samchain/econo-pairs-v1 huggingface dataset:
Effects on the real economy So what do we believe about the effects on the real economy? Increased interest rate margins and reduced lending volumes will probably result in certain macroeconomic effects in the form of reduced GDP. How great these effects will be is hard to say. The Basel Committee has appointed two groups with the task of more closely examining both the direct and the long-term macro effects of the new Basel regulations. 9 The results of their work do not indicate any drastic costs. They estimate that, during the actual implementation phase, Sweden’s GDP level will be slightly lower (approximately 0.3 per cent) that what it would be without Basel III. But, over the longer term, the new banking regulations will instead lead to higher GDP and prosperity – because we will reduce the likelihood of new crises. Making exact forecasts is always difficult. However, it is helpful to have an estimate of the levels we are talking about. And, in Sweden’s case, we can note that the costs for Basel III will not even come close to the costs of a crisis. For society as a whole, this will be a highly profitable investment in increased security. Basel III is a step forward, but more may be needed Consequently, the Riksbank welcomes the Basel III regulations. Considering the severe financial crisis we have been through in recent years and the shortcomings we have identified in the current regulations, it is perhaps not so difficult to understand why.

This can be traced back to the enactment of the Islamic Banking Act in 1983 and the Takaful Act in 1984 which facilitated the birth of the first full-fledged Islamic banking institution and takaful operator. Prior to this, Islamic finance was very niche. Its relevance was mostly limited to the provision of custodian services such as the pilgrimage fund as managed by Tabung Haji. There was no appeal to the wider market, then. Since the early 1980s, we have witnessed a significant transformation of Islamic finance in Malaysia. Over the years, this sector began to offer a wider range of solutions to cater for the evolving needs of the national economy and the local communities. Islamic finance now makes up a significant and growing share of the domestic market. The share of Islamic banking assets more than doubled from 12.9% in 2007 to 28% in 2016. Takaful penetration has now reached 14.6% of the population. Globally, Malaysia has established itself as a leading hub for Islamic finance. In the global sukuk market, we hold a share of more than 50% of the global outstanding sukuk. To cater for the growing size and sophistication, the legal foundation for Islamic finance has undergone several enhancements over the years. The Shariah Advisory Councils – or the SACs – of the Securities Commission and Bank Negara Malaysia were established roughly twenty years ago to promote greater Shariah certainty. They since have played an increasingly important role in the ascertainment of Shariah for matters of Islamic finance.
Credit growth in the UK economy continues to be weak. The latest Bank of England credit conditions survey indicates early signs of an increase in the amount of mortgage lending  BIS central bankers’ speeches  3  available to households, though much less evidence of a change in credit conditions for businesses. But it is very early days for the recently announced policy measures – in particular the Funding for Lending Scheme – which are intended to have a positive impact on domestic credit conditions. So, we can see a picture of gradually improving resilience in the banking system but with further to go, but also credit growth which remains weak. In that context, and recognising the balance of objectives within macro-prudential policy, the FSA has taken a number of steps. We have allowed banks to reduce the capital buffers they hold over the minimum requirements in line with new lending to the UK economy. Our view here is that a reduction in the risk arising from this new lending caused by an improvement in credit conditions should offset the risk from lowering capital buffers. If such extra lending boosts economic growth, it will enhance resilience in the financial system. Likewise, we have altered our guidance to banks on the liquid asset buffers that they need to maintain. This reflects the Bank of England’s stance on the potential access of banks to liquidity from the Bank, and a wider desire to reduce the incentives for banks to hold excessive liquid asset buffers for precautionary reasons.

That is not the case, and what we are doing is not about dragging the rest of the financial services industry into reform to solve a problem that is in essence only about the banks. We have to design a system that works effectively for all sectors of the industry. On that theme, I would like to start by reflecting for a few moments on the lessons of history. My main theme is that I think integrated regulation – by which I mean regulation which combines Prudential and Conduct of Business in one regulatory body with single teams of supervisors covering both – has not worked as effectively as it would need to do, for reasons that are deep-seated in the structure. I think there are a number of closely related reasons for this. First, on a rather practical point, I think it is hard for a single organisation to balance, particularly during a period of crisis, a wide range of very demanding issues which are individually rightly of great concern to the public and can come from anywhere in a landscape of around 25,000 authorised firms. Second, I think the evidence suggests that, over the last 15 years, there have been periods when either conduct or prudential supervision has been more in the ascendancy to the detriment of the other.
This describes our assessment of the stability of the financial system, as well as various risks and threats to this stability. From an international perspective, the Riksbank’s work on stability analysis has been at the cutting edge.1 We were the first central bank in the world to publish a stability report, and we  1  See, for example, Allen et al. (2004), who have carried out an independent assessment of the Riksbank’s stability work. BIS central bankers’ speeches  1  were also among the first to carry out stress tests describing the banks’ resilience to various types of shock.2 Assessing the banks’ credit risk, which is to say the risk that the banks would not recover the money they had lent, was an important part of this analysis work. It was just this kind of risk that had led to such large losses for the banks in the banking crisis at the start of the 1990s. Consequently, the risks we emphasised in the stability reports were primarily associated with credit risk. We warned of the risks but missed the one that would give us problems In the years leading up to the financial crisis, we made overall assessments along the lines of “financial stability in Sweden is satisfactory” (Financial Stability Report, June 2008). The four Swedish major banks (Handelsbanken, Nordea, SEB and Swedbank) were profitable and hade enough capital to withstand possible shocks. However, we also pointed out risks, sharpening our tone when the risks became more apparent, just before the crisis.

Fahad Almubarak: Top achievements of the monetary sector during the past decade Speech by H E Dr Fahad Almubarak, Governor of the Saudi Arabian Monetary Agency, at the National Day, Riyadh, 25 September 2014. *  *  *  Our beloved country is celebrating its 84th national day, which is very dear occasion to all of us. The march of welfare and building continues under the prudent leadership of the Kingdom. SAMA’s employees are overwhelmed with happiness on this occasion in light of the achievements of the monetary policy by focusing on the interests of the country and citizens. SAMA’s balanced monetary policy has contributed to strengthening the stability of the national economy during stages of global stress and turbulence. As a result, the credit rating of the Kingdom of Saudi Arabia has been upgraded. Fitch upgraded the Kingdom’s sovereign credit rating to AA from AA- with a stable outlook. Over the past ten years, the banking sector witnessed a great development quantitatively and qualitatively. M3 rose by 270 percent to SAR 1,669.3 billion at the end of July 2014 against an increase of SAR 451.3 billion at the end of July 2004. Total bank deposits also went up by 284.5 percent to SAR 1,520.6 billion in the same period. Total commercial banks’ claims on the private and public sectors grew by 193.3 percent to SAR 1,314.4 billion at the end of July 2014 compared to SAR 447.8 billion at the end of July 2004.
5  All speeches are available online at www.bankofengland.co.uk/news/speeches  5  The changes adopted by many central banks around the world in the late 1990s effectively narrowed their focus, reflecting the belief that price stability was the best contribution a central bank could make to macroeconomic stability, and by extension to the broader public good. Although there were tremendous innovations during this period, this reductionist vision of a central bank’s role was structurally flawed. In particular, this narrow focus failed to recognise that financial stability is as important an objective of macroeconomic policy as price stability. Central banks have a vital role in maintaining financial stability because of the deep underlying connection between it and monetary stability. Both are fundamentally about maintaining the public trust and confidence in money and the financial intermediation that is essential to oil the wheels of commerce. That trust and confidence can be undermined through a loss of certainty about the future value of money, a loss of confidence in financial intermediaries, or ultimately a loss of faith in the financial system. The financial crisis was a powerful reminder of the imperative of financial stability. After years of low and stable inflation, it became obvious that central banks had won the war only to lose the peace. The costs were enormous. The complete loss of confidence in private finance that occurred in 2008 could only be arrested by public support that totalled $ trillion in bail-outs, government guarantees of bank liabilities and special central bank liquidity schemes.

The catastrophic impacts of climate change will be felt beyond the traditional horizons of most banks, investors and financial policymakers, imposing costs on future generations that the current one has no direct incentives to fix. Once climate change becomes a clear and present danger to financial stability it could already be too late to stabilise the atmosphere at two degrees. The longer adjustment is delayed, the more GDP-at-risk will grow. Catastrophic physical risks from the increased frequency and severity of climate and weather-related events will likely increase non-linearly. 30  All speeches are available online at www.bankofengland.co.uk/news/speeches  30  And late climate policy action could bring about a climate ‘Minsky moment’ when the scale of stranded assets dawns, bringing about sudden and sharp adjustments to asset prices. These risks to financial stability will be minimised if the transition begins now and follows a predictable path, thereby helping the market anticipate the transition to net zero and reducing the costs of adjustment. The policymaker’s discount rate is important to their assessment of the financial stability risks of climate change. 𝑇  min ℒ𝑡 ≡ 𝐸𝑡 {∑ 𝛽 𝑖 [𝑓(𝐺@𝑅𝑡+𝑖 ) − 𝜙𝑦𝑡+𝑖 ]} 𝜌𝑡  𝑖=0  Last year, the Government brought the horizon consistent with Parliament’s declaration of a climate emergency and the legislation of a UK Net Zero target for 2050.
The decisions on this and certain other matters have been deferred, however, and will now be taken by those countries that join the euro area from the start. TARGET is to be tested this summer and is to be fully ready for use by 1st January 1999. Summary and conclusions Most of the evidence today suggests that the economic and monetary union will move to Stage Three on 1st January 1999. For Sweden the question is whether we should join the euro area from the start, wait a while or try to remain outside for good. I hope that we will soon be having a more lively debate on this very important issue. The question of EMU has now been largely examined and discussed by the financial sector, the authorities and big businesses. The time has come to spread the debate and information to other groups in society. In time the krona will lose ground Even if Sweden decides to stay outside, the single currency will affect us. Our analyses, together with other organisations, of what might happen in that event point to a relatively sizeable use of euro, particularly in the securities market. In time, the use of euro may spread like water rings to other parts of society. The extent to which the euro is used will among other things depend on its strength relative to the krona but also on market assessments of the probability of Sweden joining.

I would therefore like to extend my sincere thanks to the organisers of the Sibos event for this excellent opportunity to share ideas. As home to many international organisations, Geneva is an ideal location for this dialogue. We are certain to find fertile ground here. I wish you all a successful conference with many enlightening discussions. 11  Cf. FINMA press release ‘FINMA reduces obstacles to FinTech’, 17 March 2016. Page 6/6
In sum, after recognizing credibility as the main asset of a central bank, especially an independent one, we can conclude that drawing on parallel work on trust in institutions may provide a useful Page 6 of 8  Central Bank of Chile July 2019  framework to assess the current situation and to guide action to address existing gaps and vulnerabilities. Trust in the Central Bank of Chile The experience of the Central Bank of Chile can illustrate some of the ideas above. The IMF study on the importance of credibility for monetary policy underscored anchoring of inflation expectations in Chile as key to the effectiveness of its monetary policy and macro resilience in the face of external shocks. Deviations of long-term forecasts of headline inflation from target have been less than 0.1%–being the lowest for a sample of emerging countries, and even lower a benchmark group of advanced economies. This is remarkable considering that inflation volatility in Chile has not been particularly low relative to other emerging economies. Yet we do not see credibility as an immutable attribute, given the dynamism of trust in institutions in the public opinion and market perceptions. We believe that a positive past record helps, but trust can deteriorate in a number of ways, some of them pretty fast, in the face of new standards and developments. Therefore, trust needs to be protected and enhanced in a systematic way with different stakeholders in the different dimensions of activity of the Bank.

Theoretical studies in the 1980s stressed central bank independence as a precondition to bringing inflation under lasting control, and support for reform soon spread from academia to policymaking. Professor Kenneth Rogoff, was a major contributor to this process, so we are privileged to have him as keynote speaker at this Conference. Central bank independence delivered upon expectations. As the countries with independent central banks grew to nearly 70 in recent years, average world inflation dropped to 4%, from more than 25% 30 years ago. Empirical studies are pretty conclusive on a strong correlation between central bank independence and low and stable inflation after controlling for other variables. The Central Bank of Chile, as one of the pioneers of this remarkable process in the emerging world, provides a good example of the merits of institutional independence. Independence of the CBC ended 40 years of double-digit inflation and coincided with the return to democratic rule in 1990. Inflation fell from almost 30% to 3% through the 1990s while the economy expanded at an annual average 6% in the decade, doubling the average for the previous 40 years. This provided legitimacy, credibility and respect for the Central Bank under its independent status, encouraging it to maintain high technical standards and commitment to its statutory goals of controlled inflation and financial stability over the years. Independence also helped many central banks to deal with the Global Financial Crisis (GFC) of 2008 and its aftermath.
By the end of the last century, Asia less Japan had doubled its share to 30 per cent of global GDP. China is already the second largest economy in the world, India the fourth largest, and you are all familiar with the various projections of when these two economies will become the largest and third largest respectively. The rest of Asia will continue to be the most buoyant region in the world, as it has been for the last 50 years. 4. The story of China and India as the new growth engines of the world has been told numerous times. I would therefore like to tell the story of the third growth engine of Asia – ASEAN. The ASEAN value proposition 5. ASEAN is a two-trillion-dollar economy, the fifth largest in the world at purchasing power parity terms, ahead of Russia, Brazil, France and the United Kingdom. The external trade volume of the ASEAN-5 economies (Indonesia, Malaysia, Thailand, Philippines, Singapore) is more than three times that of India’s total trade and about 60 percent that of China’s. ASEAN provides good diversification for investors’ Asian portfolios. Last year, foreign direct investments into the ASEAN-5 totaled nearly $ billion, roughly three times the inflows into India. 6. Let me touch on three aspects of the ASEAN story. First, ASEAN is resilient: it rode the global financial crisis very well. I will assess how ASEAN is now coping with the post-crisis risks of inflation and capital inflows. Second, ASEAN is getting more integrated.

It had to include both monetary and economic analysis – the ECB’s famous two pillar strategy. By explicitly taking into account the development of  Page 2/4  money and credit in its monetary policy strategy, the ECB was unique in the world of central banking. However, the ECB’s monetary policy strategy was questioned by some academics. They favoured inflation targeting. Otmar never shied away from his critics and their arguments. Consequently, he launched the ECB and Its Watchers Conference. Academics, journalists and market participants were invited. There were lively debates about the role of money in the ECB’s strategy. In his last contribution to the ECB and Its Watchers Conference in 2006, Otmar reviewed the active discussion about the role of money in the ECB’s monetary policy strategy over the previous eight years. Otmar reminded the audience how some had argued that the role of money was too large. For others it was too small. Otmar pointed out that his typical response had been that it was ‘just right’. This reminds me of a scene in the film ‘Amadeus’. Mozart, Otmar’s favourite composer, asks the emperor whether he likes his new piece, the Abduction from the Seraglio. The emperor answers, hesitantly, that he does, but adds that occasionally the piece seems to have too many notes. ‘I don't understand’, Mozart replies. ‘There are just as many notes, Majesty, as are required.
William C Dudley: What does interconnectedness imply for macroeconomic and financial cooperation? Remarks by Mr William C Dudley, President and Chief Executive Officer of the Federal Reserve Bank of New York, at the Swiss National Bank-International Monetary Fund Conference, Zurich, 8 May 2012. *  *  *  It is a pleasure to have the opportunity to speak here today. As I see it, the complex interconnections that exist between the real and financial sectors of the economy, both within and between countries, have important implications for both macroeconomic and regulatory policy. In particular, cross-border coordination in both realms is warranted. Often, macroeconomic and regulatory policies are too narrow in their focus. At times, policies are designed with the goal of being “best” at the national level. Yet the resulting mix of national policies is distinctly inferior to what a well-coordinated global regime could have produced. Today I will discuss two important challenges that go along with living in an interconnected world. The first is how to define what aspects of macroeconomic policy or regulation require greater international coordination and harmonization. Some issues can be handled effectively at a national level, but the crisis has demonstrated clearly that many can not. The second challenge is how to make international coordination workable so that progress can be made in a timely manner while still preserving sufficient autonomy for countries to fashion policies to suit their particular idiosyncratic structures.

In order for the U.S. to reduce its dependence on consumption and to increase its exports, there need to be offsetting adjustments in other countries, such as China. Thus, the key issue to consider in crafting internationally coordinated macroeconomic policy is not whether these adjustments will ultimately take place. They will take place because they have to take place. Instead, the issue for policymakers is whether the policies we put in place will allow adjustments to occur in a way that is consistent with a stable global economy, high levels of employment, and low inflation. At times, the situation is akin to the Prisoner’s Dilemma – a non-cooperative approach will lead to inferior results for both players compared to a cooperative approach in which each side foregoes the chance for highest potential payoff in exchange for the payoff that maximizes returns jointly. But effective cooperation that leads to higher joint returns is difficult in this game because of the complexity of the inter-linkages and the political and institutional constraints that constrain the scope for action at the national level. In macroeconomic terms, the prospects for achieving a more cooperative solution can be enhanced by policy transparency so that the policy goals and reaction function of each authority can be well understood by others. This again applies both within and across countries. For example, the Federal Reserve is making efforts to provide greater clarity about its inflation objective in the context of the dual mandate.