the public sector increased substantially. The number of persons employed in the public sector increased from 15 to 30 per cent between 1960 and 1980. In my opinion, unemployment was held down during this period using methods that were not sustainable in the long term. I consider this to be the first important aspect to bear in mind when discussing why unemployment is now much higher than it was in the 1970s and 1980s. Towards the end of the 1980s the situation became untenable. Everyone was then counting on the krona being devalued if the rate of increase in prices and wages rose too high. The driving forces for holding down prices and wages had thus disappeared.
In the following period and until the end of 2002, the krone appreciated, and the effect of high wage growth gradually came into evidence in overall corporate results. Results last year were affected by a particularly strong krone in the second half of the year. The krone exchange rate, measured in terms of the TWI, has now returned to the level of the mid-1990s, while the business sector is still grappling with the high level of costs that has built up since 1998. Changes in the krone exchange rate have proved to be reversible, but the loss of competitiveness and jobs caused by the relatively high level of domestic wage growth is more difficult to recoup. In recent years, labour costs have accounted for an increasing share of corporate earnings. In 2002, labour costs accounted for more than 90 per cent of total factor income in manufacturing. The increase in wage shares is affecting corporate behaviour. The demand for labour is declining. Credit demand and investment in the enterprise sector are low. At the same time, the commercial property market is weak. Vacancy rates for commercial premises are high and rents have fallen. This will have an impact on investment in the period ahead. Lower interest rates will normally result in higher inflation, partly because the krone depreciates, and partly because of a rise in demand. Enterprises will thus be able to increase their earnings. Business sector activity is stimulated most effectively by low interest rates and a weak krone.

Low levels of production in Iraq have contributed to holding up oil prices. Strikes and production problems in Venezuela and Nigeria have also played a role. These developments may keep oil prices high until growth in the global economy returns to normal. The oil industry will then have come through this period of sluggish growth in the global economy since 2000 without a fall in revenues. This has, in isolation, curbed the effects of the international downturn on Norway. However, the situation, as a whole and with regard to oil prices, is still highly uncertain. Weak external developments have in particular had negative spillover effects on the Norwegian economy through the appreciation of the krone, the fall in equity prices last year and lower demand for Norwegian exports. The krone exchange rate is the price of our currency measured in terms of a foreign currency. Developments in other countries are just as important for the krone as developments in the Norwegian economy. The krone has been strong. As a result, prices for imported goods have fallen. This has contributed to low inflation despite strong wage growth over a period of several years. Our analyses indicate that the most important reason for the appreciation of the krone from May 2000 to the end of 2002 was the positive and widening interest rate differential. Combined with the interest rate differential, the fall in equity prices and reduced fluctuations, or volatility, in foreign exchange markets contributed to the appreciation of the krone last year.
There is, of course, a reason why I am standing here talking about historical events. But, before I get to this reason, I would like to say a few words about the money we use today. Central bank money and commercial bank money Today, we have three kinds of money. The first kind is the one I have talked about the most today, banknotes and coins. These are a form of central bank money, that is, money issued by the central bank. As I mentioned earlier, the special thing about central bank money is that it has no nominal credit risk, as it stands for a claim on the central bank, which cannot go bankrupt. Cash is also the form of central bank money that can be held by the general public. The second sort of money is also central bank  3 [10]  money, but in electronic form. This is the money that is held in accounts with the Riksbank and it can only be held by those who are allowed to have accounts in the Riksbank, which currently means credit institutions, securities companies, clearing organisations and the Swedish National Debt Office. It is electronic central bank money that the banks use when they are making large payments to one another. This is done through a payment system called RIX. Most of the electronic payments made in Sweden, whether they are made by direct debit, credit transfer or card, pass through RIX at some point. The third kind of money is commercial bank money.

Money is then unable to fulfil its three functions and we are, in a way, back in the barter economy. 2 [10]  Money assumes trust Until fairly recently, the trust problem was resolved in two ways. The oldest method is by minting coins in precious metals. The coins then have a value in themselves. In Sweden, the value of metal appears to have been on average 85% of the coin's nominal value until around the 17th century. Trust in coins was also increased when the king, not only in Sweden, but in most countries, promised to accept his own coins as payment for tax collection and so on. In this way, the holder of a coin knew that the money could be used in the future at a particular value and that in a worst case scenario, if the king broke his promise, the coins had a metal value. If we look at the 17th century, an important financial innovation took place here in Stockholm: the first modern banknote was produced. The banknote was made of paper and thus had not metal value. On the other hand, the issuing bank, in this case Stockholms Banco, guaranteed that the holder would always be able to redeem the paper for precious metals. The trust was thus shifted from the precious metals in the coin to the party storing the precious metals. Banknotes assume that there is a broad trust in the issuing bank. The same applies of course to the money we have in our bank accounts.
If a central bank succeeds in attaining credibility so that inflation expectations are stable, there is some scope for also taking into account developments in the real economy. The labour market: an important variable for monetary policy We thus try to conduct our monetary policy so that the inflation target is attained within a reasonable time horizon, at the same time as we emphasize that resource utilisation should approach a “normal” level. However, there is no generally-accepted measure for resource utilisation as there is for inflation. It is therefore necessary to use questionnaires or to try to estimate it using some statistical method. At the Riksbank we use, for instance, “gap analyses”, where we try to relate the current situation and the forecasts for different measures of resource utilisation to the trend for the respective variable. The gap shows how far the variable is from its “normal” level. For instance, we use the deviation in GDP from its trend to study the GDP gap. We have two ways of measuring the gap for the labour market; employment measured as the number of hours worked and measured as the number of persons employed. Developments in the labour market thus have considerable significance for the analysis that precedes the monetary policy decision. However, all of the measures of resource utilisation we present are very uncertain, and this is why we use several different measures. 6 Monetary policy decisions often concern complex deliberations.

In this context, it is worth noting that we are observing adjustments in business models. Some institutions might need to undergo radical transformation, while others need just fine1  https://www.esrb.europa.eu/pub/pdf/other/150625_report_misconduct_risk.en.pdf 3/6  tune their structures. In all cases, we see digitalisation and optimisation of processes, with potential impact on the internal control functions. We also see an increased reliance on outsourcing and an attempt to implement more agile and flexible ways of working. All these trends imply changes that pose additional risks. In this regard, there are some critical elements that banks need to consider in their management of non-financial risk. Let me say a few words about these elements. Starting with IT, I think nobody questions by now that technological change should be part of deeper considerations regarding the sustainability of the banking business model in the long term. If we look at what has happened in recent years in other sectors, there is clearly a need for the banking business model to adapt to a new reality. True, technological adaptation calls in many cases for significant investment in systems to be made. However, such investment today will be key to fostering profitability in the future. A lot of people think that IT change is mainly related to the so-called front-end, namely the customer experience. There is a lot of talk about the interaction with the client and the quality of apps, but I would like to stress that it is even more important to undertake technological change focusing on the back-end processes.
Chart 6: Major UK banks’ regulatory capital, MREL resources and requirements, % RWA (2011-2022) End-state requirement  2014: UK bail-in power introduced T1 + other total capital resources (~T2)  MREL resources  Interim requirement  35% 30% 25% 20% 15% 10% 5% 0%  2011 2012 2013  2016  2020  2022  Sources: FSA regulatory returns, MREL+ returns, Bank calculations  43  All speeches are available online at www.bankofengland.co.uk/speeches  43  Chart 7: G-SIB and D-SIB high-quality liquid assets (liquid asset ratio) Per cent  14 12 10 8 6 4 2 0  2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Total GSIBs DSIBs Sources: S&P Capital IQ and Bank calculations Notes: Weighted average based on a sample of 189 banks which are systematically important as of 2016. Yearly is defined as the fiscal year of reporting of the individual banks. Liquid Asset Ratio = (Cash equivalents + government securities)/Total assets  Chart 8: G-SIB and D-SIB loan-to-deposit ratio Per cent  3 2.5 2 1.5 1 0.5 0  2006  2007  2008  2009  2010  2011  Total  2012 GSIBs  2013  2014  2015  2016  DSIBs  Sources: S&P Capital IQ and Bank calculations Notes: Weighted average based on a sample of 189 banks which are systematically important as of 2016. Yearly is defined as the fiscal year of reporting of the individual banks. Loan to Deposit Ratio = Loans granted by a bank/Stable deposits received.

Rethinking Financial Stability Speech given by Andrew G Haldane, Chief Economist, Bank of England Co-authored with David Aikman, Sujit Kapadia and Marc Hinterschweiger(1)  ‘Rethinking Macroeconomic Policy IV’ Conference, Washington, D.C. Peterson Institute for International Economics 12 October 2017  (1)  All Bank of England. The views expressed in this paper are those of the authors, and not necessarily those of the Bank of England or its committees. We are grateful to Andrew Bell, Alex Brazier, Paul Brione, Marcus Buckmann, Oliver Bush, Patrick Calver, Shiv Chowla, Sebastian de-Ramon, Stephen Dickinson, Nic Garbarino, Andrew Gracie, Amit Kothiyal, Antoine Lallour, Katie Low, Damien Lynch, Clare Macallan, Alex Michie, Ali Moussavi, Casey Murphy, Tobi Neumann, Simon Pittaway, Amar Radia, Ani Rajan, Katie Rismanchi, Fiona Shaikh and Tamarah Shakir for comments and contributions. Philip Massoud and Karam Shergill provided excellent research assistance. 1  All speeches are available online at www.bankofengland.co.uk/speeches  Introduction  The theme of this conference is “Rethinking Macroeconomic Policy”. When it comes to financial stability, that theme could hardly be more appropriate. The global financial crisis has been the prompt for a complete rethink of financial stability and policies for achieving it. Over the course of the better part of a decade, a deep and wide-ranging international regulatory reform effort has been underway, as great as any since the Great Depression. On cost grounds alone, a systematic rethink and reform of regulatory standards has been fully justified.