samchain/econo-pairs-v1 huggingface dataset:
It is thus with the need for further economic and social development that consumer finance should expand in line with domestic savings. Ladies and Gentleman, Once again we are back at the regulator’s dilemma of regulating without dampening the exuberance and vitality of the market. Consumer finance need not be damaging as long as we can be sure that the individual or household have the prerequisite responsibility, maturity and financial literacy to manage their finances. Both the service provider and regulator must share the task of addressing these concerns and issues. lt is hoped that service providers will not only focus on improving their bottom line but to also consider the social impact of their business model. Through the use of gimmicks, service providers risk enticing under-qualified and immature applicants whose inability to manage their finances will only exacerbate social costs and NPLs. As such, if social impact considerations become embedded in the process of determining business strategy for consumer finance, service providers could easily address the social concerns previously mentioned, while at the same time securing quality growth in the consumer finance market. However, it is understood that competition may pressure service providers to leave behind these social concerns. Thus it is the duty of the regulators to issue rules and guidelines that will level the playing field in order to prevent consumer finance from causing an unsustainable bubble. The industry has already seen the Bank of Thailand’s forays into the credit card market with rules governing minimum monthly incomc, interest rate ceiling, fees etc.

Caleb M Fundanga: Bringing banking facilities closer to the people in Zambia Speech by Dr Caleb M Fundanga, Governor of the Bank of Zambia, at the official opening of the Stanbic Bank Matero Branch, Matero, Lusaka, 2 February 2005. *  *  *  •  Your Excellency, the South African High Commissioner to Zambia, Mr. Mzwandile Masala  •  Honourable Chance Kabaghe, MP - Matero Constituency  •  Your Worship the Deputy Mayor of Lusaka  •  The Town Clerk, Lusaka City Council  •  Stanbic Africa Regional Director, Mr. Robert Mbugua  •  Representative of Stanbic Africa Retail, Mr. Lincoln Mali  •  Managing Director of Stanbic Bank Zambia, Mr. Larry Kalala  •  Distinguished Invited Guests  •  Ladies and Gentlemen. I feel extremely honoured to have been invited to officiate at this important occasion to mark the official opening of the Stanbic Bank Matero Branch. Sometime last year, Stanbic Bank management informed me that they would be opening two new branches, namely the Arcades Branch and the Matero branch, and asked me to choose which one I would prefer to officiate at. Without much hesitation, I choose to officiate at the opening of the Matero Branch. The reason was very simple. For those of you that are familiar with the development of the city of Lusaka, you will recall that Matero compound is one of the oldest communities in Lusaka.
So it is natural and indeed understandable that bankers harbour grievances and misgivings towards bank regulation and supervisors. And this is why the topic I am going to talk about is a very attractive theme to them. They would like to hear from a supervisor speaking on a subject that they can normally only discuss privately amongst themselves. 4. First of all, let me give you the good news! As I see it, there are two ways to get rid of bank supervisors, one fast track and the other a slow track. Let me start with the fast track! 5. If you can find a clock or time machine that would allow you to dial back time to 100 years or so ago, then you would find yourself in a happy world where there was little or even no banking supervision. Contrary to common belief, banking supervision as a profession or industry (or, as some bankers would no doubt have it, a “black art”) does not have a very long history. Until the Roosevelt New Deal era 1933 Banking Act in the USA, no depositor in an American bank could have been assured of clear supervisory oversight, following a century of uncertainty about state and national authority over banks and the issue of bank notes. In the UK, the first statutorily-backed regulatory regime was put in place only in 1979. Prior to that time, the Bank of England had exerted only informal authority, including through the venerable “Governor’s eyebrow”.

In summary, the slow track solution to get rid of bank supervisors involves quite a number of fundamental changes to counter those trends that arise from what is now practiced in modern day banking. The measures required are not new, and are intended to restore a strong alignment of interest between bankers and their customers. This would entail, as I have explained, the creation or re-creation of a balanced and fair compensation system for bank owners and senior managers in which good performance is rewarded and bad risk management or conduct is punished. However, the crux of the matter is that the performance has to be long term and not short term. To reduce the risks of senior managers and bank staff taking short-sighted decisions, longer term or even life-time employment should be encouraged and not discouraged. 11. I know what you are going to say! You will say that I am asking for something that is very hard, if not impossible, to accomplish. The world has changed so much that it is unrealistic to go back to the “good old days”. For example, most banks are limited companies listed on stock exchanges and it is just not practical for them to return to a partnership structure. Moreover, banks employ hundreds of thousands of staff at different levels and it is impracticable to insist on life employment for all of them. Nor will employees in these modern times prefer to stick with one company for the whole of their working lives.
MAS therefore takes the view that thoughtful and purposeful use of technology to drive innovation have been and will continue to be important for the financial industry to progress. In our regulatory role, the MAS also proactively engages the industry both to understand and even to shape the technology-driven transformations in financial services. 11 Technology can bring about new or heightened risks when mis-used or abused. So while MAS is supportive of financial institutions to experiment with technology to harness potential new opportunities, or to innovate existing processes, we also require that they understand and can manage the associated risks. It is this philosophy that underpins the MAS to be among the first regulators in the world to adopt a regulatory sandbox regime. 12 MAS regulatory sandbox provides a constrained but more flexible space for players seeking to test new technology or approaches before a full launch. Such sandbox pilots are held within defined risk parameters and are time-bound. These restrictions help to limit the impact from unsuccessful applicants but equally important, they allow MAS to also understand the new model up close – how it is run, how the technology or its application is used, how the risks are managed and the value proposition to clients before mainstream use and scalability. This will also allow the MAS to calibrate our final rules that are appropriate to the new business model or start-up while addressing any level-playing field concerns.

This is to ensure that these providers adopt the necessary measures and controls to manage money laundering and terrorism financing risks. Finally, there are digital tokens that represent ownership interest akin to securities, debentures or collective investment scheme products. These will be subject to existing laws under our Securities and Futures Act (SFA) including investor protection safeguards, as for conventional securities. 16 Technology is not only an enabler for the private sector. Many financial regulators also actively use technology tools and solutions to augment or improve surveillance, supervision and enforcement actions. More than a year ago, the MAS set up a dedicated SupTech Office to serve as an expertise hub to support our line supervisors across banking, insurance and capital markets. There are several ongoing projects to support business process automation and the adoption of enhanced supervisory tools and applications. We are also exploring the use of Data APIs to streamline the submission of regulatory data, and “live dashboards” for better visualisation of trends and analyses. Our supervisors will also be incorporating the use of Artificial Intelligence and Machine Learning to support big data and network analytics in our surveillance and enforcement work. Collectively, these and other SupTech capabilities will complement the industry’s drive towards RegTech for better risk management and regulatory compliance. 17 As financial services increasingly become digital, management of technology-related risks especially cybersecurity is paramount. MAS recently issued a consultation paper on a set of mandatory Cyber Hygiene requirements.
A third will be how far in advance one needs to act. If you thought that the impact of changes in the CCB happened with a lag, that there were benefits in a CCB above zero that could be relaxed, that risks were building or that there were benefits to moving policy gradually, these would point to moving earlier rather than later in the cycle. This approach is intended to maintain the resilience of the system over the cycle. But, clearly, requiring banks to hold more capital will very probably also have a dampening effect, leaning against the cycle. The third approach to time varying macroprudential policy I mentioned would take this further. It would set policy with the explicit objective of pushing back on the cycle until the level and perhaps the composition of credit was judged to be more acceptable in risk terms. This of course would be a bigger “call” for the macroprudential authority than targeting resilience. Again it requires a very careful assessment of costs and benefits. I do not think the macroprudential policy framework should “start” there; the starting point should be maintaining resilience. But given the history and the objective of maintaining financial stability, I do not think that the macroprudential authority can foreswear making such calls when necessary. Indeed, the FPC has implicitly already done this in taking action on the flow of high loan to income mortgages.

Private nonfinancial sector credit grew by an average of 10% a year in the 20 year period before the crisis. Looked at through another lens, the level of indebtedness, the aggregate debt to income level of UK households is around 135%, some way below its crisis level of 160%. It dropped sharply after the crisis and has hovered around its current level for the last few years. But though it is below its pre-crisis level, it is again high by historical standards; average household debt to income between 1990 and 2006 was 110%. It also remains high by international standards; household debt to income is around 85% in Germany, 110% in the United States and 120% in Spain. Putting all of these high-level aggregate indicators together, the level of credit in the economy is beginning to grow again. It is not at pre-crisis levels and indeed looks below averages that include the long build-up of credit in the economy before the crisis. But if you look further back, it is high by historical standards. And it is high by international standards. 2  BIS central bankers’ speeches  The high-level picture, of course, can only tell you so much. It is clear that important though they are, these high-level indicators cannot be linked mechanically to the assessment of risk or to action to address it.
One explanation for this is that, as the upward phase of the financial cycle can be very prolonged – according to estimates by BIS scholars, the typical duration of the financial cycle is around 16 years10 – perceptions of risk and value adjusted upwards. Historical relationships between asset prices, debt ratios and underlying productivity levels were deemed no longer to hold. Hence, developments that merely reflected the longer financial cycle were falsely believed to be structural. Another explanation is that observers overestimated future productive capacity due to the effect of the financial cycle on real-time potential growth estimates.11 This in turn could have led firms’ and households to bring forward future consumption and investment into the present, based on an overestimation of their lifetime income. One way such misperceptions can arise is if a prolonged credit-driven economic expansion weakens supply constraints and raises estimates of potential output, making growth appear more structural in nature. In Spain, for example, the boom in the construction sector raised both domestic participation rates and immigration levels. The European Commission’s latest estimates of potential growth rates are in the range of 3.2% and 4% for the period 2000–2007, driven mainly by the increasing labour contribution (adding around 2 percentage points on average per year). Since 2008, however, the labour contribution has been the largest drag on potential growth, for example, subtracting more than 2 percentage points from the 2013 estimate. A final explanation is that observers mistook the significance of inflation differentials within the euro area.

There seems to be a reluctance, perhaps just about understandable in some respects, to share information amongst home and host authorities and to co-operate when regulated firms are distressed, which of course is when it matters most that they should co-operate. The FSB needs to ensure that we confront and fix this. But a solution cannot emerge without political leaders making space for – indeed, without them positively encouraging – officials to cooperate properly. 2  BIS Review 145/2010  Capital markets: the financial network The second key plank of the FSB’s existing programme has been to mitigate the complexity of the financial network. We do not just live within a world, a financial system of massive but independent firms; we work in a financial system where everything is connected to everything else. That has been the case for long as I can remember. Central counterparties The use of central counterparties in over-the-counter derivative (OTC) markets is long overdue. But we will also need to ensure that these counterparties are robust. If ever a central counterparty fails, it will be a gigantic mess. Two have failed significantly over the past 30 years: a relatively small one in Paris, but the other was a significant one in Hong Kong during the 1987 market crash, which caused the Hong Kong equity and futures market to close. They were hard to reopen. And their securities markets and regulatory regime had to be completely overhauled as a result.
As a member of that Focus Group, I am happy to be in a position to contribute to this important and promising cause. I have already outlined elsewhere and in a different context a five-prong strategy developed in the Hong Kong Monetary Authority to further co-operation between the two financial systems, which will have the desirable dual effect of enhancing the effectiveness of financial intermediation on the Mainland and maintaining the status of Hong Kong as an international financial centre 6 . The strategy comprises: First, opening doors through CEPA and other forums so that Hong Kong financial institutions can provide the much needed financial services (and competition) on location in the Mainland; Secondly, sustaining the flow of fund raising activities from the Mainland to Hong Kong, not just in the IPO of H-shares but also in bank syndication and debt issuance, and creating channels, for example through QDII schemes, to facilitate the flow of investment funds from the Mainland; Thirdly, creating a mechanism for the marketing of suitable financial instruments (for example CDR of H-shares) on the Mainland to satisfy the enormous investor demand there;  4  The guidance was given to the Drafting Committee for the Basic Law of the Hong Kong Special Administrative Region when Deng Xiaoping addressed the Committee on 16 April 1987. 5  This principle was explained in the viewpoint article "A Basic Law of Finance", which can be found on the HKMA website. (http://www.info.gov.hk/hkma/eng/viewpt/20060810e.htm).

So, what about the question I raised earlier on about whether the two financial systems of the country have a working relationship that maximises the mutual benefits of the two jurisdictions and therefore is in the best interests of the country? If you want an honest answer from me, it would I am afraid not be one in the affirmative. There seems to me considerable scope for a co-operative, complementary and interactive working relationship between the two financial systems, in which, as I said earlier, relative strengths are exploited and relative weaknesses addressed, and synergies maximised. The further question then is how such a working relationship should best, and realistically, be developed. It is quite natural to think that developing such a relationship between the two financial systems could be left to the market. While this is theoretically possible, it assumes that market forces are allowed to work freely across the two financial systems, which is not always the case. In merchandise trade, this is by and large true, and as a result the two economic systems specialise in areas in which they have respectively comparative advantage in producing. But in the provision of different services, as in the case of financial services, there are restrictions limiting the working of market forces, for example, restrictions on access of service providers to the other system and restrictions on the mobility of the user of services across the two systems.
I’m going today to set out what new instruments we have in that little metal tray next to the “prudentist’s” chair, and what we plan to do with them, so that you can prepare yourselves. View from the chair The good news is that, despite the impact of Covid, our patients are generally alive and well. Looking across the banking and insurance sectors as a whole, capital and liquidity positions are strong and operational resilience has largely held up to Covid and cyber pressures. This is the result of the efforts that have been made by many people in financial services to get the industry onto a stronger footing following the 2008 crisis, as well as the fiscal, monetary and regulatory support provided in response to Covid by the authorities. This means that we have the luxury of sitting in the dentist’s chair, and not in the hospital. A number of things seem much more visible than last time we were here: on the back of the door, a charter of regulatory freedoms to try new approaches following our exit from the EU; on the wall in front of the chair, new ideas on diversity and inclusion; and on the ceiling hanging over it all, the storm clouds of climate change. Plus of course Solvency II, which is resistant to being included in any form of analogy.

I refer of course to the review of Solvency II, led by the Treasury with close involvement from us. This is a great example of an area where we can tailor a regime designed for 28 countries to work much better for the one we inhabit, cutting bureaucracy and supporting competitiveness while maintaining high standards. I am grateful to actuarial teams and other colleagues in firms who have been hard at work preparing quantitative and qualitative submissions which should allow us to understand the potential impact of any changes. It is important that this work moves forward at a good pace, but it is also important that we get it right – no one will thank us if we accidentally drill a hole in a perfectly sound tooth, or put a cap on the wrong one. Some of those in the debate whose job it is to promote the interests of shareholders favour a straightforward weakening of the regime. We, with a statutory objective to protect policyholders, are cautious on weakening. This difference of perspectives is of course entirely unsurprising and a natural part of the reform process. For our part though we have reached no firm views on any proposals at this point, because even before consulting we will need to be informed by the data which will shortly come back in from firms.
In this sense, I believe the emotional relationship of citizens to the euro has become stronger. Question: What, in your view, is the greatest achievement of the first ten years of the euro? Answer: For me, the greatest success is the fact that, after having promised the citizens that the euro would be equal, in terms of stability and the maintenance of value, to the previously most solid currencies, including the Deutsche Mark, we have fulfilled this promise effectively. Question: And what is the greatest challenge for the next ten years? Answer: There are a number of challenges that face us. The first is to maintain the level of credibility and confidence that the euro has gained during the first ten years. And in addition to all the other challenges that an important central bank in the industrialised world has to deal with, I would stress two challenges that are entirely specific to the ECB. First, the fact that we are ourselves actively contributing to achieving the single market with a single currency and, second, that we must prepare in the best possible fashion for a successful enlargement of the euro area. Question: In addition to price stability, the stability of the financial markets has become the focus of attention in the context of the current crisis. Would it be sensible for the ECB to have an explicit mandate to safeguard the stability of the financial markets? Answer: Our primary mandate, to ensure price stability, is a very important prerequisite for financial stability.

To conclude, I would like to thank CEMLA, the co-organizing central banks for putting together this meeting and the team at the Central Bank of Chile for their work and for arranging the logistics of this event. Currently, when we are living under very uncertain circumstances, it is especially relevant to be discussing risk issues. This is so because high uncertainty affects the evaluation process when making decisions, when assigning probabilities to certain events and, finally, how our institutions are governed and managed. There is no doubt in my mind that this meeting will enrich our knowledge on the subject. We will also benefit from the richness of the exchange of information between institutions, which I hope will show us the road to the future of risk management. I wish you very fruitful sessions today and tomorrow, which will encourage learning, generate more conversations over time and development collaborative work that will provide continuity to the topics that will be covered in these two days. Thank you very much. 3/3  BIS - Central bankers' speeches