samchain/econo-pairs-v1 huggingface dataset:
In response to these developments, the international community adopted in 2009, under the impetus of the G20, an ambitious reform programme including Basel III, which is a key element for the banking sector. Indeed, a banking system that is more robust as a whole and capable of absorbing major shocks is vital to avoid the repetition of such chain reactions in the future. In this respect, despite the delay in the reform agenda in the United States, Europe must clearly press forward: the credibility of our banks and our economies is at stake. Basel III is naturally based on Basel II which establishes the current capital adequacy rules. However, Basel III goes further than merely changing and updating the existing rules. –  Basel III indeed considerably strengthens the capital requirements that banks must meet, but this reform is more extensive in that it significantly enhances the prudential framework: in addition to capital requirements, it establishes liquidity requirements, and a leverage ratio is set to be introduced in the medium term. From this point of view, Basel III is a far-reaching reform of banking regulation. BIS central bankers’ speeches  1  –  Furthermore, and most importantly, I believe that Basel III is a major step forward in that it leads to a much closer interaction than has been the case to date between the individual supervision of banks, known as microprudential supervision, and the overall supervision of the banking and financial system, or macroprudential supervision.

Christian Noyer: Basel III – CRD4: impact and stakes Introductory speech by Mr Christian Noyer, Governor of the Bank of France and Chairman of the Board of Directors of the Bank for International Settlements, at the Autorité de contrôle prudentiel (ACP) conference, Paris, 27 June 2012. *  *  *  Ladies and gentlemen, I am delighted to welcome you today to this new conference organised by the Autorité de contrôle prudentiel (ACP). This morning, the conference will be dedicated to the impact and stakes of the Basel III reform and, this afternoon, to the supervision of business practices in banking and insurance. I would like to thank all the participants for the interest they have shown in these crucial exchanges between regulators, supervisors and market participants. This conference is being held against the backdrop of an economic and financial environment that remains very difficult, characterised in particular in Europe by the ongoing sovereign debt crisis. Many questions surround the future of the European banking system, which has already undergone major transformations in the recent period while significant changes in its prudential framework and the organisation of its supervision are currently being reviewed.
New services offered by banks on the FX market, such as the prime brokerage, also create difficulties. Under a prime brokerage agreement, the bank makes its credit limits available to other institutions that speculate on the FX market, most frequently to hedge funds. As the product becomes widely used, supervisors are faced with a growing difficulty in monitoring the credit risk and liquidity risk of operations concluded on the FX market, 42 where the average daily net turnover amounts to USD 1,900 trillion. This creates quite a challenge for supervisors, who must have human and financial capital available to properly assess the risk in the increasingly global and complex world of finance. The understanding of the mechanics of financial markets is a never-ending challenge for supervisors. 40  Kapstein E. “Architects of stability? International cooperation among financial supervisors”, BIS Working Papers No 1999, February 2006. 41  Schinasi G. J. “Safeguarding financial stability: theory and practice”, Washington, D.C., IMF, 2005. 42  Kos D. “Developments In the FX Market: New Opportunities, Risks and Responsibilities”, a speech at the “Future of FX” conference in New York, October 24, 2003. BIS Review 60/2006  15  The response of bank supervisors gathered in the Basel Committee on Banking Supervision to the increasing complexity of financial instruments in banks’ portfolios is the New Capital Accord (“Basel II”), which is to replace the regulations currently applicable in over 100 countries.

21  Feldstein M., Horioka C. “Domestic Savings and International Capital Flows”, Economic Journal, June 1980. 10  BIS Review 60/2006  work of 1980 estimated the correlation between the national savings rate and the investment rate in the years 1960-1974 at 0.89. This correlation for the years 1990-1997 was estimated at 0.60, and having included South Korea – at 0.76. Despite a pronounced fall, the correlation between the national savings and investment remained high. 22 his constituted a peculiar puzzle, as in the global world of finance there were no good reasons for which investments were to be financed with residents’ savings rather than with loans drawn on the global financial market. As in the case of the “Lucas puzzle”, numerous works have been written to explain this phenomenon. In the most recent work by Martin Feldstein regarding this subject, 23 the newly estimated correlation rate gradually decreased over subsequent decades to reach a mere 0.19 in the decade ending in 2002. The decreases regard mostly smaller countries, but the estimates for large countries also show that the correlation rate fell from 0.92 down to 0.59. Therefore, it seems that over 10 recent years the process of globalization of financial markets exhibited a pronounced deepening. One may wonder why the recent years have witnessed acceleration and deepening of the globalization process, given that some phenomena that are universally deemed the reasons behind globalization, started a few decades ago.
For example, episodes of volatile capital flows may return, while the economy’s long-term competitiveness remains in need of improvement. Policy objectives in 2011 The Bank of Thailand envisages two economic policy objectives this year: (1) to safeguard macroeconomic stability, and (2) to continue strengthening underlying fundamentals of the economy. Both objectives should be interpreted in the broad sense, for example, macroeconomic stability entails price stability, financial stability, as well as fiscal sustainability. Likewise, strong economic fundamentals encapsulate resilient private sector, efficient public sector, and sound banking sector among others. Given these broad goals, the Bank of Thailand and everyone all have parts to play. The government, for example, is in charge of ensuring a sustainable fiscal position in the long-term, and an efficient disbursement of budget so as to best strengthen the economy. Monetary policy Maintaining economic balance is key to the making of monetary policy, as it is one of the most important pre-requisites of macroeconomic stability. In practice, this means that as the economic activity returns to normalcy, monetary policy stance must similarly be normalized. Failure to do so will add undue pressure on inflation, ultimately posing risks to macroeconomic stability. Thus this year, the monetary policy committee (MPC) will need to continue normalizing monetary policy. The amount and pacing of policy interest rate adjustments this year will be consistent with the outlook for growth and inflation as well as the surrounding risks.

And many people in Germany, as elsewhere, on seeing that they are hardly earning anything on their savings, are wondering if we are ever going to see an end to quantitative easing. Today, the risks for growth and inflation are tilted to the downside. The best service that the ECB can provide to the citizens of the euro area is to fulfil its mandate so that inflation returns towards 2%, which requires the economy to pick up again, jobs to be created and exports to the euro area to find solvent outlets. We are aware that the low interest rates also have negative effects, notably on savings, and could pose risks to financial stability if they were to stay low for too long. We don’t want this monetary policy to last too long, but we will apply it for as long as necessary in line with our mandate. 2  BIS central bankers’ speeches  In other words? Governments need to take action and implement the necessary reforms in order to consolidate confidence and growth, and to demonstrate a credible fiscal policy. If the euro area policy for growth rests exclusively on the ECB’s shoulders, things will end badly! Admittedly, we are nowhere near that point. But we sense that there is a temptation to rely entirely on the ECB. What key measures do governments need to implement specifically in order to restore growth?
At the frontier of development, the evolution of Big Data and Insurtech has opened up significant new possibilities for segmenting and pooling of risk and capital, and tailoring solutions to specific needs and profiles. Online platforms based on the group captive model and P2P insurance concepts are a case in point. Given that captives aim to provide specialised coverage that is not typically available in the traditional market, it is only natural for captives to operate in this space. Third, we are likely to see greater traction in efforts to understand captives from a regulatory and supervisory perspective. At a global level, there is a greater appreciation of the role and importance of captive insurers, including by the International Association of Insurance Supervisors (IAIS). IAIS published two papers in 2006 and 2015, addressing the economic benefits of captive insurance and its relationship to traditional insurance and reinsurance markets. More significantly, it recognizes the importance of applying a supervisory regime that has due regard to the specific nature, scale and complexity of various forms of captives. A primary objective of regulation for captives is promoting financial stability. In this respect, regulators will continue to be concerned with risks that may be created as a result of arbitrage and distortions to the broader insurance market. Captives have an important contribution to offer. However, understanding risks relating to captives at a much deeper level, will be important to deliver regulatory outcomes that are proportionate and economically efficient.

Given what we have experienced in the last two years, it is my hope that the international community will see the wisdom of not waiting for the next crisis to learn how we can make the international financial system a more robust and safe one for all of us.” 3. Ladies and Gentlemen, I made the above remarks over 10 years ago, in June 1999. It was ten months after the Asian Financial Crisis hit Hong Kong, which was then followed by the turbulence of the global financial system as a result of the abrupt collapse of the LTCM. It was rather unfortunate that the fear I expressed in 1999 has come true ten years later. The international community has failed to learn the lessons from the Asian Financial Crisis and the LTCM debacle and to make the financial system more robust and safer. As a result, we have been punished, and punished very, very severely. The latest Financial Tsunami, dubbed as “Once in a Century”, has demonstrated that somehow all the key safety valves and gatekeepers have failed functioning properly to prevent excessive leverage and risktaking within the financial system, leading to very heavy fiscal and social costs in the subsequent bail-outs. 4. Now the international community, led by G20, is trying very hard to draw lessons from this latest financial crisis. I sense that there is a very strong resolve to do something this time round.
The Role of Sentiment Other than perception, the ringgit is also driven by sentiments, mostly adverse. These are commonly cited through the various sentiment indices, for example as measured by MasterCard or the Financial Times. Sentiments are shaped over time by analysts and interestingly, there are three factors that consistently drive market sentiment. One of these is the high level of external debt, frequently cited by international rating 3/7  BIS central bankers' speeches  agencies and analysts alike. The discussion on external debt has driven market sentiment negatively as it is being touted as a source of vulnerability. The fact is that some of these analysis ignore the evidence of more granular data and worse, only skim the surface without the discipline to deep dive into the available data; Market sentiments also play out based on the government financial position and the issue of governance. Sentiments can be easily affected if new issues or indicators are published on the Government’s financial position. This is further exacerbated by the perceived governance challenges that give rise to further negativity; Market sentiment is also affected by a string of negative news headlines. While there were a number of news headlines on ringgit this year, about 30% of the articles by foreign and local media were written in a negative light or perspective. This make it difficult to ensure a realistic view of the country and hence on the ringgit. Realities and Facts Let’s examine these perceptions, or rather misperceptions.

Beyond the ups and downs of the economic cycle since 1999, despite the swings in the international prices of raw materials, monetary policy has managed to keep its inflation record faithful to its strategic aim. I am satisfied that we have fulfilled our mandate. Speaking in Germany, I would like to recall that the average annual inflation rate in this country in the 1990s was 2.2%, and in the 1980s it was 2.9%. Given the initial promise made to all people of Europe that the euro would be as credible, reliable and as good a store of value as were the best of the national currencies. On these figures, I can say that with an estimated average annual inflation rate of 1.95% for the first twelve years, the euro is in terms of safeguarding purchasing power “stark wie die D-Mark”. In a nutshell, the “M” has done its part. The main current challenges for our union originate in the “E”. Economic union is based on responsible national policies: fiscal policies, wage policies, structural policies. At the core of the economic union is the Stability and Growth Pact. The crisis has revealed some of the shortcomings of national policies to comply with the requirements of an economic union. In particular, in a number of cases, national policies that  BIS Review 59/2010  3  are responsible for domestic public finances and for the competitiveness of member economies have not achieved their objectives.
The free flow of goods in import-competing sectors such as agriculture implies unrestricted access for Maltese products to EU markets, while allowing reciprocal access to imported products. This represents both an opportunity and a threat, however, so that it should be met with appropriate restructuring of the sector so as to enable it to face foreign competition. In this regard Malta can obtain considerable market and development assistance from the EU for the agricultural and fishing sector, including for processing activities. As an EU Member State, Malta can also benefit from programmes aimed at promoting industrial restructuring, particularly with regards to SMEs. The freedom of movement of capital which Malta is experiencing as a Member State of the EU has significant implications. For one, it signals to investors that Malta is a developed market economy with a well regulated financial system where financial resources can find profitable employment. This contributes to the development of the sector, including of its intermediation function of transforming savings into productive investment. It also encourages the inflow of capital from abroad. For these same reasons, however, international investors will maintain a close scrutiny of developments in the local economy, and move capital according to their evaluation of prospective risks and returns. Freedom of movement of capital thus implies the need for more vigilance by the Central Bank of Malta not only to protect the exchange rate but also to preserve financial stability.

Chart 1 Outstanding Notional Amounts of Derivatives $ 700  Interest rate contracts Foreign exchange contracts Credit default swaps  600  Equity-linked contracts  500  Commodity contracts Unallocated  400 300 200 100 0  98  99  00  01  02  03  04  05  06  07  Source: BIS. •  The credit default swap (CDS) component has experienced explosive growth. The outstanding value of CDS contracts has surged to more than five times the outstanding principal of global corporate bonds by the end of 2007. Yet only three years’ ago, at end-2004, the CDS market was only some 85% of the size of the corporate bond market. The CDS market is now by far the more liquid market for trading credit risk. •  The outstanding value of commodity derivatives outstanding has risen from around $ billion in 1998 to $ trillion at the end of 2007. •  Options markets have also grown very strongly. For example, the outstanding principal of interest rate options has increased from $ trillion to $ trillion in the past decade. •  Innovation and the removal of barriers to cross-border activity has spurred global capital market integration. For example, turnover in foreign exchange markets has tripled since the BIS survey in 2001. And cross-border asset holdings have outpaced the strong growth in the global stock of financial assets. •  Markets offering investors ready-made portfolios rose very rapidly in advance of the credit crisis.
We need mechanisms to foster collaboration and co-creation ... … to translate ideas into products; bridge problems with solutions. People Let me start with the most critical part of ecosystem - people. The shortage of tech skills and talent is a global phenomenon. For a small city-state like Singapore, it is almost existential …. and that is why it is our top priority. Singapore is taking a multi-pronged approach: our institutes of higher learning are adapting their curriculum with industry input to develop students who are able to work with emerging technologies; our FIs are putting in place programmes to help re-skill mid-career professionals to take on the jobs of the future; and we will continue to welcome and embrace top talents from across the world to augment our own talent pool and raise the game here. Minister for Education, Ong Ye Kung, will speak more about skills and talent this Wednesday. Identity Let me then move on to the pain of verifying identity – the KYC problem. 3/9  BIS central bankers' speeches  For personal KYC, the Singapore government has taken the first step with National Digital Identity (NDI) … … which every resident of Singapore can use to establish his legal identity in a secure manner - with two-factor authentication and a public-private key pair - when making online transactions. A powerful component of NDI is MyInfo. This is a digital service that enables citizens to authorise third-parties to access their personal data sitting across many different government agencies.

In particular, we can’t be confident about how much fiscal drag will blunt growth. Ultimately, though, the drag should abate. When that happens – presumably later this year, the economy should strengthen. Inflation, as measured by the personal consumption expenditure deflator, is currently below the Federal Reserve’s 2 percent objective (Exhibit 9). Substantial slack remains in labor and product markets, and underlying measures of inflation are subdued. With weak labor compensation growth, the trend growth of unit labor costs is less than 1 percent annualized, which is well below price inflation. Moreover, inflation expectations remain well anchored at levels consistent with our 2 percent longer-run objective. Thus, I conclude that the risk that inflation could significantly exceed our 2 percent objective is quite low over the next few years, even if the recovery were to strengthen considerably. U.S. monetary policy initiatives Beginning in September, the FOMC made a number of important changes to monetary policy in order to promote a stronger recovery in the context of price stability. First, the FOMC began purchasing an additional $ billion of agency mortgage-backed securities (MBS) each month.4 Second, the FOMC stated, for the first time, that it would continue buying assets and employ its other policy tools as appropriate until there was a substantial improvement in the labor market outlook5. Third, the FOMC stated its intention to maintain a highly accommodative stance of monetary policy for a considerable time after the recovery strengthens. Two additional initiatives followed in December.
I would like to name three priorities or key trends here. First, I would say what we have seen in the past year showed that our implementation of the Standards must constantly adapt to changing circumstances. 16. While we all had Business Continuity Plans (BCP), these were unavoidably limited in scope. For example, we never expected that banks and their customers, as well as banking 2/5  BIS central bankers' speeches  supervisors, would all be in the same situation of working remotely. Certainly we cannot predict future events, but we can say that our collective responses to COVID in terms of BCP have so far stood up to the test. That said, in order to achieve the step-change we all aspire to, and deliver better outcomes, it will be essential for governments, regulators and the private sector to continue to be adaptable in how we approach AML/CFT work. 17. I have just now provided examples of how we fully used the built-in flexibility of the risk-based approach, together with the application of technology, to deliver an effective response to some of the challenges of COVID-19. We acted quickly, and with NO change required to the standards that all of our systems are based upon. 18. At the same time, we must not simply regard FATF standards, as well as Mutual Evaluations (ME), as simply compliance-orientated or, in the case of MEs, static assessments that take place once every eight or nine years.

We live in a small open economy and are forced to import inflation through our purchases of necessities from abroad. Because of this, we must trust that our trading partners will take decisive action to bring inflation down within their own borders. Iceland is now reaping the rewards of the ironbound policy formulated during its reconstruction following the 2008 financial crisis - a policy that insisted on a secure financial system with strong lines of defence against external instability. Icelandic banks have extraordinarily strong capital in historical and international context, and they are under close financial supervision. Moreover, the news from abroad confirms that merging the Central Bank and the Financial Supervisory Authority back together at the beginning of 2020 was the right decision. The merger and, in particular, the increased power the Bank has been granted in the area of financial stability have been of vital importance in ensuring that the current fluctuations in demand, interest rates, and financial conditions do not give rise to a credit bubble or excessive risk-taking in the financial sector. Iceland carries very little household, corporate, or government debt in comparison with other countries. It is clear that these conditions provide monetary policy with full flexibility to act. There are no handcuffs here. Honoured guests: I don't know whether any of you have gotten lost in the fog, found yourselves going around in circles, and been convinced that water flows upstream. I have never gotten lost in the Icelandic outback, but I have often done so in foreign megacities.