samchain/econo-pairs-v1 huggingface dataset:
This transformation reflects the coming-of-age of the Islamic banking industry after more than two decades of development. The move grants legal status to the Islamic banking business of the new entity, which is accorded a licence for its operations under the Islamic Banking Act 1983. The underlying philosophy of the incorporation of an Islamic subsidiary is primarily aimed at further strengthening the institutional structure for Islamic banking business operations. The Islamic subsidiary will also be able to assimilate the developments in the regulatory and supervisory standards governing the lslamic banking operations. It is envisaged that greater strategic focus and resources as well as higher autonomy and governance will be accorded to the Islamic banking business. The Islamic subsidiary will be led by a chief executive and a board of directors solely dedicated for the Islamic bank. Placed under the commercial banking arm of the group, the Islamic subsidiary will continue to leverage on the synergies and operating infrastructures of the group, thus achieving cost optimisation for the Islamic subsidiary and the group as a whole. For bank customers, the Islamic banking products and services will continue to be available at the existing branches of the conventional commercial banks. Given that it is a subsidiary with a more focused vision and business strategies, the potential that can be unleashed for the Islamic subsidiary will enhance value to its stakeholders.

2  BIS Review 13/2005
The latter, on the other hand, focuses on strengthening the institutional framework for monetary policy and financial supervision as well as fostering financial sector development that improves the ability of the system to absorb shocks by itself, in a way that minimizes the impact on the real economy without the need for policy intervention. Given the significant gap that emerging market economies have in this respect relative to developed economies, it becomes more crucial that the pursuit of monetary and financial stability in emerging markets be accompanied by a vigilant focus on making progress on structural reforms. In what follows, I will discuss some specific challenges to monetary and financial stability in emerging markets from both the short and the longer run perspectives. Let’s begin first with the short run stabilization challenge. As we have seen in past years, the search for yield among international investors has resulted in a resurgence of capital inflow into emerging markets, leading to a pick-up in asset price volatility. 3 Given the high degree of dependence on foreign trade, and the inadequate experience with modern financial risk-management tools particularly at the firm level, these asset price fluctuations have become an important policy issue in emerging markets. Typically, when large capital flows into financially shallow markets, it puts pressure on emerging market central banks to lower interest rates or to increase sterilized intervention in  3  This global liquidity glut may have stemmed from various factors, both structural and cyclical.

Regulators will need to be alert for pure regulatory arbitrage – seeking to change the form but not the economic substance of transactions in order to lower regulatory requirements. We have already seen, for example, transactions seeking to take credit risk in the form of derivatives rather than loans in order to lower the leverage exposure measure. More legitimately, banks might switch from activities for which risk weights have increased to activities which carry lower risk weights (Chart 2). The leverage ratio will, however, set an effective floor on the ability of banks to improve their capital position by shifting into low riskweighted assets, providing a safeguard against uncertainties around our estimates of risk. Conversely, banks for which the leverage ratio is a binding requirement may have incentives to move into higher risk-weighted activities (Chart 3) but the risk-weighted ratio should limit the extent of any such risk shifting. In this way, the risk-weighted and leverage ratios should complement one another. It will be interesting to see how banks allocate capital in a world  2  2  http://www.bankofengland.co.uk/publications/Documents/speeches/2014/speech765.pdf. BIS central bankers’ speeches  where they are subject to multiple capital constraints – risk-weighted, leverage and stresstest-based.
If this is the case, the nominal policy rate will not necessarily return to its pre-crisis levels. There are, however, other economists who argue that the observed drop in real rates was mainly of a cyclical nature. If this view is correct, the steps towards neutral monetary policy – steps already undertaken by some central banks in recent years – may easily continue to the pre-crisis levels. I am therefore glad that we have here two papers that may shed some more light on this policy important topic. The next session will be devoted to the exchange rate. Nobody doubts that exchange rate movements are of utmost importance for open economies. The papers in this session analyse the monetary policy channel of the exchange rate and the possibilities of international policy 1/2  BIS central bankers' speeches  coordination. Both are simultaneously fascinating and policy relevant. Friday, the second day of our conference, will include two sessions. One will be dedicated to bounded rationality in macroeconomics. The rational expectations revolution that started in the late 1960s changed modern macroeconomics in a significant way. The rise of new Keynesian DSGE models some 20 years ago demonstrated that the rational expectations approach can be fruitfully applied even to large-scale models that are of practical use in policy institutions such as central banks and international organisations. Let me remark that the CNB has been successfully using its own DSGE model as its main forecasting and policy analysis tool for more than a decade now.

On the other hand, the experience with models based fully on rational expectations sometimes shows that certain aspects or policy implications are at odds with what is considered reasonable. One example is the forward guidance puzzle, i.e. the unrealistically large responses of inflation, long-term rates and output to the announcement of the future path of interest rates. Therefore, we as macroeconomists want to reconsider the assumption of superrational agents and replace it with something more realistic. The second session on Friday will be devoted to two papers that may challenge our ideas about the economy and the way we think in terms of our usual models. It is always extremely useful to listen to new concepts and visions and to rethink our current approaches. Discussing thoughtprovoking and stimulating papers is the only way to avoid rigidity in ideas and opinions. Rigidity that will – sooner or later – lead to wrong attitudes and decisions. I believe that good policymaking will always benefit from cutting-edge research. I would therefore like to thank the participants of the high-level policy panel, the presenters and commentators in the individual sessions, and all other participants for coming to our event. Ladies and gentlemen, thank you for your attention. I wish you all an interesting conference, fruitful discussions and an enjoyable stay in Prague. 2/2  BIS central bankers' speeches
Experience with TARGET demonstrates the importance of the market infrastructure in allowing arbitrage to operate effectively. Let me now turn from wholesale activities to banks’ customer business. As European banks are typically universal banks, they combine a wide range of products within a single institution. The markets for these products have varying degrees of integration - some are already global or European, while others have remained national or even local in character. At least the major banks already operate in highly internationalised markets for a number of their products and have geographically diversified activities. Even if banks remain nationally based, they are increasingly subject to international market developments. National tendencies are increasingly influenced by international developments. Hence, the usual argument that cross-border mergers and acquisitions are a necessary condition in order to achieve a more integrated and international banking system does not seem very strong. In particular, many of the asset management and investment banking services are already quite internationalised as the capital markets have taken significant steps towards integration and growth following the introduction of the euro. Banks’ own holdings of securities have also become BIS Review 83/2000  4  increasingly diversified across borders. The trend has been quite strong for government securities, as well as for corporate bonds. To take an example of the financial services provided by banks in the capital market area, the leading underwriters of bonds issued by European firms are the major European banks, alongside the largest US investment banks.

In this context, we expect internal demand to continue weakening over 2008. Indeed, the most recent economic projections released by the Bank of Spain show reduced GDP growth in 2008 and 2009. At the same time as we face a slowdown in growth, we are seeing sharp increases in headline inflation. These have been driven by large energy and food price rises at the global level. The price boom has affected Spain to a larger extent than some other countries, partly due to the higher relative weight of these items in household expenditure. And the Spanish economy may be more vulnerable than other countries to second-round effects due to the widespread existence of indexation mechanisms. I would like to make a few comments about what economic agents should and should not do to face these challenges. On inflation, the key issue is how firms and workers respond to the recent shocks. I would like to make two points: •  First, firms should not view the shocks as permanent. In other words, they should not consolidate price-rises over the longer term. •  Second, workers should understand that inflation cannot be offset by demanding wage increases that are not justified by productivity developments. This would just keep inflation persistently high, as the 1970s experience painfully showed. BIS Review 70/2008  1  From the perspective of GDP growth, if we are to see a quick return to our potential, we need flexibility in supply and demand responses.
Perhaps the ability to pay high wages has been more dependent on the oil industry than thought earlier. Going forward, the key to success for Norway will be the same as for other countries: We must make the most of our number one resource - labour. The value of Norway’s human capital is around three times the sum of its natural resources, production capital and financial capital.7 Our future welfare level therefore depends on how many are in work and how productive they are. Employment in Norway is no longer as high as it once was. Today, a smaller share of the population aged between 25 and 54 is employed than 20 years ago (Chart 17), and the share is now higher in a number of countries, not least because female employment abroad has also risen. At the same time, the share of adult men in work in Norway has fallen. 7 See Meld. St. 29 (2016-2017), Long-term perspectives for the Norwegian economy 2017. 16  NORGES BANK  Chart 17a No longer at the top of the employment chart. Employment. Share of population aged 25-54.

The oil price fall reduced revenues. At the same time, withdrawals from the fund have become substantially larger, in pace with the increase in the fund. Despite the subsequent downward revision of the expected real return to 3 percent of the value of the fund, we have spent as much oil revenues over the past decade as in the 40 preceding years. The fund was still three times larger towards the end of 20192 than at end-2009, owing to substantial value gains. Almost all the gains have been earned in the past ten years. The krone depreciation accounts for a quarter of the value gains (Chart 5). A weaker exchange rate means that we have to pay more for foreign goods and services, which is why the fund’s value is adjusted for exchange rate effects when measuring the fund’s return. 2 Figures for the GPFG as at 30 September 2019. 5  NORGES BANK  Chart 5 The krone has boosted value gains. Shares of total value gains. 1)  ECONOMIC PERSPECTIVES 13 FEBRUARY 2020  Percent  Exchange rate  GPFG's value gains in international currency  1) At 30 September 2019. Source: Norges Bank  The past ten years have been beneficial for the fund, also in foreign currency terms (Chart 6). The average return has been higher than in the fund’s first years, primarily reflecting a sharp rise in global equity prices. Chart 6 A good decade for the GPFG. Average annual return on the GPFG.
Despite heavy monetary policy stimulation, inflation is far below target in many countries and the recovery from the global financial crisis is still going slowly in most places after seven or eight years. A number of central banks have been forced to switch to conducting monetary policy by other means than policy rate adjustments, as this rate has now been cut as far as is deemed possible. Monetary policy seems to have lost its magic touch, at least for the time being. Today, I intend to describe a few reasons for why it has become more difficult to conduct monetary policy than in the period prior to the global financial crisis. I also intend to describe which further tools monetary policy decision-makers will need to consider if these difficulties persist. In between, I also intend to give my view on how much room for manoeuvre a small country has to deviate from developments in large countries and their monetary policy. Low global level of interest rates In recent decades, the level of interest rates has shown a falling trend, both in Sweden and internationally (see Figure 1). Long-term real interest rates, which is to say nominal interest rates minus inflation, have fallen by about 4.5 percentage points around the world over the past 30 years. The reasons for the downturn are not fully understood.

This also applies to the temporarily restricted autonomy and flexibility when a central bank must act resolutely in certain situations to maintain confidence in the inflation target. So far, it is my assessment that this is something transitory. Different theories behind the weak recovery from the financial crisis One notable theory for the reasons behind the low interest rates and the sluggish recovery from the financial crisis is the hypothesis of secular stagnation advanced by Summers (2013). The concept here is that a chronic surplus of saving has arisen in the world for various reasons, and that this has pushed the interest rate down. The problem, however, is that not even the current low level of interest rates creates a balance between supply and demand. The result of this is the risk that many countries will become stuck in a situation with too low aggregate demand, resource utilisation below normal and inflation that tends to be much too low. Rogoff (2015) instead argues that growth is being restrained by the world being in an adjustment phase of an unusually large debt cycle, a “debt supercycle”. Even if the level of interest rates is unusually low, this needs not mean that countries are stuck in a situation of chronic demand deficit. Demand and growth will start to pick up when the debt situation again normalises. Unlike a case of secular stagnation, which can be regarded as a structural phenomenon, the problems are thus assumed to be of a basically cyclical, albeit long-term, nature.
15  The FROB is also responsible for the management and future divestment of the State’s holdings – resulting from the government support provided during the crisis – in the capital of banks subject to restructuring plans. 10  budget, balance sheet and profit and loss account, which are submitted to Parliament via the Government. The Banco de España also regularly submits reports to Parliament, such as the Annual Report, the Institutional Report, the Report on Banking Supervision and the Report on Sanctioning Measures. Stipulated as part of this accountability before Parliament is the Governor’s appearance before the Economic Committee of the Congress of Deputies, to present the Annual Report prepared by our institution. This report provides a detailed assessment of developments in the Spanish economy and its main challenges. Likewise, the Governor of the Banco de España is expected to regularly appear before the Parliamentary and Senate Budget Committees to assess the content of the Draft State and Social Security Budget. Complementing these regular appearances, there have been occasional testimonies before various committees, such as the recent appearance before the Parliamentary Committee for the Social and Economic Reconstruction of Spain after COVID-19. In my opinion, this accountability mechanism should be reinforced with more regular appearances by the Governor before Parliament. Specifically, it may be appropriate for the Governor to appear periodically to present the Banco de España’s view of the economic situation, monetary policy and the financial system, and to report on the institution’s actions and plans within the various areas under its remit.

Under the provisions of Art. 10(2) of the Statute, two groups of countries have been formed at present according to the size of their economies and their financial sectors. The first group of five governors has four voting rights and the second group of 14 governors has 11 voting rights. 4  The unweighted qualified majority regime (two-thirds of the votes) is used in very specific cases such as that envisaged by Art. 14(4) of the Statute regarding the performance of functions by the NCBs which might interfere with the objectives and the tasks of the Eurosystem. Where decisions are adopted by weighted majority (Art. 10(3) of the Statute), the rotation of voting rights does not apply. In these cases, an alternate or substitute appointed for the meeting is allowed to vote, which is not permitted for other voting. The votes of the Executive Board have a weighting of zero. The weighted simple majority regime is envisaged for decisions on the subscription of capital and adjustments to shares (Art. 28 of the Statute), on the key for capital subscription (Art. 29 of the Statute) or on the allocation of monetary income to central banks (Art. 32 of the Statute) or of losses and net profits to central banks (Art. 33 of the Statute). Where decisions are adopted by weighted qualified majority, half of the shareholders (10) and two-thirds of the subscribed capital are needed. The type of decisions adopted using this regime are those affecting increases in and payments of capital of the ECB (Art.
Moreover, the high level of foreign exchange reserves, the relatively low inflation environment achieved through tight fiscal and monetary policies and the distance covered in terms of macroeconomic stability are all indications of the changing circumstances. Now, I would like to talk to you about a different dimension of the growth process, which I have already mentioned. Sustainable growth We know that the growth process of the Turkish economy was in the form of an expansion-contraction cycle, especially for the period until 2001. In the past, generally short periods of economic expansion used to be followed by drastic shrinkage. However, the fact that high rates of growth were attained three successive years, following the contraction in 2001, and that the rate of growth for this year is  1  Kaminsky, G.L. ve Reinhart C. M. (June 1999). The Twin Crises: The Causes of Banking and Balance-of-Payments Problems. The American Economic Review, 89, 3, 473-500 and CBRT calculations. BIS Review 36/2005  11  forecasted to be 5 percent show that this cycle has, to a large extent, been broken. Yet, it is not possible to conclude that the Turkish economy has entered a process of sustainable growth. The same as price stability; sustainable growth is a vague notion to the Turkish economy. Sustainable growth can be defined as achieving permanent price stability, building consistency between economic indicators and macroeconomic balances and sustaining growth rates closer to the potential growth level for a period of five years or more.

That is why, the primary surplus is the targeted variable and we set our goals high in order to increase the credibility of the policies, which aim to reduce the ratio of public debt to national income. The high primary surplus target convinces economic units of the possibility of debt rollover as well as reducing public debt, improving expectations and generating confidence. Positive expectations lead to a decline in the risk premium and, as a result, real interest rates and contribute to the stability of the New Turkish Lira. This process is likely to directly affect growth. The most convincing proof of this is the implementation of tight fiscal policy in Turkey for the last three years and the realization of record high growth rates. Now let me touch upon a subject that I frequently come across in the print media and peoples’ comments, which shows there are mixed opinions on macroeconomic policies. In the scope of the entire Turkish economy and the definition of various economic variables such as growth, employment, inflation, debt stock, foreign trade statistics and current account balance, a fact determined not only technically, but also in practice, is that macroeconomic policies cannot affect all these variables  BIS Review 36/2005  15  directly and at the same time. Therefore, setting a figure for each economic variable and defining these as targets is not correct practice within the framework of the market economy.