samchain/econo-pairs-v1 huggingface dataset:
It has been severely tested by: taxpayer bail-outs of systemic institutions; rewards perceived as undeserved; a perception that clients have become counterparties; and egregious examples of misconduct and rigging of markets. Without that licence, the door will be opened to a level of regulation that constrains the ability of finance to innovate and support growth and trade efficiently. The licence will require consistent exemplary behaviour, and finance to have a clear sense of its purpose not as an end in itself, but as a means to promote investment, innovation, growth and prosperity. It is not merely that we should want to follow Churchill’s wish to see “finance less proud and industry more content”. We want to see industry content and finance taking justifiable pride in its contribution to society. That is far from straightforward when, even six years on from the crisis and public bailouts, triggers for public opprobrium are plentiful. Last week, the UK’s Financial Conduct Authority, US CFTC and Swiss FINMA fined six banks $ for misconduct in FX markets: misconduct that went on long after banks had already been fined for abusing interbank interest rate benchmarks. The repeated nature of these fines demonstrates that financial penalties alone are not sufficient to address the issues raised. Fundamental change is needed to institutional culture, to compensation arrangements and to markets.19 As Bill Dudley and my colleague Minouche Shafik have argued, the succession of scandals mean it is simply untenable now to argue that the problem is one of a few bad apples.

Similarly, Malaysia’s exports have been recording double digit growth since the start of 2021 and the order books of our exporters remain healthy. These positive developments will continue to provide support for growth in 2023. 4. Second, the labour market has also shown strength. Wages in both the manufacturing and services sectors have been increasing since the start of the year, at around 5% and 7%, respectively. Unemployment is now less than 4% and income prospects remain positive. 5. Third, in spite of global inflationary pressures, inflation remains well anchored. Headline inflation has averaged 3.1% year-to-date. It is largely supply-driven, but we have also seen stronger demand with the reopening of the economy. That said, we project that inflation will peak in the third quarter this year. In addition, the extent of upward pressures to inflation will remain partly contained by existing price controls and the prevailing spare capacity in the economy. 6. No doubt, the outlook next year will be more challenging due to a confluence of factors – rising geopolitical tensions and conflict, global inflationary pressures and extremely volatile financial markets. All these will lead to slower growth next year. And all this at a time just as when we thought that the pandemic was in the rear-view mirror. Ladies and gentlemen, 7. While acknowledging the challenging external environment, there is reason to be optimistic. Let me emphasise that the Malaysian economy is not in a crisis. The fundamentals of our economy and financial system are strong.
It is expected that this will lead to an increase in the confidence of European companies and households and thus to growth being able to recover towards the end of the year. I think this is a reasonable assumption. Recent figures regarding, for example, the purchasing managers’ index for the manufacturing industry and household confidence, indicate that pessimism has declined somewhat since the end of last year. Nevertheless, the economic outlook for the euro area is still of course uncertain. Consolidation measures required Some of the uncertainty stems from the fact that we have still not seen the final effects of the fiscal policy tightening that is now being implemented by the governments of the euro countries. Some voices in the current debate claim that this tightening could have such negative consequences for growth that the countries concerned should wait to implement it. This brings me to the first aspect I would like to discuss. The fact is that I am more worried about the reverse; that is that the countries are not dealing with their problems quickly enough. At present, most of the countries in the euro area have deficits in their public finances and these deficits are expected to fall slowly over the next few years.

We will receive further clues as to the current state of the economy before the next monetary policy meeting in April and will then review how this new information affects monetary policy. As I said earlier, in the slightly longer term the Riksbank’s latest forecast is that there will be a gradual recovery in the euro area and the global economy following a weaker 2012. This will of course affect Sweden too. It is expected that resource utilisation will increase, the rate of wage increases will accelerate and underlying inflation will gradually rise as growth improves. The latter is illustrated in Figure 6. BIS central bankers’ speeches  7  Figure 6. Gradually rising inflationary pressures The CPI, CPIF and CPIF excluding energy, annual percentage change 5  5 CPIF excluding energy CPIF  4  4  CPI  3  3  2  2  1  1  0  0  -1  -1  -2  -2 06  08  10  12  14  Note. The CPIF is the CPI with a fixed mortgage rate. Sources: Statistics Sweden and the Riksbank  Low real repo rate for some time to come We will need to gradually tighten monetary policy when inflationary pressures and resource utilisation increase. The Riksbank’s repo-rate path from February therefore indicates repo-rate increases during the course of 2013 and 2014. Nevertheless, this forecast still means that monetary policy will remain highly expansionary in the years ahead.
I would like to outline these shifts in the global economic landscape, and then elaborate on the implications for the IMS and monetary policy coordination. Three structural shifts in the global economy Globalisation, home bias and regionalisation Clearly, the defining feature of the last three decades has been the dramatic strengthening of globalisation in both trade and finance. Cross-border trade in goods and services as well as investment has soared, driven by trade-liberalising policies, the lifting of capital controls as well as innovations in transport and information technologies. The global financial crisis has led to a halt in this trend, perhaps only temporarily. But there is also the possibility of a step backwards, i.e. a re-emergence of financial home bias and a stronger drive towards regionalisation. Early evidence of this is the resurgence of the so-called “Feldstein-Horioka puzzle”, that is, a sharp rise in the correlation between savings and investments.1 European banks have retreated from dollar-denominated lending.2 Banks from emerging economies also have a stronger regional orientation, in particular in SouthEast Asia, Central America and the Commonwealth of Independent States.3 Regulators have been tempted to ring-fence their domestic financial systems. Restrictions on intra-European  1  For euro area countries the cross-country correlation between the savings and investment-to-GDP ratios fell continuously from 0.6 in the early 1990s to essentially zero in 2005; similarly, for non-euro area OECD countries it even fell from almost one to zero over the same time span.

See also B. Cœuré (2014), keynote address at the ECB-IMF conference on the “International dimension of conventional and unconventional monetary policy”, Frankfurt am Main, 30 April 2014, forthcoming in a special issue of the Journal of International Money and Finance. BIS central bankers’ speeches  3  account deficit was not of concern given the international status of the US dollar; the positive valuation effects and the positive net foreign income balance were seen as evidence that the current account deficit in the US was sustainable. As a matter of fact, we did not experience a US balance of payments crisis, even though we did experience a spectacular global financial crisis.9 What was the connection between global imbalances and the global financial crisis? What were the drivers of those global imbalances? The debate has still not been settled. Similarly, I would claim that the main obstacle today to international monetary policy coordination is the lack of consensus on (and maybe even of understanding of) the degree of slack in the labour and product markets of the major economies. Reaching a consensus on the nature of spillovers is not straightforward either. Most models of international monetary policy coordination assume that policy-makers are able to identify the types of shock and how they are transmitted to the domestic and global economy. But this is often not the case in practice. For instance, there have been marked differences in the views on the global impact of Federal Reserve announcements.
Further, the risks to global growth have stepped up. Such risks include most notably those derived from the increase in protectionist policies, from the growing vulnerability of certain countries and agents to a potential further adjustment to global financial conditions, and from the possible heightening of geopolitical tension in certain hotspots. In addition, in the European arena, the outcome of the Brexit and the direction of Italian economic policies are major areas of uncertainty. These developments, along with the increase in global risks, might ultimately affect the growth outlook for the euro area as a whole and, therefore, for the Spanish economy. The economic expansion in the euro area has not been accompanied to date by an acrossthe-board and sustained acceleration in prices (see Chart 4). In this respect, the recent rise in inflation, to 2.2 % in October according to the latest leading indicator published today, is essentially due to the increase in the cost of energy, while the more stable components continue to post low rates of increase. That said, the intensity of job creation and the progressive reduction in the degree of labour market slack in the euro area economies are prompting a gradual rise in wages. Should this continue over time, it would contribute to a sustained pick-up in inflation towards rates closer to the Eurosystem’s medium-term price stability objective, consistent with an inflation rate lower than, but close to, 2%.

With the advance of the euro area economy’s position in the cycle, according to the ECB’s latest estimates, there will be a progressive pick-up in inflation levels to close to 2% in the coming years. Indeed, at its meeting on 14 June, the ECB’s Council reached the conclusion that the progress to date towards a sustained adjustment of inflation has been substantial, which gave rise to a gradual reduction in net asset purchases, duly confirmed by subsequent successive meetings of the Governing Council. The anchoring of long-term inflation expectations, the sound underlying firmness of the euro area economy and the maintenance of a high degree of monetary accommodation offer reasons to believe that the sustained convergence of inflation on the Governing Council’s objective will continue in the coming months, and that it will be maintained even after the finalisation of the net purchase programme, in line with the – very gradual – normalisation of monetary policy announced by the ECB’s Council. Fiscal policy should resume the fiscal consolidation process, given that both the public debt/GDP ratio and the structural deficit are holding at levels some distance off the limits set in the Stability and Growth Pact (see Chart 12). In recent years notable headway has been made in correcting some of the imbalances in the Spanish economy, such as the restructuring of the financial system, private-sector deleveraging, the recovery in competitiveness and the attainment of persistent currentaccount surpluses, and the adjustment of the real estate sector.
Inadequate regulation and supervision, coupled with an explicit or implicit government guarantee, have attracted much of the blame, leading Paul Krugman to describe Asian banks as “over-guaranteed and under-regulated”. Inadequate supervision cannot be the whole story since a number of the weaknesses arise from circumstances which are not the direct responsibility of banking supervisors. There were some flaws in macroeconomic policy, in particular the maintenance of unsustainable exchange rates. There was undoubtedly also political interference in banks, in terms of both policy lending and pressure on supervisors not to take action against well-connected owners of banks. Another fundamental problem was weakness in the infrastructure of business laws that made it difficult for banks to take and realize collateral and to put insolvent companies into liquidation. We must also bear in mind the fact that the ultimate responsibility for poor lending and risk management practices must rest with the management of the banks themselves. However, having said all this, there have undoubtedly been failures in supervisory policies and practices, as demonstrated by the reform measures that are now being put in place in a number of countries. The Basle Core Principles 13. Reform is not an easy task. But at least supervisors in individual countries are now in a position to tap into an international network of technical cooperation and assistance to help them to bring their systems up to scratch.

At the centre of this international effort is the Basle Committee on Banking Supervision which is taking on a leadership role in devising supervisory standards that can apply to all countries and not just the G-10 countries which sit on the Committee. In particular, the Committee has produced a set of Core Principles that are intended to provide a set of minimum requirements for effective banking supervision. Supervisory authorities around the world are being encouraged to endorse the Core Principles and to implement them as quickly as possible. The IMF will have a role to play in checking that countries are indeed taking serious steps in this direction. 14. The Core Principles are not earth shattering. They have not unveiled some new secret of how to supervise banks. All they do is to summarize what are generally agreed to be the fundamentals of a sound system of supervision.
More widely, the future Prudential Regulation Authority will work to transform the climate of prudential regulation. The Bank’s prudential supervision will avoid ticking boxes, instead being centred on making judgments about big risks to safety and soundness. We want this to be as collaborative, open and honest as possible – a different relationship between banks and their supervisors. One that revolves around penetrating and forensic analysis of the business and, where necessary, frank discussions with senior management and the board. Not a negotiation. And a regime where the Bank’s Prudential Regulation Authority has the powers to underpin pursuit of material concerns about safety and soundness, based largely on whether firms meet the broad statutory criteria – the Threshold Conditions – for being authorised. Macroprudential policy: keeping the regime up to speed, and taking away the punchbowl No set of static rules, regulations and structures will keep the system safe for ever. As time passes, and the financial system evolves we cannot put an ever increasing burden on microsupervisors of individual firms to compensate for outdated regulatory regimes. The market will eventually take the system to the edges of the box the authorities have tried to put it in. Policymakers therefore need to be able to move the box when circumstances warrant. 6  BIS central bankers’ speeches  This is where macroprudential comes in – keeping the rules of the game up to date, and leaning against exuberance. In the UK, the Financial Policy Committee is charged precisely with those tasks.

In addition, I should point out that, like the ECB, we resolutely support the initiative recently launched by the European Securities Markets Authority (ESMA). As the regulator of rating agencies, ESMA is seeking to establish guidelines so that these entities make public the way in which they incorporate sustainability elements into their valuations. To conclude, allow me to reiterate the importance and scale of the challenge we face. It may sound clichéd; but it is nonetheless true that we are not only talking about our well-being, but the well-being of future generations who may be left with little leeway if we are not sufficiently ambitious. The challenge extends to all agents and sectors, and proof of this is the broad and varied representation here in this room today. The financial sector undoubtedly has a notable responsibility in this challenge. In our capacity as financial authorities and under our mandate, we can and must do everything within our power to properly value, manage and mitigate the risks associated with climate change. The challenge is paramount and the need for coordination – with other national and international authorities – enormous. But I believe that, if we have been capable of structuring an appropriate regulatory response to the international financial crisis, we will also be capable of rising to the challenge here. I think that the measures rolled out from Europe will ultimately be an international reference and standard.
Joseph Yam: Consumer protection and the banking industry Speech by Mr Joseph Yam, JP, Chief Executive of the Hong Kong Monetary Authority, at the Hong Kong Association of Banks’ Half-Yearly Dinner, Hong Kong, 19 June 2001. *  *  *  Thank you very much for asking me to give the speech this evening. The last time I was invited to speak at an HKAB dinner was almost exactly two years ago, and the time before that was nearly nine years ago. Although I am not quite sure whether I could manage the pace if this rate of acceleration were to continue, it is a pleasure to be getting together with you more frequently. It is also most appropriate. The banking industry in Hong Kong is going through a period of rapid transformation. The regulatory system is in the middle of a programme of intensive reform. And the Hong Kong Association of Banks, now in its 20th year, is currently reviewing its role and aims in the light of these changes. As the banking sector’s main representative body, HKAB has an important role to play: I shall suggest later on, that indeed it has an increasingly important role to play as the banking sector continues to evolve and adapt to changing conditions.

This is one of the HKMA’s key policy objectives, but it is also an area in which HKAB has a keen and constructive interest. In particular, HKAB, together with the HKMA, is joint owner of Hong Kong Interbank Clearing Ltd, which operates one of the key features of Hong Kong’s financial infrastructure, the Real Time Gross Settlement System. One other project on which HKAB can work closely with the HKMA is in the development of a Commercial Credit Reference Agency. Some of your members are already participating in the Working Group that is now engaged in thrashing out the details of how the CCRA would work. An issue which has been raised in the deliberations of the Working Group is whether HKAB should participate in the ownership of the CCRA, as it does in HKICL. This was not an idea that found much favour when we consulted the industry on the CCRA  4  BIS Review 55/2001  scheme last year. But perhaps, now that it seems likely that such a scheme will go ahead, it is an idea which should be revisited at some stage in the future. That is a matter for HKAB and it is one that I leave you to think about. Even if you were to confirm the earlier view not to participate directly in this particular project, it would not undermine the general principle that the HKMA and HKAB should, wherever feasible, work hand in hand in developing important pieces of the financial infrastructure.
5  All speeches are available online at www.bankofengland.co.uk/speeches  5  I do not want to go into this in detail today. But we should not lose sight of the fact that reforms to the banking system, particularly substantially stronger capital and liquidity requirements have bolstered, albeit indirectly, the resilience of the CCPs. 6  Equally, if not more important, the resolution regimes now being implemented in major jurisdictions are intended precisely to ensure that a major bank can fail, without the disruptive systemic impact of insolvency and default - including default to the clearing house. The objective is that debt holders can be bailed in and liquidity provided to restore the bank to solvency enabling it to continue to meet its obligations. I will return later to the question of how we can have assurance that bank resolution will operate effectively. The point I want to stress here is that if a major bank fails, effective resolution should prevent default to the CCP occurring in the first place. The CCP’s own defences  Stronger banks and effective resolution regimes reduce significantly the risks that CCPs face from member default. But they do not eliminate it. Like banks, CCPs need to hold resources to absorb default losses. But unlike banks the great majority of these resources are not the capital of the owners. It is the resources of its members because it is the counterparty risk of the members that is being managed.

One consequence of the financial crisis is that, in the future, we will see more regulation of banks and the financial sector in general. The fundamental aim of these regulations is, of course, to reduce the likelihood and effects of crises of the type we have just experienced. These increased requirements will probably lead to increased prices for financial services, slightly higher lending rates to households and companies, and a slightly lower credit supply. One way of putting it could be that these costs are a kind of insurance premium that society is willing to pay to avoid financial crises or to considerably reduce the risk of them. However, at the same time, it should be borne in mind that these regulations could impact the economy’s potential output and growth. If the regulations are too far-reaching, they may have a negative impact on the efficiency and growth potential of the financial sector. It is true that the significance for growth of the financial sector is not entirely clear, but the possibility  3  See, for example Athanasios Orphanides, “Monetary Policy Rules and the Great Inflation”, American Economic Review Papers and Proceedings 92:2, May 2002. BIS Review 68/2010  7  that an “over-regulated” financial sector could contribute to lower potential growth in the economy as a whole can hardly be ruled out.