samchain/econo-pairs-v1 huggingface dataset:
Good quality financial statements typically contain comparable and reliable information, which depends in turn on the accounting standards being used. In this respect, IFRS can help ensure that financial reporting is prepared under accepted principles that convey a true and fair view of the financial position. BIS Review 114/2007  1  For the banking sector, the most important accounting standard is the IAS 39 because it deals specifically with financial instruments. The standard assures that financial instruments are correctly recognized and measured in the financial statements, to reflect the true financial position and performance, as well as the related risk exposure. Under IAS 39, there is important change to the accounting for derivative transactions, in which banks need to markto-market and record all derivatives on their balance sheets, as well as classify them as held for trading, unless they are used as hedging instruments. Previously, all derivative transactions are kept off the balance sheet, and hence from the recognition of external stakeholders or even bank management. IAS 39, therefore, brings off-balance sheet items into the spotlight. Apart from IAS 39, commercial banks also need to comply with the accounting standards concerning financial instrument’s presentation (IAS 32) and disclosure (IFRS 7), which require banks to present their financial statements in an appropriate format, and to disclose information sufficiently regarding financial instruments and risk. Ladies and Gentlemen, The Bank of Thailand has taken a careful timing to implement both standards in Thailand.

Improved from Basel I, Basel II provides guidelines for maintaining capital for more comprehensive types of risks. Under Pillar 1, as you know, banks are required to maintain minimum capital for operational risk in addition to market and credit risks as previously required. And on top of the minimum capital, additional capital may be recommended by national supervisors under Pillar 2 for risks not covered by Pillar 1. Because Basel II will be imposed on a wide range of financial institutions with different sophistications, the framework offers several approaches to calculate minimum capital, ranging from a simple factor multiplication approach to model-based methodology. Obviously, we as supervisors, expect complex financial institutions to adopt the model-based methodology for a better measurement and assessment of risk. One important point I would like to stress here is that Basel II should not be viewed as merely a capital calculation methodology. Rather, it should be seen as a principle-based guideline for sound risk management. This is because Basel II’s advanced approaches are derived from the best banking practice. It is, therefore, a vehicle for better risk management. Banks in emerging markets, including here in Thailand, should, therefore, take advantage of this opportunity to improve their operations. From the perspective of financial information, it is also necessary for banks to produce good quality financial statements so that stakeholders will be well-informed, and a sound judgment on their financial status can be made by the market.
In normal times, when risk factors are contained and can be diversified away, the interest rate channel, working through inter-temporal arbitrage, is the prime conduit of monetary policy (see slide 2). It sets the floor for term borrowing costs. Parsing longer-term yields into two components – the average level of the short-term policy interest rate expected over the term to maturity of the asset, and the risk premia – expectations of monetary policy pin down the first component. The mechanism through which this occurs is the inter-temporal financial arbitrage I just described. Term and liquidity premia are the additional returns that investors demand as a compensation for their reluctance to bear interest rate risk over long-duration assets, and for their decision to forgo liquidity services – I am abstracting here from credit risk, to which I will return later. When markets are properly functioning, non-depository institutions – dealers, hedge funds, investment banks – provide immediacy by offering lenders and borrowers their capacity to take positions on both sides of the market. Their ready availability to take positions as lenders and borrowers supports market liquidity, namely the ease with which a lender can liquidate a position before maturity. When market liquidity is secure, lenders are willing to engage in finance, trades in long-duration assets are active and the liquidity premia are contained. And, most importantly, they are steady. With a steady premium, the expectations  2  There are two reasons for idiosyncratic fluctuations of reserve demand by individual banks.

The Federal Reserve was therefore able to achieve the desired level of the federal funds rate, its policy target, by making slight adjustments in the supply of reserves in the system, so that it intersected the demand at that rate.3 On a typical day, implementing monetary policy entailed forecasting the level of reserves that would achieve the targeted level of the federal funds rate, and then, if necessary, conducting open-market operations to add or remove reserves. Nowadays, however, reserves are no longer scarce. The supply of reserves now fluctuates widely around roughly two trillion dollars, compared to remaining tightly around ten billion dollars in mid-2007. This largely reflects the effect of the large-scale asset purchase programs, the last of which concluded in 2014, and the FOMC’s subsequent direction to maintain the size of the balance sheet by reinvesting principal repayments. Because the stock of reserves is so large, it is impractical to use open market operations to quickly reduce reserves back to the point where the federal funds rate can be controlled with scarcity, at least for now.4 Our current framework relies, instead, on providing the market with two overnight investment opportunities to help steer money market rates: interest on reserves (IOR) and the overnight reverse repurchase agreement (ON RRP) facility.
The objective of a stable external value of the French franc vis-à-vis the most credible currencies in the European Exchange Rate Mechanism was met. BIS Review 2/1997  -2-  Since the beginning of 1996, the franc has continued to move gradually closer to its central rates against the other currencies in the European Exchange Rate Mechanism. This firmness of the franc has gone hand in hand with the continuing overall competitiveness of the French economy. The real effective exchange rate of the French franc has improved and exports, as in previous years, helped to boost activity. The seasonally-adjusted current account surplus for the first nine months of 1996 stood at almost FRF 84 billion. This was much greater than the FRF 64 billion surplus posted for the same period of 1995. On the basis of current forecasts, France will record the third largest current account surplus in the world for 1996. Growth in the M3 reference aggregate, which is the reference for our internal intermediate objective, showed a reversal in its trend. The expansion of M3 at the end of the third quarter of 1995 was close to its medium-term growth target path of 5%, but subsequently slowed sharply. The twelve-month increase of 4% in December 1995 gave way to a contraction of 0.4% in October 1996, the last month for which figures are available.

In fact, at times, when short-term rates have been pinned at the zero lower bound, the Federal Reserve has taken actions that eased financial conditions without changing shortterm interest rates. Such actions have included forward guidance that the FOMC was likely to keep short-term rates low for a long time and large-scale asset purchases that led to lower bond term premia. Now, as I said at the start, just because I don’t want to follow a rule mechanically does not mean that I favor the polar opposite – that is, a fully discretionary monetary policy in which market participants, households and businesses cannot anticipate how monetary policy is likely to evolve as economic and financial market conditions and the economic outlook change. If households and businesses do not have a good notion of how the Federal Reserve will respond to changing economic and financial market conditions, then this would loosen the linkage between short-term rates and financial conditions. This would also likely lead to greater uncertainty about the outlook and higher risk premia, and it would make it more difficult for policymakers to attain their objectives. Instead, what I favor is a careful elucidation of those factors that influence the economic outlook and how monetary policy is likely to respond to changes in the outlook. This includes fiscal policy, productivity growth, the international outlook and financial conditions, as well as how much employment and inflation deviate from the Fed’s objectives.
figures 2 and 3 in Frankel, Jeffrey A., Carlos Végh and Guillermo Vuletin (2011): “On graduation from fiscal procyclicality”, NBER Working Paper 17619. 6  Chen, Yu-Chin. and Kenneth S. Rogoff (2003): “Commodity Currencies”, Journal of International Economics 60, 133–169, documents that commodity exports have a strong and stable influence on the floating (real) exchange rates of Australia, Canada and New Zealand. Ferraro, Domenico, Barbara Rossi and Kenneth. S. Rogoff (2012): “Can Oil Prices Forecast Exchange rates?” NBER Working Paper 17998 extends the analysis to higher frequency data and out-of-sample forecasting and finds that both contemporaneous and lagged oil prices have significant predictive ability for the NOK/USD-exchange rate and oil prices. BIS central bankers’ speeches  3  Inflation targeting with interest rate forecasting Chart: Inflation When the fiscal rule was introduced in 2001, Norges Bank was charged with the task of keeping consumer price inflation low and stable. The value of the krone exchange rate was allowed to float freely. The operational target of monetary policy is annual consumer price inflation of close to 2.5 percent over time, under a regime of flexible inflation targeting. In the conduct of monetary policy, the aim of reaching the inflation target is balanced against the aim of stabilising output and employment. In addition, monetary policy should be robust by seeking to mitigate the risk of a build-up of financial imbalances. Over the past ten years, average inflation in Norway has been somewhat below, but close to, 2.5 percent.

•  Thirdly, a fund owned by the government must be highly transparent, not only to the Norwegian public but also in an international context. Let me elaborate on these aspects. In the early summer of 2007, the fund’s strategic equity share was raised from 40 to 60 percent. From summer 2007 to 2009, the fund bought equities worth USD 180 billion in international markets, equivalent to 0.5 percent of all globally listed equities. The largest volume of transactions was carried out in the midst of the financial crisis of 2008 and 2009. The long-term horizon also enables us to invest countercyclically, by rebalancing asset classes: If the equity share increases by more than 4 percentage points from the target weight of 60 percent, we will sell equities and buy bonds. Conversely, if the equity share drops below 56 percent, we will sell bonds and buy equities. The capacity to withstand market turmoil was demonstrated during the financial crisis in 2008 and 2009. For a period of 18 months, the fund’s losses totalled roughly USD 120 billion – more than 25 percent of Norway’s GDP. The losses did not go unnoticed. They led to lively public debate on the fund’s investment strategy. However, the conclusion drawn was that the strategy was robust, and the government remained committed to it.10 Norway would have to accept that the fund’s capital would fluctuate, sometimes dramatically, given the high equity share. Indeed, through 2009 and 2010, not only were those losses reversed, but additional gains were also made.
an increase in general riskiness) is also worth highlighting: output growth falls, credit spreads rise, real credit growth falls, and real house price inflation falls. This is all as one would expect from the discussion above regarding the risk-taking channel. In both countries, inflation also rises when macroeconomic volatility increases. Charts 4a and 4b show historical decompositions derived using the posterior means of the distribution of the coefficient estimates. As there is rather a lot of information to digest in these decompositions, we show just the main variables of interest: the policy rate, and the four-quarter growth rates of output, real credit and real house prices. We also combine the  6  BIS Review 111/2010  impact of the aggregate demand and supply shocks into a single composite factor, and do the same with the credit demand and credit supply shocks so as to focus more clearly on the impact of monetary policy and macroeconomic volatility. There are a number of points to be made. First, monetary policy (the green bars) during the 2002–5 period is loose relative to the estimated historical reaction function not only in the United States – as might be expected given the evidence from Chart 1 – but also, more surprisingly, in the United Kingdom. In the United States, the Federal Funds rate is, on average, 1.5 percentage points below the rate that would have obtained if the estimated reaction function had applied. In the United Kingdom, the corresponding figure is 2.1 percentage points.

Households live forever and have standard intertemporal preferences over consumption (Ct) and hours worked (Ht). Investment (It), which is subject to adjustment costs, cannot be funded directly by households and instead must be financed by borrowing from a bank. Bank loans (Lt) are financed by the capital of bankers (Bt) and deposits (Dt) from households. Banks are owned and run by bankers. A proportion (1-γ) of bankers die at the end of each period and are replaced by a new generation. Bankers reinvest all their earnings in the capital of the bank whilst they live, and leave their net wealth to households when they die. In log-linear form (carets denote log-deviations from steady-state), the standard block of the model is described by: 1)  Market-clearing condition for output (Yt);  2)  Production function (Zt is TFP and Kt is capital);  3)  Labour market equilibrium (Xt is marginal costs);  4)  Price of physical capital (qt);  5)  Return on capital (rkt);  6)  Law of motion for physical capital;  7)  Consumption Euler equation (rnt is deposit rate);  8)  New Keynesian Phillips curve (πt is inflation rate). The special ingredient is a moral hazard friction in the banking sector.
But for those that fall within the mandate of the Basel Committee, we believe that the ideas produced by Basel Committee thinking – translated into the Basel III reforms, and subsequently endorsed by the G20 and Financial Stability Board – provide a substantial foundation on which the banking system can be rebuilt to be much more robust and resilient in the future. Basel III capital requirements are probably well known to all of you, so I do not propose to say much more about them today. What I would instead like to focus on is our thinking in relation to liquidity, and particularly the LCR. As an idea, it is simple: a bank should have enough liquid assets to survive a 30-day period of stress. And perhaps to some, it might seem underwhelming. If you tell your spouse that we have implemented a reform that requires banks to have enough cash to last 30 days, more than likely you will get the same response I did when I tried to explain it to my wife: “what do you mean, only 30 days?” Yet this idea has been one of the most fundamental reforms of the crisis. It also is a classic example of an idea that had been toyed with for a long time, but took a crisis to bring to fruition. A study of Basel Committee history shows liquidity to have been on the agenda almost for the entire existence of the Committee, but we have never come close to an international standard.

Assessments under the RCAP are currently underway for Singapore and Switzerland. Later this year will follow China, Australia, Brazil and Canada. As with all of the RCAP work, transparency is critical to success – all of these reports will, of course, be published in full when complete. It is important to note that, in undertaking this work, the Basel Committee has no enforcement power, so it would be meaningless to think we can force jurisdictions to change their local regulations if we find gaps. Our goal is therefore framed more positively: to deepen the implementation process and to help jurisdictions identify the gaps and address them. Ideally, the assessments provide a roadmap by which identified gaps can be closed. They also provide stakeholders and markets with a much higher degree of transparency about the extent of any local divergence from agreed international standards, and the importance of these. In this way, we believe we will establish the appropriate incentives for local rulemakers to apply the global standards, and for markets and others to apply appropriate pressure where banks may be subject to weaker-then-expected prudential requirements. More consistent domestic regulations will be an improvement. But beyond looking at how local regulators have transposed Basel agreements into domestic regulations, the Committee has also begun examining whether the framework(s) are producing consistent outcomes. Ultimately, what counts is that the capital ratio calculated and reported by individual banks provides a meaningful and comparable representation of their capital strength.
This is important because the chances of the monetary union functioning properly are better if rates of inflation are much the same initially and government finances are under control. Besides the matters behind the Maastricht criteria, with monetary union imminent there are somewhat different issues that need to be considered. Even when the Treaty was being drafted, many economists pointed out that the criteria by no means constituted the only, perhaps not even the most important, requirements for an efficient monetary union. There are now two other matters that seem to be particularly important and they will no doubt receive more attention, both in the European economic debate and in the EU decision-making processes in economic policy: •  One has to do with the degree of uniformity in cyclical activity and the possibility of using judicious fiscal stances in different parts of the monetary union to make up for the absence of national discretion in monetary policy. •  The other concerns the participant countries’ economic structures, not least how their labour markets function and to what extent they are sufficiently flexible both to cope with any shocks to stability and to bring unemployment down to more acceptable levels. If the various political systems fail to prevent large imbalances in government finances, internally as well as between countries in the monetary union, then the ECB will be under strong pressure to consider other objectives than average European inflation. The same applies if unemployment were to remain high or become even higher.

Let me suggest three broad areas. First, as researchers are removed from the fray of day-to-day action, you can step back and ask fundamental questions about risk management practices, identify gaps, and facilitate innovation in risk management techniques. I am pleased to learn about your credit rating project, which aims to provide rigour and transparency to the financial assessment of regional corporates. The value of such work is that it is grounded on sound empirical and theoretical work, with a clear focus on solving practical, impactful problems. In the same vein, RMI’s regular workshops and lecture series serve as useful platforms to present findings to the industry, and to encourage two-way discussions. MAS fully supports RMI’s initiatives to deepen its collaboration with the industry. Second, as a repository of knowledge on risk management, RMI plays an important role in education. RMI has been appointed as the lead provider on risk management under the  BIS Review 121/2009  3  Financial Industry Competency Standards (FICS). You have launched 50 accredited programmes across seven Risk Management job families over the past year. To support the role of Boards and senior management in risk management, I hope that RMI would consider appropriate executive programmes for Board members and senior management of financial institutions. I believe RMI can make an impact in enhancing the knowledge and capability of practitioners. Finally, I hope RMI can provide a focal point to bring in global thought leaders and practitioners on risk management, through your flagship RMI Annual Conference.
The second reason is the strength of the sterling exchange rate, or more particularly the weakness of the euro for most of the time since its introduction some 3½ years ago. The frustrating thing for us has been that that there was very little that either we at the Bank or the UK Government could do directly to address the problems at source. That's fairly obvious when we are talking about the weakening of domestic demand in other major countries. It's perhaps less obvious that we couldn't have done more to affect the exchange rate. It's not that we didn't care - as has sometimes been suggested. In fact we've repeatedly made it clear that we'd welcome a stronger euro because that could help to restore a better balance to the UK economy. The problem has been that we didn't know how to bring it about, certainly without destabilising the overall economy. Many people think it's simply a question of reducing our interest rate by more than the ECB reduced theirs. But it really isn't as simple as that makes it sound. We did indeed do precisely that last year but sterling continued to strengthen - though it has in fact fallen back somewhat against the euro since as the euro has staged a moderate recovery. What we were able to do - given that inflation was somewhat below target - was to try to compensate for the external weakness by stimulating domestic demand here in the UK.

Malaysia is also a leader in the development of sukuks and its pioneering efforts have seen the introduction of innovative structures such as the exchangeable sukuk musharakah, exchangeable sukuk as well as sukuk based on istisna' and ijarah. This is reinforced by the diversified tenures of the issues. Malaysia's strong financial links to the traditional and nontraditional markets such as in the Middle East also allows issuers to diversify their investor base. Malaysia therefore continues to remain an important destination for international financial flows that are traded on the New Silk Road. In concluding my remarks, I wish to congratulate all those involved in crystallizing the Electronic Trading Platform that is being launched today. This is a further step to create a more vibrant bond market. The growing role of the bond market in mobilizing and allocating funds not only in the domestic financial system but also across borders, to and from other parts of the world, has demonstrated the maturity of the Malaysian bond market. This has not only strengthened international financial inter-linkages but has increased the potential for greater economic integration and shared prosperity. 2  BIS Review 53/2008