samchain/econo-pairs-v1 huggingface dataset:
The UK’s major markets in Europe are benefiting from strong demand for their exports; and the latest news suggests that domestic demand in most of these countries is finally picking up, though consumers probably still remain a little wary. As the news from abroad has steadily improved, we have also seen a marked strengthening in demand at home. After a fairly weak first half, retail sales bounced back, the housing market took on a new lease of life and investment began to recover. It now looks as if the UK economy has been growing around or above trend since the middle of last year. It was against that background that the Monetary Policy Committee raised interest rates in three further stages to 4.5%. Meanwhile inflation remains low, well below the Chancellor’s target of 2%. This might seem to bear out the old taunt, that central bankers are the sort of people who want to close the bar as soon as the party starts to go with a swing. It would be fairer to say that we want to be sure that the party remains under control. We don’t want to encourage binge behaviour any more than you do, and for much the same reason; it makes life unpleasant for other people, and it leaves a nasty mess behind. That points to taking action at the first sign of trouble, and preferably before. In current circumstances, strengthening demand is beginning to put upward pressure on costs.

As a consequence, at times, we must be willing to intervene to restrain financial booms in order to temper the busts.   Reform should be undertaken in ways that better align the economic incentives of participants in the financial system with the goal of financial stability.   We should strive to achieve a degree of transparency in the financial system that would enable market participants to make informed judgments about their financial market risks and exposures.   The core of the financial system – the major banks, non-bank financial intermediaries, and financial market infrastructures – must be made more resilient to adverse shocks and less susceptible to runs. BIS central bankers’ speeches  1    Recovery and resolution regimes must be effective in limiting the contagion to the broader financial system when major financial intermediaries or financial market infrastructures come under stress.   We must pay close attention to how all the components of the financial system interact. It can’t just be about particular institutions and infrastructures. Market processes and practices are also very important. Turning first to the issue of financial booms and busts, empirical observation makes it clear that financial markets are inherently unstable. Throughout history we have seen numerous sizable booms and damaging busts. The notion that financial markets are dynamically unstable is also supported by controlled experiments conducted by behavioral economists. Now I accept the notion that some minimum degree of instability is unavoidable.
As a consequence, we had to conduct a more aggressive interest rate policy than the ECB in order to lower the attractiveness of our currency and give some leeway to our economy. Things have normalised since then and we have already lifted interest rates on four occasions in the last two years. As you can see, we conduct our monetary policy independently of the ECB. 2/3  I'm sure you will agree, that Switzerland is most definitely not an isolated island, as many still believe. It is clearly an open economy which has chosen to take up the challenges of the world economy. Large Swiss firms invest more money and create more jobs abroad than at home. Switzerland has become a major investor not only in Europe, but also here in the United States, as well as in Asia. Today, there are 4.2 million jobs in Switzerland and we count 1.8 million people working in Swiss firms abroad. Apart from Singapore and Hong Kong, there is no other country where foreign investments play that kind of leverage role. Actually, Switzerland is not an alpine fortress, but a home base for globally active industries… …in keeping with the long-standing tradition of watchmakers and chocolate producers! 3/3

Although there are signs of improvements in the recovery, many economies are still in a weak financial position, and domestic demand is expected to grow at low rates for some time. After years of financial excesses, households in many countries, particularly in the U.S., have accumulated excessive debt. Many advanced economies also have weak fiscal positions, due to fiscal expansions implemented to contain the recession, measures to support the banking sector, or simply the fiscal profligacy that took place prior to the crisis. In particular, the level of government debt in some European countries will require a significant and protracted fiscal consolidation to avoid insolvency. Therefore, the deleveraging process of households and governments implies that domestic demand is unlikely to be an engine of growth. As a consequence of this scenario, the inflationary pressures will be relatively contained. The rise in commodity prices is having effects on headline inflation, but the propagation to other prices will be limited because of a negative output gap. This is in sharp contrast with the situation in emerging market economies (EMEs). Accordingly, monetary policy in advanced economies will remain expansionary, and despite some tightening in the near future, they will still have lower interest rates than those in EMEs, and which will be well below what used to be considered a neutral stance. In contrast, EMEs have been growing strongly, and after suffering moderately from the global crisis, many have already reached levels of full capacity, and some of them may even be overheating (Figure 1).
In particular, lower interest rate levels help reduce losses on credit portfolios, thanks to the favourable effect they have on borrowers’ ability to repay their loans, associated both with lower loan costs and with the higher income and lower unemployment levels linked to the positive macroeconomic impact of lower interest rates. These effects have been especially significant in countries such as Spain where the banking system had a high level of non-performing loans and where short-term and variable rate lending predominates, since this means that changes in market yields are rapidly passed through to the cost of outstanding debt. This effect thus explains part of the decline in the NPL ratio in recent years. In addition, lower interest rates help drive up the prices of financial and real assets. This effect is immediate in the case of debt securities, especially long-term ones, as their prices are more sensitive to yield changes. The prices of equities and real assets, such as housing, are also boosted by lower interest rates, owing to their effect on the discount factor, although these prices are also affected by other factors, such as macroeconomic expectations. All this entails capital gains for banks exposed to these financial and real assets. It also increases the value of loan collateral, which enhances the credit quality of loans and, therefore, reduces losses on the credit portfolio. That said, it is true that these capital gains become exhausted once interest rates cease to decline and remain at low levels.

The events range from small random informal gatherings to large-scale highly organised events to celebrate women’s advancement while highlighting the need for continued vigilance and action. A good number of Governments around the world, have made commitments to promote gender equality, by among other things, taking initiatives to integrate gender perspectives into national budgets or development plans in order to reflect the differentiated needs of women and men. Zambia is no exception. In Zambia, it is recognised that the creation of the Ministry of Gender and Women in Development, is a deliberate effort by the Government to ensure that the needs of women are addressed. Through the Ministry we are able to recognise the strides that have been made by women in national development and we look ahead to the challenges that are before us as we strive to achieve our goal of gender equality. In addition, Zambia is a signatory to the SADC Declaration on Gender and Development. This declaration calls for the equal representation of women and men in the decision making process of member states at all levels. I must concede here that, although we have made significant strides as a country in women representation, more still needs to be done. We are however encouraged that there are a good number of women with potential and ability to rise above any form of challenge.
None of these mechanisms would breach the Currency Board rules, since the Hong Kong dollar liquidity thus created, in the form of the addition to the Aggregate Balance of the banking system, would be BIS Review 77/1999  4  matched either by a decline in another component of the monetary base (the Exchange Fund paper) or an increase in US dollar assets. Beyond this, we have stated on several occasions in the past that, in exceptional circumstances, where there is a risk that large-scale Hong Kong dollar transactions might create extreme conditions in the LQWHUEDQN PDUNHW DQG DIIHFW WKH VWDELOLW\ RI WKH H[FKDQJH UDWH  WR DQ H[WHQW XQZDUUDQWHG E\ DQ\ economic fundamentals - the HKMA may temporarily lend or borrow Hong Kong dollars to or from the interbank market to dampen these extreme conditions. Should an imminent bank failure pose the threat of triggering extreme conditions in the money and foreign exchange markets, there may be justifications for the HKMA to inject liquidity directly into the interbank market, on a temporary basis, to ensure systemic stability. This would represent a departure from the strict rules of the Currency Board system. The availability of excess foreign currency reserves allows some scope for discretion, but the intention would anyway be that this injection should be only temporary.

Preconditions for Lender of Last Resort Support The basic precondition for lender of last resort support is the systemic risk that would, in the judgement of the HKMA, arise from the failure of a troubled institution if it were deprived of liquidity assistance. This is the basic precondition, but not the only precondition. The institution in question would also need to satisfy a number of further conditions designed to demonstrate that lender of last resort support is genuinely being sought as a last resort, and that such support would not amount to throwing good money after bad. To be specific, the additional preconditions are: •  First, the institution would need to have a sufficient margin of solvency. As a measure of sufficiency, we would generally require the institution to demonstrate that it maintains a capital adequacy ratio of at least 6% after making adjustment for any additional provisions that might be necessary. •  Secondly, the liquidity support extended to the institution would need to be adequately collateralised. •  Thirdly, the institution should have sought other reasonably available sources of funding before seeking lender of last resort assistance. •  Fourthly, the shareholder controllers of the institution should have made all reasonable efforts to provide liquidity or capital support as a demonstration of their own commitment to the institution. •  Fifthly, there must be no prima facie evidence that the management is not fit and proper, or that the liquidity problem is due to fraud.
6/18  Meeting the guidelines of the preventative arm of the European Stability and Growth Pact should show the temporary fiscal consolidation path to follow in the future after having managed last year to cut the budget deficit to below 3%. At the same time, a review of the composition of public spending and revenue might also contribute decisively to improving the economy’s potential growth. There is room both to increase the efficiency of public spending and steer its composition towards those items exerting greater influence on the accumulation of physical, technological and human capital, and to re-define the structure of the tax basket in order to make it more conducive to growth. The presence of high tax benefits in our tax system, arising from numerous exemptions, allowances and special low rates, which generate substantial revenue-related losses and distort the efficiency and fairness of the tax system, are a good example of the headroom existing here. Secondly, despite the notable correction to date, the negative net international investment position is still at 77.1% of GDP. And the nation’s gross debt amounts to 166.7% of GDP, only slightly below the peak seen during the crisis. To bring down the debt vis-à-vis the rest of the world, Spain will have to run external surpluses over an extended period of time. And that, in turn, requires maintaining the gains in competitiveness, which throughout the recovery have been based on the moderation of labour and financial costs, and which, hereafter, should rest to a greater extent on increases in productivity.

5  See Zamarro, G., C. Hitt and I. Mendez (2016) “When Students Don't Care: Reexamining International Differences in Achievement and Non-Cognitive Skills” EDRE Working Paper No. 2016-18. 14/18  The first papers to have evaluated this experience in Spain do not offer conclusive findings. And that underscores the challenge of adapting another country’s successful model to our circumstances.6 It is therefore important to conduct pilot programmes enabling us to determine which design is most suitable for us. Also, in addition to improving employee training, it is important that such training should be in an innovative environment. In this respect, investment in R+D activities in Spain is still very low in the public and private domains alike (0.8% and 1.4% of GDP, respectively, in 2016), which places Spain at levels 25% and 50% below the European average. As a result, the technological capital gap with the EU has continued to widen. Here several measures, among others, would be advisable: to evaluate the possibility of increasing the public funds allocated to the area of innovation; to change research promotion and career arrangements to facilitate the entry and development of new highpotential researchers; to restructure in their entirety public organisations that pursue innovation in order to harness synergies where they may be found; and to promote a sound evaluation system to determine the allocation of resources across centres.7 Business financing  6  See Bentolila, S., A. Cabrales and M. Jansen (2018): “Market insertion of youth: Evidence from Madrid”, Working Paper, forthcoming.
1 1.1  The Spanish economy: recent developments and outlook International environment  As I stated in early October before the Economic Affairs and Digital Transformation Committee in this House, the COVID-19 pandemic has prompted unprecedented disruption to economic and social dynamics both in Spain and globally. It is an event which, given its exceptional rarity and marked impact, we economists colloquially dub a “black swan”. In the first half of 2020, the health crisis and the measures to contain it caused a deep recession worldwide, which peaked last spring. Since then, economic activity has embarked on a path of recovery which, however, has proven incomplete, uneven and fragile. It is incomplete or partial because, despite the rises observed in recent months, activity and employment are still clearly down on their pre-crisis levels in virtually all countries. Uneven, not only at the international level but, in particular, from the sectoral standpoint, as some sectors of activity involving a substantially high degree of social interaction continue to be appreciably more affected than the rest. And lastly fragile because, as we have seen in recent weeks, in the absence of an effective medical solution for the virus, the intensity of the current path of recovery, and indeed its continuation, are highly dependent on how the pandemic evolves and any fresh outbreaks. As a result, global economic developments in the coming quarters are subject to very high uncertainty.

In the early phases of the upturn, output growth primarily reflected a strong increase in the number of person-hours worked partly owing to the marked increase in average working hours when sickness absence fell in 2004. A high level of inward labour migration after EU enlargement in 2004 also contributed to increasing economic capacity. Historically, there has been a close relationship between the change in prices for domestically produced goods and services and the level of capacity utilisation, here measured by the output gap. This relationship broke down in 2006. Surprisingly low inflation through 2006, despite appreciably stronger output and employment growth, may indicate that developments have been influenced by conditions on the production and supply side of the economy. The present economic expansion differs from previous upturns in that inflation has remained low so far despite strong growth and increasing capacity utilisation. There are probably several reasons for this. First, low import prices and high prices for our commodity exports have improved Norway’s terms of trade considerably. Prices for oil and gas, shipping, fish, industrial commodities and engineering products have increased considerably. Moreover, Norwegian importers have gained access to new markets in central Europe and Asia which offer considerably cheaper consumer goods. The terms of trade have improved by about 40 per cent since 2002. A similar situation has not been seen since World War I when earnings in the shipping industry and other export industries were exceptionally high for a period. Second, an ample supply of labour has boosted output growth.
It shows a high correlation, with rises in equity prices inducing reallocations into equities. This suggests a potentially significantly pro-cyclical swing in portfolio behaviour. For example, a 10% rise in the S&P on average increases the equity portfolio share by over one percentage point – or around $ billion given the scale of US life insurers’ balance sheets. 6 If done quickly, this could be a potent procyclical amplifier. Similar patterns are evident among life insurers in other countries. A second piece of indirect evidence comes from the behaviour of regulators. There have been several incidences over recent years of regulators loosening regulatory constraints to forestall concerns about pro-cyclical behaviour in a downswing. For example, UK regulators loosened regulatory constraints on insurance companies in the early 2000s following the bursting of the dotcom bubble. This was due to fears of selling pressure on equities being amplified as insurance companies de-risked their portfolios as they neared regulatory constraints. Pension fund regulators have taken similarly-motivated actions recently due to depressed real yields boosting the market value of liabilities. A third piece of evidence comes from analysing the impact of ICPF asset allocation decisions on asset prices. In particular, at the Bank we have analysed the impact of purchases of longterm UK indexed-linked debt by UK ICPFs since the early 1990s (Zinna (2014)). Over this period, the combination of accounting and regulatory rules led to large cumulative purchases of long-term government debt by ICPFs. At the same time, long-term real yields fell from around 4% to around –1%.

But you can’t have a meal without food — and you can’t have banking without service, trust, and capital. 6. Yes, technology is replacing some traditional banking channels and processes. But that actually enhances those core principles. So, I don’t think technology will replace banks. Rather, I’ll be making the case today that technology will make banks better — whether it is delivered by an established bank or a new market entrant. A new era established 7. In 2017, the HKMA launched seven initiatives to begin a new era of smart banking. Since then, the competitive landscape for banking in Hong Kong has changed quite a lot. We are proud to be one of the first markets in the region to have fully digital banks — or virtual banks. As we speak, our city has one of the highest numbers of virtual banks in Asia. 8. Today, customers can choose from a wider range of banking providers and platforms. They can choose digital or physical, niche or universal. 9. Not surprisingly, competition is bringing down costs and improving customer experience. For example, traditional banks have been phasing out fees for maintaining low account balances. Many are proactively improving their digital platforms to improve the user experience. 10. We owe this progress to the innovators, entrepreneurs, and bankers in today’s audience. It has been driven by your hard work and determination. 11. As a regulator, we help to facilitate this progress. We ensure a level playing field for all types of financial institutions.
This will assist the Islamic banking institutions in mitigating part of the risks emanating from asset and liability mismatches. The Islamic capital market, in particular, the Islamic debt market, has also experienced rapid growth since its emergence in the 1990s. The issuance of Islamic bonds has expanded steadily at an average growth rate of 33.7% since 1995. In 2003, the total funds raised via the issuance of Islamic bonds amounted to RM8.1 billion, constituting 19% of the total funds raised in the bond market. New innovative Islamic financial instruments such as Islamic asset-backed securities have also emerged and the financial structures underlying Islamic securities have become more diversified. The number of Shariah-based unit trust funds has also grown consistently over the years to reach 55 in 2003 with a net asset value of RM4.75 billion, constituting a market share of 6.8%. The rapid growth of Islamic unit trusts comprising a variety of bond funds, equity funds and balanced funds increases the efficiency and potential of the Islamic financial system as an intermediation channel by providing investors access to professional asset management that is based on their distinct risk tolerance levels. The development of a vibrant, efficient and effective Islamic capital market requires the creation of a broad spectrum of innovative Islamic financial instruments and the infrastructure to promote active trading so as to enhance the breadth and depth of the market.

Zeti Akhtar Aziz: Current issues and developments in Islamic banking and finance Keynote address by Dr Zeti Akhtar Aziz, Governor of the Central Bank of Malaysia, at the ASLI’s Conference on Developing Islamic Banking and Capital Market: “New Opportunities, New Market and New Frontier in Islamic Banking and Finance”, Kuala Lumpur, 25 August 2004. *  *  *  Islamic banking and finance has emerged as a financial intermediation process that is competitive and resilient and that contributes to the overall wealth creation, growth and development of our nation. Amidst an increasingly challenging and competitive financial environment, the evolution of a comprehensive Islamic financial system seeks to meet the range of requirements of a rapidly changing economic environment, with its soundness and stability secured through the robustness of its regulatory framework supported by the strength of its financial infrastructure and the sophistication of its products and services. Indeed, the strength of the respective components of the system and the interconnections of its markets will open new frontiers in Islamic banking and finance and will maximize the potential and opportunities that it accords. Distinguished guests, It is my pleasure to be here today at this conference organised by ASLI to speak on the current issues and developments in Islamic banking and finance. The Islamic financial system in Malaysia has evolved as a viable and competitive component of the overall financial system, complementing the conventional financial system as a driver of economic growth and development.