samchain/econo-pairs-v1 huggingface dataset:
On the other hand, with limited proprietary positions, banks generally emerged from a summer of stress unscathed. Certainly, no one wants to return to the days when major dealers’ trading books were crushed under the weight of worthless leveraged super senior debt. To strike a balance between making banks safer and maintaining adequate market liquidity, we need to draw lessons from the financial crisis, when contagion from stressed banks spread rapidly through the global financial system via counterparty credit concerns, liquidity hoarding and mass deleveraging. In this environment, core funding and OTC derivative markets seized up and conditions were set for the panic that ensued. By contrast, markets with greater transparency and more robust trading and settlement infrastructure, such as equity markets and exchange-traded futures and options, performed rather better. Prices were not always to participants’ liking, but these markets remained open. London should lead the way in ensuring that fixed income and derivative markets meet such standards. At the FSB, the Bank of England is helping to devise reforms that increase transparency, build more robust infrastructure and encourage better collateral management. Since collateral management is a cornerstone of resilient markets and goes to the heart of central banking, let me take a few minutes to expand on it.8 Collateral reduces credit risk between market participants and supports market-based sources of credit to the real economy. It is central to the functioning of OTC derivatives markets and the funding of the shadow banking system.

In terms of the financial account, the resident sectors’ improved terms of access to external funding from 2013 enabled the outflow of funds from the rest of the world at the height of the euro area sovereign debt crisis to be reversed. The progressive normalisation of the euro area’s capital markets, as from the final stretch of 2012, significantly reduced the need for Spanish credit institutions to finance themselves through the central bank. Subsequently, the abundant liquidity resulting from the ECB’s quantitative easing measures has once again given rise to net fund outflows in the Spanish economy. These have, however, come about in a very different way to those resulting from the 2012 balance of payments crisis. Indeed, net fund outflows are not, as was then the case, the outcome of a worsening in economic sentiment regarding the Spanish economy. They are rather the result of a redistribution between institutions and countries of the abundant liquidity injected by the Eurosystem. As to instruments, the funding raised abroad in the most recent phase has preferentially taken the form of stable flows, such as foreign direct investment, equity and investment fund shares, and long-term government debt securities. This composition reveals international investors’ confidence in our economy, to which the structural gains in competitiveness and the recovery in output and domestic demand have been conducive. In the specific case of foreign direct investment in Spain, these flows have accounted for around 2.6% of annual average GDP in the 2013-2019 period.
Businesses and governments are looking for best response strategies to ensure smooth expansion of their enterprises and the economy in general. Tonight, I would like to focus on 3 related and timely subjects. I will begin with my view on the outlook of the Thai economy and the risks surrounding its prospects. Then, I would like to outline what I think is necessary for monetary and exchange rate policy going forward. And lastly, I would like to talk about how we can foster private investment and what Japanese businesses can do, in your role as investors and employers, to help make Thailand an even better place to invest. Ladies and gentlemen, As you well know, the Thai economy had to weather through a host of challenges over the past 2 years. To my mind, and from the view of the Monetary Policy Committee, domestic political uncertainty, high and rising energy prices and sharp US dollar decline were at the top of our concern. Indeed, political uncertainty, coupled with rising retail oil prices, took a toll on private sector confidence and consumers’ purchasing power. These negative developments dented domestic demand during the first 9 months of 2007. The fall of the US dollar, while widely anticipated, had been a major risk that could disrupt Thailand’s robust export activities. In fact, the risk was even greater after the extent of the US financial crisis became clearer during the second half of 2007.

In the near term, I think your experience from adjusting to the yen’s sharp appreciation should be particularly helpful to your local partners. Japanese companies are capable of lending a helping hand to your local suppliers as they try to upgrade their productive efficiency. That would help smooth their adjustment process during these rough and tumble times. Ladies and gentlemen, I hope I have contributed to your understanding of the economic conditions and outlook for Thailand. The Thai economy has shown that it is resilient to adverse shocks. I am confident that our fundamentals are strong. Public investment in basic infrastructure and the Bank of Thailand’s commitment to maintain economic and financial stability should translate into moderate long-term cost of investment financing. With the awareness of what’s in store for us and the right macroeconomic policy mix going forward, we should see the economy expand favorably and in a sustainable fashion. I need not mention how crucial it is to both Thailand and Japan in ensuring that our trade and investment partnership prosper in the years to come. Thank you for your attention. BIS Review 33/2008  5
For details on liquidity management in Sweden, see “The Riksbank’s operational framework for the implementation of monetary policy – a review”, Riksbank Studies, March 2014, Sveriges Riksbank. 6  In Denmark and Switzerland, the interest rate on banks’ marginal deposit facility at the central bank corresponds to our reserve rate. For details on the liquidity management system in Denmark, see Jørgensen, A. and Lars Risbjerg (2012): “Negative interest rates”, Monetary Review, 3rd Quarter 2012, Part 1, Danmarks Nationalbank. 7  The policy rate in the euro area is the refinancing rate, which is the minimum bid rate in the ECB’s weekly market operations. BIS central bankers’ speeches  3  Excess reserves have increased substantially since the ECB started to provide banks with long-term loans and implemented quantitative easing. This is illustrated by the grey area in the chart. As a result, the overnight interbank rate has remained below the policy rate and just above the reserve rate, as shown in the chart. Negative rates have their limitations In the euro area and Sweden, the aim of unconventional monetary policy has been to bring inflation up towards the inflation target. Negative rates – in combination with asset purchases – are intended to boost activity and prevent low inflation from becoming entrenched. The effects can be transmitted via both lower bank interest rates and a weaker exchange rate. In other words, negative money market rates operate through the usual channels.

The academic faculty will include permanent as well as regular visiting professors and scholars-in-residence. INCEIF will also form strategic alliances with leading local and international learning institutions to complement our pursuit to provide world-class knowledge for the benefit of the industry in particular, and the ummah in general. It is our vision that INCEIF will one day be an international nucleus for tertiary education in Islamic finance, training and research and provide a strong support in the development of Islamic financial infrastructure. With the grace of Allah, and with the support of the international Islamic financial community, it is our hope that INCEIF will make a meaningful contribution to the future development of Islamic finance for the benefit of the ummah. In closing, once again, I would like to express our deepest appreciation to the Yang Amat Berhormat, Dato' Seri Abdullah Haji Ahmad Badawi, Prime Minister of Malaysia for gracing this occasion and for accepting to officiate the launch of INCEIF. 2  BIS Review 22/2006
Keeping in mind that the risks for both financial and real sectors are interrelated, the banks that lend in foreign currency to firms, which earn revenues in domestic currency, are also indirectly affected. In such cases, the whole economy becomes more vulnerable to shocks due to amplified risks resulting from dollarization. A recent strand of literature and country cases such as the Asian meltdown of 1997 and the 2000-2001 banking crisis in Turkey, have all emphasized the importance of such vulnerabilities brought about by dollarization. Moreover, firms adjust their prices more frequently in a dollarized economic environment where depreciation of national currency is perceived as permanent. Thus, dollarization leads to higher pass through effect from exchange rates to prices via deteriorating pricing behaviour of firms. Ultimately, from the public sector’s point of view, the issue of debt sustainability is highly influenced by dollarization. In fact, public sector is exposed to problems similar to that of non-trading firms indebted in foreign currency 4 . There is no doubt that dollarized debt adversely affects government’s solvency as its assets are in domestic currency. In this sense, given the high level of dollarization, the fluctuations in real exchange rate might turn an apparently sustainable fiscal situation into an unsustainable one. Furthermore, public sector insolvency can immediately lead to banking sector insolvency if domestic banking system holds large claims against government. Dear Guests, Before continuing with the Turkish experience, I have to add that dollarization deserves a special attention from a central banker’s perspective.

The amendments made in the Law of the Central Bank of Turkey in 2001 have been a turning point and instrumental for the efforts to maintain macroeconomic stability. With these amendments, achieving and maintaining price stability is stated as the primary objective of the Central Bank and the Bank acquired its instrumental independence. In fact, the independency has given the Bank the opportunity to set its policies for longer terms, free of political cycles and pressures. As an assurance given to the public to ensure the long term price stability objective, the independence of the Central Bank of Turkey together with its transparent and effective communication policy have increased the credibility of the monetary policy. Besides, the new monetary policy framework implemented first as implicit and then as full-fledged inflation targeting regime together with the floating exchange rate regime have contributed a lot to the decline in dollarization since 2002, as the literature 10 suggests. In this respect, we can observe the findings of the portfolio approach in Turkey very clearly. To be more specific, the volatility of exchange rates has increased due to floating exchange rate regime on the one hand and inflation and its volatility have declined significantly on the other.
This fall in fund performance then gives rise to a second feedback loop, inducing investor withdrawals from those funds which have under-performed, further reducing demand for the bond and amplifying the fall in its price. It is only after some time that the influence of value investors stabilises the market. Each individual run of the model is like hitting a wild horse once and has an unpredictable outcome. But we can get an idea of the general behaviour of the funds by running the same scenario repeatedly – if you like, hitting the wild horses hundreds of times and looking at their most likely response. The most likely behaviour of funds in this model-market are oscillatory, with shocks amplified in the short run and only damped after a period of several hundred days (Chart 14). But by rolling the dice over and over again, we can also look at the distribution of possible outcomes, as the average may hide extreme behaviour in the tails. For example, if the fraction of passive investors increases, this dampens average changes in bond yields (Chart 15). But it also increases the chances of much bigger changes in yields – the tails of the distribution fatten. 34  All speeches are available online at www.bankofengland.co.uk/publications/Pages/speeches/default.aspx  34  Chart 14: Impact of a shock to the expected loss rate  Chart 15: Distribution of outcomes after a shock to the expected loss rate  Source: Braun-Munzinger et al (2016).

Both approaches have their place in making sense of the dappled economic and financial world. But, to date, both have not been given equal billing. The global financial crisis is an opportunity to rebalance those scales, to take uncertainty and disequilibrium seriously, to make the heterodox orthodox. A profession that has, perhaps for too long, been shackled needs now to be Shackled.
A tale of two workers So which of the twin-peaked outcomes facing the economy is most likely? An imminent burst of macro-economic sunshine? Or leaden-grey skies as far as the eye can see? Several factors have been put forward to support the secular stagnation hypothesis. They include rising levels of inequality, worsening levels of educational attainment, a rising debt overhang, lower prices for investment goods, rising levels of youth unemployment and lower levels of innovation (Gordon (2012), VoxEU (2014)). None should be dismissed lightly. But nor do these factors necessarily contradict the possibility of recovery in at least some parts of the economy. It is entirely possible that both poles may be in play – if you like, sunshine with showers – pulling the economy in opposing directions. Those polarising forces are well illustrated by developments in the labour market. Polarisation in the labour market has been a phenomenon since at least the 1980s, with a “hollowing out” of employment across the skill-distribution (Goos and Manning (2007) Goos et al (2009), Autor et al (2003, 2006, 2010), Sissons (2011), McIntosh (2013), Plunkett and Pessoa (2013)). Employment growth has been strongest among the highest and lowestskilled. But the casualty has been the mid-skilled, where employment has fallen. This structural shift is usually attributed to technological displacement of mid-skill jobs – for example, because of the automation and digitisation of certain tasks. For that reason, a “smiley face” employment pattern has been found across a wide number of countries when looked at in skills space.

Abdul Rasheed Ghaffour: Roundtable Meeting of Centralised Shariah Advisory Authorities in Islamic Finance Welcoming remarks by Mr Abdul Rasheed Ghaffour, Deputy Governor of the Central Bank of Malaysia (Bank Negara Malaysia), at the Roundtable Meeting of Centralised Shariah Advisory Authorities in Islamic Finance, Kuala Lumpur, 2 October 2018. * * * It is an honour for me to be here today at the inaugural Roundtable Meeting of Centralised Shariah Advisory Authorities in Islamic Finance. On behalf of Bank Negara Malaysia, I would like to welcome the esteemed Shariah scholars and delegates who are gathered here this morning to share their experiences and exchange perspectives. We are at a time where our economies and financial systems are more connected. We are seeing greater cross-border trade and services, and mobility in capital. Technological advancements are shaping the way businesses operate and influencing dynamism in customer behaviours. This gathering today therefore is an important first step – towards strengthening relations and connectivity among the scholars and regulators who share common goals – that Shariah principles are embraced not only in form but more importantly in substance, – and that Islamic finance consistently delivers positive impact to the broader economy and society. The global Islamic finance industry has seen remarkable progress over the last decade. Global Islamic banking assets have doubled over the last 10 years and Islamic financial services are now available in more than 48 countries.
In part, this is because domestic firms will be enabled to participate more readily in external trade because of the absence of exchange rate risk. According to an estimate of this trade boost effect if Iceland were a member of the euro area (see Chapter 8), goods trade relative to GDP could increase by 4–11 percentage points and, as a result, GDP per capita could rise permanently by 1½–11%. •  Research shows as well that the increased trade between member countries with a common currency could cause the business cycle in those countries to become more symmetric over time, so that OCA criteria are met to a gradually increasing degree. •  The use of money is subject to considerable economics of scale; for instance, in connection with currency issuance, the cost of providing monetary services (such as monetary policy and payment intermediation), and cross-border foreign exchange transactions. Other things being equal, participation in a larger currency area would lead to a more efficient and less expensive monetary system. •  In addition, small countries in a currency union can save foreign exchange reserves to a greater degree than is possible with an independent currency. •  The domestic foreign exchange market is small, undeveloped, and relatively expensive to trade in (see Chapter 12). Euro area membership would provide access to a large, deep financial market without exchange rate risk. This would facilitate risk diversification domestically.

Finally, if economic shocks extend only to the home country and joint monetary policy is insufficient to absorb the shock, labour market flexibility could take the place of nominal exchange rate adjustment once the domestic currency has been abandoned. Consideration of these criteria based on historical data does not produce an unequivocal answer about Iceland’s suitability as a member of the eurozone. The Icelandic business cycle has been rather weakly linked to that of the euro area – and actually, to most other regions and countries as well (see Chapter 10). Iceland’s export sector differs in structure from that in most other industrialised countries (see Chapter 4). On the other hand, the economy is quite open to trade and the euro area is by far Iceland’s largest trading partner (see Chapters 4, 8, and 20). In addition, the domestic labour market is quite flexible, although downward flexibility of nominal wages has not been tested much and available data suggest that it has been relatively limited to date (see Chapter 14). The OCA theory has many shortcomings and does not take account of a number of potential benefits of participation in a large currency area such as the eurozone. Historical experience also suggests that currency unions can be successful even if the participating countries do not fulfil the OCA criteria at the outset (see Chapter 5). In this context, the following points are worth noting: •  Research indicates that currency union membership will stimulate trade with the currency union without reducing trade with other countries.
I would therefore like to clarify that under a flexible exchange rate regime, movements in the ringgit exchange rate reflects both external and domestic factors, including the strength of the domestic economy and the flow of foreign capital in the financial market. Our economy remains resilient with a respectable growth performance within the range of 4 – 5%, relative to the performance of regional and emerging market countries. The ringgit depreciation is not a unique and isolated event. It is a global phenomenon. The strong appreciation of the US dollar has led to similar depreciation pressures in all global and regional currencies. This is due to several factors including the uncertainties surrounding monetary policy in the US as well as global economic and political developments. These global developments have affected sentiments in global financial markets that led to capital outflows from emerging markets. The currencies of many countries have underperformed and the ringgit was also not spared. The ringgit was affected given the structure of our economy and financial market that is one of the most open among emerging market countries. Our market was exposed to global financial market uncertainties that led to the reversal of portfolio investments. There were also other specific factors that affected the ringgit. First, some investors had taken advantage amid the market turmoil and uncertainty to gain profit through speculative activities in the offshore ringgit non-deliverable forward (NDF) market.

Based on a survey that was conducted, consumer satisfaction towards financial services increased significantly from 61% in 2011 to 73% in 2015. We will continue to invest efforts towards improving the performances in this area. With loans amounting to RM1.5 trillion as at end-November 2016, the banking industry is the main source of funds to households and businesses, including small and medium enterprises (SMEs). Recognising the pivotal role of the banking sector in our economy, Bank Negara Malaysia will continue to develop the financial sector in a progressive and inclusive manner to ensure that all segments of society can benefit from this financing ecosystem. Financial knowledge among businesses and individuals must be continuously improved While results are promising, our efforts in achieving financial inclusion need to be further intensified. There remain gaps in access to financing for certain segments of society, which require collective efforts from all. The Bank is receptive towards these needs and remain committed to assist the public at all times. Among the issues raised by businesses are the difficulties in obtaining funding to start a business, particularly for SMEs and new companies. The factors cited for this include the absence of collateral, or insufficient track record, especially for businesses involved in new growth areas.