samchain/econo-pairs-v1 huggingface dataset:
I am sure, ladies and gentlemen, that you are going to enjoy and benefit from the quality, both in substance and in form, of the address that Governor Noyer is about to give. Ladies and gentlemen, thank you very much. BIS central bankers’ speeches  1

Hedging markets developed rapidly. All in all, financial engineering emerged as a new area of knowledge. Dear Guests, The aggressive capital movements among countries and developments in financial markets generated a number of economic benefits at the global level. When borders between countries have disappeared in favor of capital flows, funds flew to regions where capital had the highest return. So, it has been observed that competitiveness and productivity of capital in global scale increased considerably in the 90s. There has been also a substantial rise in the volume of global merchandise trade. However, all developments that I mentioned now represent only the front side of the medallion. The back of the medallion has not been as bright as the front. In the 90’s, not only the scope, timing and speed of the financial liberalization varied across countries, but also the consequences of economic policies had various effects on national economies, depending on the initial conditions and country specific factors. Hence, the rapid increase in capital movements among countries shook the financial markets from time to time, led to financial and banking crises in many countries and, even more importantly, caused the crisis in one country to spread to others. In 2003, Caprio and Klingebiel reported 117 episodes of systemic and highly costly financial crises in developed and emerging market countries since the late 1970’s1.
It could be argued, too, that this is more likely an underestimation than an overestimation, as there is systemic positive bias in household inflation expectations and the breakeven inflation rate in the market entails risk premiums. The effect that the real rate has on domestic demand and inflation depends on what the equilibrium real rate is considered to be at any given time; that is, the real rate that neither stimulates nor dampens the economy. The equilibrium real rate has probably fallen in Iceland, as it has in most economies in the wake of the financial crisis, but exactly where it lies is highly uncertain. One of the Monetary Policy Committee’s tasks is to attempt to assess it. It is normal that Central Bank interest rate should rise above equilibrium when a positive output gap develops and inflation is above target, but neither is the case at present. That being so, it was appropriate to contain the rise in the real rate by lowering the Bank’s nominal interest rates. 2  BIS central bankers’ speeches  Some will surely ask: Shouldn’t the Bank have lowered interest rates earlier? Hasn’t the monetary stance simply been too tight in the recent past? I don’t think this is the right time to dissect these questions, not least because many things look different in the rear-view mirror. As is said in Njáls saga, “Everything is ambiguous in retrospect.” That said, I think there are solid arguments in favour of a negative response to both questions.

In many financial institutions, the rigor of board scrutiny and due diligence was replaced with an over-reliance on external ratings or complex internal models for credit evaluations. This was compounded by incentive structures that were not adequately risk-aligned and inconsistent with long-term value creation, eventually undermining the soundness of banks. These failures have extracted a high price on affected financial institutions, investors and national economies at large. Some of the large financial institutions that entered aggressively into the sub-prime market are now no longer around, while losses from the write-downs of loans and provisions have been staggering. Between the second quarters of 2007 and 2009, the global write-down of loan provisions had amounted to USD1.3 trillion. In October 2009, the International Monetary Fund indicated that the estimates could rise further to as much as USD2.8 trillion 1. The events which have since unfolded underscore the fact that effectively managing risks associated with mortgage financing encompasses a much broader set of considerations – including the consequences of an adverse and broad downturn in the housing market. The crisis has reinforced the need for banks to consider the cyclical developments in the mortgage financing market more explicitly in their risk assessments. Factors such as a sustained growth in house prices, low interest rates and modest equity commitment should inform banks of the risk outlook for the mortgage segment and corresponding risk mitigation actions that are needed to avert potential losses.
The fall in real incomes caused by the depreciation of sterling was absorbed by employees, effectively purchasing faster job creation. 13 In addition, large inflows of foreign capital – now financing a current account deficit of 6% of GDP – mean spending and investment are higher than would otherwise be possible. This underscores the value of the UK maintaining its attractiveness as an investment destination through a competitive tax system, deep human capital, a flexible economy and ready access to a wide range of markets. Finally, the UK has a highly credible monetary policy framework. The UK’s inflation target of 2% is symmetric: we care about inflation below the target as much as above. 9  With other reforms to further the fairness and effectiveness of market-based finance, and major steps taken towards end Too-Big-To-Fail, the UK is also on track to ensure greater risk-sharing between its creditors and debtors. 10  It is estimated that on average around a fifth of variation in regional personal income relative to the national average is stabilised by central government transfers. Estimates reported in Melitz and Zumer (2002), “Regional Redistribution and Stabilization by the Center in Canada, France, the UK and the US: A Reassessment and New Tests”. Journal of Public Economic, 86, pp. 263–286. 11  The geographical share of North Sea oil revenues, estimated by the Scottish Government, was 84.2% in 2012–3, down from 92.9% in 2008–9. In 2012–3, Scotland’s per capita share of North Sea oil revenues was estimated by the Scottish Government to be 8.2%.

For me today, it means that all current EU member states will contribute as much as they can to these improvements with their own ideas, knowledge and experience. The new ESCB members are prepared to contribute their share. They have gained a wealth of experience from a decade of economic transformation, a decade during which they used a wide variety of monetary policy strategies, from inflation targeting to currency boards, in order to deliver low inflation. Let me mention just a couple of lessons that were learnt: •  how to make decisions and produce good-quality economic forecasts when faced with large uncertainty (eg. about available data)  •  how to bring the economy back to low inflation after a series of supply-side shocks and how efficient communication is crucial in such circumstances  •  and that maintaining low inflation is much easier providing fiscal discipline and policy co-ordination can contribute to the task. These issues will surely be familiar to others. The knowledge gained during the transformation period will enrich the policy debates of the ESCB´s councils and working groups. This is how monetary integration will happen on a day-to-day basis both in countries that already use the euro and in those that will introduce it in the future. 2  BIS Review 70/2004
The chart shows the actual trade-weighted exchange rate (TWI) and expected TWI one year ahead as from 1998.3 When the krone is “weak”, the expected exchange rate one year ahead tends to be stronger than the actual rate. Likewise, the expected exchange rate one year ahead tends to be weaker than the actual exchange rate when the krone is strong. In the period 2002-2003, the krone exchange rate varied considerably. Movements in exchange rate expectations, however, were less  3  4  Consensus Forecast data were not available earlier. BIS Review 25/2004  volatile. When the krone was at its strongest in the second half of 2002, the expected exchange rate one year ahead was 4-5 per cent weaker. This illustrates that exchange rate expectations seem to be more stable than actual exchange rate movements and that after moving markedly beyond a long-term equilibrium level, the krone exchange rate is expected to revert to around this level. The equilibrium level for the nominal exchange rate is not, however, constant over time, but partly depends on price and cost developments in Norway relative to our trading partners. The advantage of a flexible exchange rate is perhaps most evident when the economy is sluggish. If the krone were to remain at a level that is too strong, nominal wages would have to remain unchanged over a longer period or fall in order to bolster companies and jobs. This only occurs when unemployment is very high.

Inflation is expected to remain low, with headline inflation around 2.8 percent. The second round minimum wage increase is unlikely to have significant impact on inflationary pressure, given that many firms are able to make necessary adjustments in reducing costs and increase productivity by shifting to more capital-intensive production. Robust domestic demand should continue to be the major driver for Thai economy. Private consumption is backed by many supportive factors such as the first-car scheme from the previous year and cuts in personal income tax and accommodative monetary and fiscal  BIS central bankers’ speeches  1  policies. Private investment is also expected to expand well, given the crowding-in effects of public infrastructure investment projects. Export sector should pick up pace towards the latter half of this year on the back of moderate recovery in the global economy. Nevertheless, there are still many challenges lying ahead for the Thai economy. The state of the global economy, while improving somewhat, remained fragile. And a firm recovery is still subject to risks and uncertainties. Domestically, although inflation seems to be benign, there is a possibility of rising inflation pressure from oil prices after global demand started to pick up gradually. Supply constraints, mainly from tight labor market, may also add on to wage-price inflation in the future. As a central bank, we always have to remain vigilant on price stability. Of more immediate concern; however, are potential threats to financial stability stemming from developments in asset prices as well as household indebtedness.
The adequacy of such measures has yet to be seen, but the swift and proactive response of policy makers is a positive step forward, as the most recent events have clearly demonstrated that it is likely to cost less to undertake preventive measures prior to a crisis than to clean up in its aftermath. Of course, economic conditions and institutions differ across countries. An effective macro prudential tool in one country might not work in another country. Therefore, policy makers need to take country specific factors into account in designing their own framework. It is also imperative for the academic community and international organizations to focus on this issue and develop a set of concrete policy tools that national authorities, at their own discretion, can use to identify, assess and manage systemic risks. Financial stability and central banks The critical importance of financial stability from a central bank’s perspective is not new. Smooth functioning of the financial system and payment mechanism has been a concern of central banks since their foundation. In fact, that is the reason they are called as “the bank of banks” or “the lender of last resort” for financial institutions. However, over time as the financial system gets more complicated and expanded exponentially, its supervision and regulation has been partially transferred to other institutions.

Philipp M Hildebrand: Financial Stability and Hedge Funds: Effective and Ineffective Supervision Speech by Mr Philipp M Hildebrand, Member of the Governing Board of the Swiss National Bank, Diskussionsforum «Nachbarn Deutschland-Schweiz: Impulse für die Zukunft», Berlin, 9 November 2005. The complete speech can be found in German on the Swiss National Bank’s website (www.snb.ch). *  *  *  The hedge fund industry has grown rapidly over the past few years and it has become an important segment of global financial markets. The possibility to use leverage and a high degree of flexibility are key elements of a broad range of investment strategies which have made the hedge funds industry very profitable. Hedge funds have been an important source of innovation in the traditional asset management industry and they have rendered financial markets more liquid, more efficient and more flexible. Nonetheless, the rapid growth of the industry and the excessive use of leverage may result in potential systemic risks which are relevant to central banks, unlike prudential matters. Overall, industry leverage is difficult to measure. However, several studies suggest that it is lower than at the time of the near collapse of LTCM in 1998. Even so, temporary excessive levels of leverage with single hedge funds can not be ruled out completely. A crisis in the hedge fund industry might therefore spill over to their primary trading partners, the major investment banks.
The Bank has put in place a structured, holistic and collaborative Scholars’ Development Programme to support all of our scholars throughout their studies. The programme aims to develop high-quality and well-rounded scholars with leadership qualities that will be the next generation of young talent who will be the leaders of tomorrow for the Bank and our nation. With regard to the achievement of our scholars enrolled in top university, I am glad to share with you that this year 3 of our scholarship holders will be entering the University of Pennsylvania to pursue their undergraduate studies in Economics and Finance, 1 scholar to pursue Engineering at the University of Cambridge and another scholar to pursue Philosophy, Politics and Economics at the University of Oxford. We wish all our scholars the best and to make the Bank proud of your excellence. BIS central bankers’ speeches  1

For example, the recent upsurge of capital flows can be a prelude to a number of common shocks to financial stability that can hit in the region in the future. In this environment, a unilateral approach to deal with the issue, through macroprudential policy, can be inefficient and may lead to more volatility as investors engage in regulatory arbitrage  1  Roengpitya and Rungcharoenkitkul (2009) “Measuring Systemic Risk and Financial Linkages in the Thai Banking System”, Bank of Thailand Discussion Paper. 2  BIS Review 143/2010  across different economies. To address this dimension of the challenge, a more coordinated approach to macroprudential measures may be needed. Although steps towards formal coordination have yet to be established, ongoing close cooperation amongst regional economies has already resulted in a number of common platforms through which greater policy coordination can be conducted. For example, the Asean+3 Macroeconomic Research Office (AMRO) to be launched next year is already mandated to conduct economic and financial surveillance across the region. The office will be in a good position to study this type of policy coordination. In the meantime, more discussion among policy makers in the region should be encouraged, as we increasingly are facing common problems that are of a global nature. To this end, I would like to commend Bank Indonesia for organizing this international conference, which contributes tremendously to the region’s discussion and efforts along this line. It is on this note that I would like to end my remark. Thank you. BIS Review 143/2010  3
The RM151 million project is a milestone achievement, being the first large-scale commercial development project on a waqf land in the country. Another important aspect in professionalising waqf management is instilling good governance. It is unfortunate that management of waqf has had some governance challenges. Efforts must be directed at strengthening its governance and management. Adequate internal controls have to be put in place, including risk management, internal and external audits, and compliance systems. Its standards of disclosure and transparency need to be at par with those of modern finance or of endowments in advanced economies. For a start, waqf authorities should provide high-quality disclosure and reporting of waqf activities to instil trust and confidence among the contributors and wider stakeholders. Contributors want to know where their contributions are going and how they are being spent. In this regard, the Waqf Fund collaboration between Islamic banks and the State Islamic Religious Councils provides a good mechanism for the financial sector to lend its expertise and share best practices on good governance and transparency practices in managing fund. Under the initiative, the Code of Governance and Transparency of Waqf Fund will be issued by AIBIM. This will act as guidance for more efficient and effective management of waqf and with higher governance and transparency practices, thus bringing waqf to the next level. Conclusion Waqf has played a significant socioeconomic role throughout history. Exciting potential lies within waqf, even today.

One of the biggest misconceptions is on its usage. Waqf is to benefit all. While waqf land has traditionally been used to build mosques, cemeteries or tahfiz schools, nothing in the Quran or 1/4  BIS central bankers' speeches  Hadith prohibits wider use of waqf to meet the needs of the community. In fact, there is no requirement for a waqif or donor and beneficiary of waqf to be a Muslim. There are instances from past Islamic civilisation where the use of waqf extended beyond those that were directly related to the religion and specific needs of the Muslims. Waqf land and buildings were used to build schools, hospitals and infrastructure to benefit both Muslims and non-Muslims alike. The Al-Azhar University is an excellent example of a waqf asset. This makes a lot of sense. It is obvious that waqf should be prioritised to improve education and health, critical ingredients for social mobility and a productive workforce. There are an estimated 300 square kilometres of waqf land – the size of the main island of Langkawi – in the country, and unfortunately, most of this land remains undeveloped. Think about all the needs that can be met by developing this land – affordable housing, schools and universities, hospitals, sports facilities, research centres and industrial complexes. While I acknowledge the challenges in developing this land, including ownership and registration issues, as well as limitations in financial resources, these are surmountable.
The Joint Assessments also play a crucial role in identifying the medium-term economic policy priorities and the Accession Partnerships do likewise with regard to the establishment of priorities for EU technical assistance. Following the tremendous efforts of the last few years, we have now arrived at a stage in which there are no less than 12 applications for EU membership currently under consideration, ten of these from transition countries. Moreover six of the 12 have already begun accession negotiations. When addressing the issue of enlargement, we may ask ourselves what exactly should be required of a member state of the European Union and on what criteria should the eligibility of a candidate country be assessed? Of course, these are not usually questions asked of central bankers and it is certainly not my intention to provide answers to them. As I mentioned earlier, central bankers are not politicians. But, fortunately, there is no need for me to provide answers, since these issues have already been addressed within the context of the current enlargement process. I am referring here to the so-called “Copenhagen criteria”. As I am sure you are aware, these criteria were formulated at the Copenhagen European Council in 1993 with a view to defining a level playing field and ensuring the equal treatment of applicant states.

The seller will be obliged to make the investor — the so-called investor who is just an individual — acquainted with these documents. No less important is the law the Speaker has spoken about, setting forth the rules for selling investment financial products. This is where the Federal Antimonopoly Service could step in and make the difference. Misselling should be punishable. We are working on this draft law jointly with the Finance Ministry, and hopefully the Federation Council will in turn assist in passing it as soon as possible. A number of regulations may even need tightening there. Apart from this future law, it is our responsibility to protect investors from product offerings or financial instruments whose risks they are unable to evaluate, from products they may buy at banks on the assumption that they are buying a sort of bank deposit. That is, it turns out that people do not realise that they become retail investors when they buy these products and assume some risks. As I see it, urgent action is needed to rectify this situation. This is what we propose. The decision we are bringing up for discussion today has taken us quite some time to formulate given all the compromise solutions 3/4  BIS central bankers' speeches  we had to consider. We propose that direct restrictions be imposed on the sale to non-qualified investors of structured financial products, that is, products with leverage and those with a forex component in an asset base.