samchain/econo-pairs-v1 huggingface dataset:
Muhammad bin Ibrahim: The “Islamic Finance Country Report for Malaysia 2015” Keynote address by Mr Muhammad bin Ibrahim, Deputy Governor of the Central Bank of Malaysia (Bank Negara Malaysia), at the launch of the “Islamic Finance Country Report for Malaysia 2015”, Kuala Lumpur, 30 June 2015. *  *  *  Thank you for the invitation today to officiate the launch of the “Islamic Finance Country Report for Malaysia 2015” published by IRTI, the research and training arm of the Islamic Development Bank. This country report is the fifth in its series and features Malaysia’s ongoing initiatives and prospects in transforming into a high income economy and the contribution of Islamic finance in this endeavour. Islamic finance in Malaysia has undergone three decades of progress and its current state of development is the reflection of the collaborative effort between the industry and the government. While Malaysia has achieved a number of successes, a lot needs to be done still. Islamic finance needs to advance from domestic-centric growth and expand beyond our borders. The next phase of achievement would very likely hinges on our ability to collaborate successfully with others and harness our capabilities to ensure that Islamic finance will progress and expand transactional activities across borders to remain competitive and dynamic.

But of course don’t expect a central banker to answer this question, one year in advance. I will just mention the Banque de France view on the rationale that should be behind the determination of the starting level of the euro area short-term rates. As you know, we currently observe interest rate differentials between the “core” and more “peripheral” currencies participating in the exchange rate mechanism. Although these spreads have been dramatically reduced in the past two years, due to the remarkable convergence of inflation rates throughout the European Union, some interest rate differentials still exist. They can be attributed partly to differing positions in the business cycle, and partly to differences in credibility. Cyclical differences within the potential euro area should not be overestimated. There is, all in all, a relatively high degree of synchronisation in the business cycle in continental Europe. The convergence criteria laid down in the Maastricht Treaty certainly played an important role in fostering this synchronisation. Moreover, in the future, differences in cyclical developments will gradually be reduced as policies, structures and behaviour will become more and more similar. Lastly, some persisting differences may well be tolerated as is currently the case between the various regions of the same country or, for instance, between the various member states of the USA. Credibility differences between “core” and “peripheral” currencies result from the different lengths of the track records in terms of stability-oriented policies.
A monetary policy that is guided by an inflation target is basically concerned with adapting the development of demand to the economy’s long-term growth. That is not easy, I can assure you, and our chances should not be exaggerated. Towards the end of last year, however, activity in the Swedish economy did begin to slow to a growth rate that can result in a stable long term development. The last time we met, early in October, we discussed the situation in these terms and I concluded that if the strong economic upswing were to continue, it would be necessary to raise the repo rate. Other central banks around the world had been facing a similar situation for some time. The U.S. Federal Reserve, for example, had raised its instrumental rate successively during 1999 and 2000 to 6.5 per cent. Last year the European Central Bank raised its rate to 4.75 per cent and the Bank of England’s rate was increased to 6.0 per cent. I recall that last year many observers counted on relatively large interest rate hikes in Sweden as well. They thought they saw signs that the Swedish economy was on the way to becoming overheated and argued rather vigorously that the Riksbank therefore ought to act quickly — starting in the autumn of 1999 and continuing with further steps up to last summer — in order to avert the threat they saw looming on the horizon.

It is not yet possible to tell to what extent the U.S. economy will experience a lengthy, more difficult process of adjustment. That is probably the background to how the Federal Reserve has acted in recent years. A series of interest rate hikes during 1999 and 2000 were presumably intended to restrain the euphoria and excessive expansion. When a downturn then became evident, it seemed  2  BIS Review 26/2001  desirable to try to limit the mood swing by means of the marked interest rate cuts we have seen this year. It is precisely the Federal Reserve’s vigorous action that underlies certain analysts’ view that the current economic slowdown will be fairly mild and brief. If international activity were to move into a recovery, most things suggest that demand in the Swedish economy would start rising rapidly again. The earlier capacity restrictions would then return to the agenda, with the attendant risk of an accelerating rate of inflation. So the situation is difficult to assess and I grant that the judgements our Executive Board has had to make in connection with the present Inflation Report have been more difficult than usual. While the difficulty in predicting the future is admittedly a truism, the present international economic situation is perhaps the trickiest for a decade. Growth with a balanced picture of inflation The main scenario we have adopted in the Inflation Report envisages weaker real economic activity in the rest of the world, with the slowdown in the United States in the foreground.
But we also collect and analyze enormous amounts of other information, both in the form of data and reports from members of the communities we serve, to help us assess the state of the economy and inform our decision-making. The Economic Outlook I’ll start off with the most common measure of the overall economy: gross domestic product, or GDP. I expect inflation-adjusted, or real, GDP to rebound sharply this year. Indeed, with strong 1/4  BIS central bankers' speeches  federal fiscal support and continued progress on vaccination, GDP growth this year could be the strongest we’ve seen in decades. Such a robust rebound would be very welcome after the toughest period for the economy in living memory and a winter where the pandemic has been particularly severe. The resurgence of COVID-19 over the past few months caused consumers to pull back on spending, resulting in significant job losses in some sectors—especially in leisure and hospitality. In past recessions, we have typically seen a decline in manufacturing jobs, while the service sector—establishments like hotels, bars, and restaurants—was not affected to the same extent. But the pandemic has flipped the script in that regard. Indeed, this time, both the manufacturing and housing sectors have rebounded sharply since last spring, while much of the service sector remains depressed. The pandemic has had a truly devastating effect on employment.

In general terms, the CCyB would be activated and increased by authorities whenever aggregate credit growth was judged to be excessive and associated with a build-up of system-wide risk. The buffer can be reduced during a downturn to help ensure that banks maintain the flow of credit in the economy. Considering that this is a new macroprudential tool, the evidence of implementations is still limited. Notwithstanding that, the number of countries that have developed a policy framework is increasing and the number of jurisdictions that have set a positive buffer level increased significantly over recent years. Until now, around forty countries have been using the CCyB, with heterogeneous effects depending on their local conditions and vulnerabilities. Furthermore, during the Covid-19 crisis, many countries released their countercyclical capital buffers, marking the first time that the CCyB was used widely in a downturn. Among them we can mention France, Germany, Sweden, Switzerland and United Kingdom (BIS, October 2022). These countries lowered the CCyB either completely or partially. Recent reports from the Basel Committee are also focused on providing empirical evidence regarding buffer usability and cyclicality of the framework. So far, the evidence gathered suggests that although the countercyclical capital buffer may be less effective to contain the build- up phase of the credit cycle. However, it may help to strengthen  1/3  BIS - Central bankers' speeches  banks' solvency and mitigate the risk that banks' lending standards amplify an economic downturn as well as all the spillovers implied.
Overall, the June 2013 Eurosystem staff macroeconomic projections for the euro area foresee annual real GDP declining by 0.6% in 2013 and increasing by 1.1% in 2014 thanks to three main drivers: export growth, accommodative monetary policy and low inflation. BIS central bankers’ speeches  1  2. How can we boost growth further in the euro area? A strong fiscal stimulus obviously appears unfeasible, given the necessity to rebalance public finances. I want to stress two things here: •  The euro area has very rapidly and efficiently set to work to cure its fiscal weaknesses and can today boast some of the best results among the major developed economic regions: its public deficit has been reduced from 6.3% of GDP in 2009 to approximately 3% today; by the end of 2013, the euro area should show a positive primary balance;  •  While the commitment to progressively achieve sustainable levels of public debt and deficit has to be achieved; the measures need to be designed in such a way as to limit the negative side-effects on growth. For instance, efforts need to be focused on non-productive spending. In fact, there is only one way to durably raise the growth potential of our economies, and that is by structural reforms that enhance competitiveness. It is clear that the euro area is well equipped to confront the challenges of the 21st century. With 370 million consumers and high purchasing power, it remains the biggest market in the world.

This Code extends to all wholesale market participants – sell-side, buy-side, non-bank market makers, trading platforms and market infrastructure. A question that we have been asked frequently comes from buy-side participants – Why does the Code matter to me? The application of the Code to all wholesale market participants, including the buy-side, stems from the belief that good practices should apply to all market participants and not only a subset. 2/6  BIS central bankers' speeches  With widespread adoption, the power of market discipline and peer pressure can be immense. This is important for a voluntary Code. The Code incorporates the principle of proportionality, given the diverse nature of market participants. What this means is that not every principle will apply directly to every market participant. In the case of a buy-side participant, you will find that only a portion of the principles have direct applicability. For example, most of the principles relating to execution are directly applicable only to sellside participants. Hence, the implementation burden may not be as significant as one would expect. Nevertheless, while the rest of the principles may not have direct applicability, they provide clarity to your counterparty relationship with the sell-side. By understanding the practices that your counterparties are abiding by, it informs what you should expect from the counterparty relationship. For example, in the hotly debated issues of mark-ups and last look, the good practices help you make more informed choices in selecting and interacting with your counterparties.
In addition, improved information flows make it easier to move production outside of the company’s premises, to “outsource” activities that are not part of the core activities and to decentralise. The most important effects of IT probably occur in terms of company structure, working life and the everyday life of the individual. The price is crucial One way of evaluating the strength of IT is to compare it with earlier technological changes. The telegraph is an interesting example, both with regard to parallels and differences. The introduction of the telegraph led, just like IT, to a strong increase in the flow of information in the economies of the time. A message that had previously taken perhaps a month to arrive, could now be transmitted in a matter of minutes. Today, with the aid of the Internet, this type of message can be transmitted in a few seconds. This further time gain is relatively marginal, but the significance of the Internet is not. 1  BIS Review 93/2000  The difference lies in the cost. Telegraphy was expensive, which is why its spread was limited. The people of the nineteenth century had to visit a telegraph office or employ a telegraph boy and pay a considerable amount of money if they wanted to send a telegram. In today’s money value it cost them approximately SEK 2,000 to send a long distance message of 20 words, while the corresponding cost today is around 10 öre for 20 pages.

In such a scenario, the net result in the short term will not necessary be falling inflation - it could just as well be rising inflation. This is one of the risks in this context. Another risk that has not been discussed much yet refers to a longer-term perspective. Changes create both winners and losers. Lower purchase prices for a business owner or for us consumers may involve a lost profit margin for other companies. An increase in productivity may involve redundancies and that companies which are unable to keep up with developments are wiped out. The structural transformation thus contains not only possibilities, but also social maladjustment that must be dealt with by the labour market, the capital markets, the education system, etc. What does this mean for monetary policy? I intend to discuss four areas that have figured in debates on monetary policy and the ‘new and old’ economy: the effects on interest rates, the effects on purchasing power, the economic relations and the Riksbank’s intellectual framework. It would not have been possible for interest rates to lie at the current levels if price stability had not lowered the risk premium that lenders require for the uncertainty factor. In addition, the reduction in public borrowing and declining indebtedness has led to real interest rates being pulled down. But would this still apply if we had a higher growth in productivity in the future? One effect of higher growth and increasing investment could be rising real interest rates.
For  BIS Review 36/2010  11  instance, the Committee thought that the chance that inflation would be 2% or higher in 2011Q1 was between 15% and 20%. We can once again use the February forecast to highlight a few of the key messages that the MPC wanted to communicate. In the early part of the forecast period, the probability of inflation being above the target is very high. This is because the data for inflation are well above target at present, and also because the fan chart here is relatively narrow. But the projection for inflation falls over the forecast period. This implies a fall in the probability of inflation being above target. Towards the final part of the projection, the probability of inflation being above the target rises back to being broadly one half. This chart emphasises that, in spite of the most likely outcome for inflation being below target, the nature of the distribution of risks implies that the probability of exceeding the target is about one in two. We can also combine the usual top-down fan chart with the information in the cross-sectional densities to produce a 3D fan chart [Slide 20]. The particular advantage of this chart is that it shows how the overall density changes over time. For instance, when the distribution is very narrow, such as at the start of the forecast period, the probability density at the centre of the fan is higher, simply because the MPC is more confident about its central forecast here.

The building blocks do not require every system to be the same, but highlight areas where benefits can arise from carefully implemented and coordinated harmonisation. This focus area benefits from the building blocks in the first two focus areas and 4 5  https://www.bis.org/cpmi/publ/d193.htm See Annex 2 4  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  4  is a key enabler of innovation as much of the work represents a ‘no regrets’ step towards future technology, some of which we are already considering in the UK as part of our ongoing renewal of our RTGS system. Focus Area D targets data quality and processing by enhancing data and market practice to tackle frictions around fragmented and truncated data. It stems from a simple reality – the better the data we have, the more we understand and can make the right decisions. We know that poor data quality and limited standardisation make cross-border payments more complex to process, in turn affecting their speed, price and transparency. Currently around 60% of all payments need an element of manual intervention. For example, SWIFT estimates that enquiry management is costing banks 25-35 times more than payment processing itself and that efforts to automate cross-border payments processing have had very limited results.6 The building blocks in this Focus Area go deeper than identifying standards: it extends to incorporating crucial mapping and translation tools that support widespread interoperability between systems.
And, as U.S. Attorney for the Southern District of New York Preet Bharara has observed, if you spend your time thinking about how close to the line you can get, it is inevitable that you will at some point cross that line. No one gets the arbitrage right 100 percent of the time.2 When you make that mistake, you will not only have a bad culture, but you will also have to deal with Preet Bharara’s office. 2/6  BIS central bankers' speeches  Therefore, what’s needed is a better culture. Culture can help to fill in the spaces between and beyond rules. Culture also shapes our attitude toward rules. A strong, ethical culture is one in which individuals within an organization demonstrate to each other a commitment to certain first principles. These principles must align with both the private purpose of the organization and the public rules governing its operations. Of course, it is possible for principles to conflict. When that occurs, determining the right course will be difficult. But, the more you wrestle with that conflict, the better you will become at resolving ethical quandaries. Aristotle called this aspect of ethics “habit,” but I prefer to think of it as ethical muscle memory. The more practice you have in thinking about it, the better you will be at determining what is right. Bankers will be more likely to think about what is right, as opposed to what is merely legal, the more often they observe their colleagues doing the same.

3  European Union enlargement  At first glance, the link between this topic and the two issues I have been dealing with up to now appears quite tenuous. Yet, while the issues arising from market integration and financial stability are of concern for many Central Banks, managing the EU enlargement is a distinctive concern of the Eurosystem. I would like to share views on how the Eurosystem will act to address this concern, while performing their task regarding price and financial stability. Ten countries from Central, Eastern and Southern Europe –comprising 75 million inhabitants – are to join the EU, thus completing European reunification. Although their combined GDP is rather small (equivalent to that of the Netherlands for instance), in terms of population' size they will propel the EU (450 millions inhabitants) largely ahead of the combined population of both the US (population: 275 millions) and Russia (population: 145 millions). This testifies again, if need be, to the attractiveness of the European Union framework, which has provided us with economic prosperity and political stability for almost half a century. Accession countries have accomplished important progress in stabilizing and strengthening their economies and their institutions. Observing the accession countries, recent history shows the major improvements those countries have made, in hardly 10 years, on the road towards convergence with the EU. Let us keep in mind, the sometimes rather slow pace the current Member States took, regarding for example trade openness, price liberalisation, or macro economic discipline.
But not all of the sectoral differences that have emerged are necessarily unwelcome. Indeed, for those seeking to ensure stability in the economy as a whole, it is really just as well that consumption growth has remained robust at a time when the net trade position of the economy has worsened so markedly. And, as recent MPC minutes show, that has been our intention. So long as the world economy recovers quickly enough to pick up the slack as consumption slows, it may be that we in the UK will avoid the sharp recessions of previous cycles. Of course, this is a big 'if', and I do not want to imply that I am excessively confident that this will occur. Rapid consumption growth brings with it considerable risks, not least when it is financed by a large build up in consumer debt. But it is the MPC's central expectation that we will escape a serious slowdown at current interest rates. In the last few weeks, we have seen some tentative signs of an unwinding of some of the more severe sectoral gaps in the economy, with the slowdown in retail sales growth since the start of the year, and an encouraging pickup in a number of surveys of business confidence and investment intentions. 2  BIS Review 18/2002  Overall, it seems to me that the risks around the outlook for UK inflation are fairly evenly balanced.

A key area for cooperation that is being advanced relates to the provision of a robust liquidity management infrastructure for Islamic finance. This is an important imperative to ensure the resilience and stability of the Islamic financial system, as well as to reduce the cost of intermediation. A significant regulatory challenge remains in terms of having efficient crossborder liquidity risk management in the Islamic financial system, due to the lack of short-term Shariah compliant instruments in international currencies. A chapter in the book describes the regulatory response to the issue of liquidity risk facing Islamic financial institutions, including the important role of the International Islamic Liquidity Management Corporation (IILM) in facilitating cross-border liquidity management. BIS central bankers’ speeches  1  With these changes set to re-define the financial landscape going forward with far reaching implications, the publication of this book is both timely and relevant. Six years from its first edition in 2007 which made an important contribution to the literature on the regulation of Islamic finance, this second edition captures the diverse range of current information and updates arising from the regulatory issues in a post-crisis global economy. Reviews on the various characteristics of risks faced by Islamic financial institutions will improve the understanding and examination of the implications of current and new reform initiatives for the regulation and supervision of Islamic finance.