samchain/econo-pairs-v1 huggingface dataset:
For example, voices are raised saying that the interest rate has been too low for too long or that the Riksbank should conclude its asset purchase programme, without reference to whether monetary policy tightening is justified from an inflation point of view. This underlines the importance of the Riksbank’s communication constantly being careful to explain monetary policy in light of the inflation assessment and not ‘taking its eye off the ball’; see Jansson (2019). 15 For interesting views on this aspect and thoughts on fiscal policy in general, see Regling (2021). 9 [17]  the same time, however, it means that it has become more difficult to achieve the inflation target.16 It has thus become more difficult for monetary policy to counteract economic downturns. One condition that would change this would be a rise in the global real equilibrium interest rate. Central banks’ average policy rates would then also be higher – in the same way as they have now fallen in line with the equilibrium interest rate. However, no noticeable increase in the global real equilibrium interest rate is on the cards in the near future, according to most analysts.17 In any case, it will not happen so soon as to make my talk here today unnecessary. Another condition that would at least improve the situation would be if the recent rise in inflation were, for various reasons, to lead us closer to the inflation target in a slightly more persistent way in the future.

It is analogous to physical capital, like equipment, buildings and property, or to human capital, like the accumulated knowledge and skills of workers,6 or reputational capital, like the franchise value or brand recognition.7 Cultural capital is an input into a firm’s production process—impacting how it does its business. Cultural capital is an intangible asset. That is, we generally experience the impact rather than the thing itself—but its impact can be measured, assessed, and ultimately influenced. For example, in an organization with a high level of cultural capital, misconduct risk is low and observed structures, processes, formal incentives, and desired business outcomes are consistent with the firm’s stated values. The unspoken patterns of behavior reinforce this alignment. Problems are escalated to senior managers routinely, as employees feel empowered to raise their hand and believe that their efforts will result in meaningful responses. And senior leaders advance through the organization because, in addition to strong business performance, they set a credible tone from above by modeling behaviors consistent with the firm’s values. By contrast, consider some characteristics of an organization with low levels of cultural capital.
On the contrary, we are very much in favour of growth. First and foremost, because the objective of monetary policy - price stability - is paving the way for medium and for long-term, sustainable robust growth. This is the strong belief of the Europeans. I see three main channels through which price stability is fostering growth. First, preserving and reinforcing the competitiveness of the productive sector through low inflation and therefore low unit production costs. Second, reinforcing the trust of savers  6  BIS Review 28/2001  in that monetary and financial instruments will preserve their value in the medium and long run therefore permitting low medium and long term market interest rates. And, last but not least, fostering growth of domestic demand by preserving the purchasing power of households through low inflation. –  This last contribution to growth is particularly important presently in the Eurozone. In reinforcing confidence of the European people in the ability of the Eurosystem to deliver price stability and low inflation we are improving the overall confidence of the consumers and therefore the level of consumer demand. Not only are we aiming at sustainable non-inflationary steady growth through our action but also via all our recommendations: we are calling for implementing resolutely anti-Malthusian policies in all fields of the economy, that is we support innovation, liberalisation and growth incentives. We are anti-Malthusian as regards scientific and technical progress.

Jean-Claude Trichet: The euro after two years: European competitiveness in a globalized global world Speech by Mr Jean-Claude Trichet, Governor of the Banque de France, to the Swedish National Committee of the International Chamber of Commerce, Stockholm, 6 April 2001. *  *  *  Ladies and gentlemen, it is a great pleasure and an honour for me to be invited to speak at this meeting of the Swedish National Committee of the International Chamber of Commerce, today in Stockholm. I am particularly happy to express my views on the already successful existence of the euro and Monetary Union, and the conditions and prospects for its further success. As you all know, within nine months, on 1st January 2002, the euro will become a reality across Europe as euro banknotes and coins are introduced. This will be the largest monetary change over the world has ever seen. However, it should be recalled that for all economic, monetary and institutional purposes, Monetary Union was created on 1st January 1999. Then, a decisive event in the history of Europe occurred. The euro was born and the irreversible nature of this change has convinced an increasing number of economic players that the success of the euro is necessary for Europe. It is a keystone of the European single market, which will ensure prosperity in Europe for the benefit of the rest of the world.
The third imperative is to professionalise and modernise waqf management. For waqf to progress strongly, it requires a new character and a more modern image. In this regard, I would identify two priorities, namely professionalising those who are entrusted to manage waqf and putting in place proper governance framework. Let me elaborate. The management of waqf must be entrusted to experienced and knowledgeable experts with the highest integrity – that is, people with the right calibre, right competency and right character. The USD 37.1 billion Harvard Endowment is run by some of the best minds in finance, who determine the most optimal asset allocation strategies that deliver the best sustainable returns for the university. In 2017, the endowment contributed more than a third of Harvard’s operating revenue. Returns from the fund help to provide scholarships and to fund ground-breaking research. Surely we would like to see the same in our Malaysian universities. Acquiring such expertise and capability may take time. To expedite this, I would like to suggest that waqf authorities explore partnering or collaborating with experts from the private sector to commercialise or monetise waqf assets. In particular, partnerships with Islamic financial institutions can help waqf authorities develop waqf assets productively with the required financial expertise on board. A good example is the partnership between Majlis Agama Islam Wilayah Persekutuan and Lembaga Tabung Haji in developing Menara Bank Islam on a 1.2 acre waqf land in Kuala 3/4  BIS central bankers' speeches  Lumpur.

The measurement debate tends to start with the simple metric of length: how long are our rules? Our robot has run the numbers on prudential regulation for banks and tells me that there were about 700,000 words in relevant EU rules, the PRA Rulebook (UK rules), and UK guidance (PRA supervisory statements) in 2017. Now I’ve heard Andrew observe previously that that is longer than War and Peace, and others have said that this is longer than the Old Testament.7 The inference, I think, is that our Rulebook might be a rather less good read than Tolstoy or the Bible. But actually it would not surprise me if it turned out that Andrew has our Rulebook in his living room at home and regularly dips into it for a little light refreshment following a hard day’s work at the FCA. But with our new dataset, we can explore other ways the rules have evolved from 2007 and 2017. Here are two examples. First, as well as using a higher volume of words, we’ve actually used a lot more unique words. In 2007 the rules contained about 11,800 unique words. By 2017 this had increased by close to 14 percent, to over 13,400.8 And the rules have become much more conditional. The absolute number of conditional statements  5  Rethinking Financial Stability (Haldane et al, 2018) This is not a new topic, nor unique to the UK.
This is particularly the case when the network has scale-free properties – in other words, a coreperiphery-type topology. These points can be brought to life using some simulations of the statistical distribution of a simple set of systems of systems. These are constructed by mixing together component distributions, which proxy the layers or sub-systems. These layers may themselves be complex. This mixing of layers, or distributions, is done using an assumed distribution of correlations, which may itself be non-normal and complex. In other words, there are multiple layers of complexity in this system of systems. The inputs to the simulations are shown in Table 1. Chart 1 shows a set of joint (system-wide) distributions from these simulations, where each line represents a probability contour of the distribution. 3 Chart 1a is the baseline case. It involves a mix of two normal distributions with a low correlation coefficient (0.3) where these correlations are themselves normally distributed. 4 This joint distribution represents a twolayer system of systems, with neither layer complex (hence the normal distribution for each) and where the correlation between the sub-systems is weak and regular. The resulting joint distribution is slightly more elliptical than the normal – meaning a greater likelihood of large positive or negative outcomes occurring simultaneously – but is otherwise unexceptional. 5 We can now add progressively greater degrees of complexity to this base case to assess its impact on the distribution of systemic risk.

This adds additional complexity to the setting of monetary and macro-prudential policies. It is possible to explore this complex interplay using simulations from models comprising both nominal and financial frictions. Both are needed to accommodate a role for monetary policy (whose effectiveness relies primarily on nominal frictions) and macro-prudential policies (whose effectiveness relies principally on financial frictions). A number of models have recently been developed with these core ingredients and have been used to explore monetary and macro-prudential policy interactions (Smets (2013), Paustian and De Paoli (2013)). Chart 18 shows the results of a simulation from a model developed by two colleagues at the Bank (Aikman and Nelson (2014)). This, too, embodies both nominal and financial frictions. On the axes are plotted two measures of stability – macro-economic stability (as proxied by the variability of nominal GDP) on the x-axis, financial stability (as proxied by the variance of  12  More details are available at www.crisis-economics.eu. 13  For more on the Bank’s research agenda, please see http://www.bankofengland.co.uk/research/Documents/onebank/discussion.pdf. 12  BIS central bankers’ speeches  credit spreads) on the y-axis. Historically estimated levels of these two variables, normalised to one, are shown at point A in Chart 18. If we now allow monetary policy to play an active role in stabilising the business cycle, through an optimal policy rule which weights output and inflation deviations from target, we can move the economy to point B.
In Malaysia, both the Federal Government and the central bank 2  BIS central bankers’ speeches  issued long and short term papers that formed the basis for the creation of a vibrant Islamic money market and a deep and sophisticated sukuk market. Another lesson that can be learnt is that central bank can play a catalytic role in promoting a new market. Central banks have the capacity to issue Shariah compliant money market instruments to enable investment in short term papers. It could assist in the liquidity management of Islamic banks. It also gives an opportunity for the public at large to invest in short term Shariah-compliant papers. At the same time, conventional investors have an opportunity to invest in a new asset class. Usage of Waqf. Another interesting area for Islamic finance and this applies, not only to new entrants but also established finance jurisdictions, is the innovative use of waqf in areas underserved by the present financial system. The endowment received from waqf, together with the revenue generated from the waqf properties can assist in the socio-economic uplift of the community. Utilisation of waqf by Islamic microfinance institutions can potentially create more options in offering interest-free financing in the economy. Islamic financial institutions and corporate organisations can also consider including waqf as part of their corporate social responsibility programmes for more suitable solutions that have profound impact over the long term, particularly in education.

Similarly, a majority of SMEs in Africa are unbanked and access to finance is a major obstacle. Only 20 percent of African SMEs have a line of credit from a financial institution. This gap provides abundant opportunities for those who are willing to tap into very promising African financial market by providing Shariah-compliant financing facilities to the retail and SME clientele. Islamic microfinance facilities can also enhance financial inclusion in Africa. The role of Government and the central bank. The government has an important role to play. Any new industry requires harnessing and nurturing. Government’s commitment is key but commitment must commensurate with substantive action. For new entrants to the Islamic financial industry, sovereign sukuk issuance by government would be a bold and strategic move. Naturally, the private sector will follow suit as there is already readily available pricing benchmark. In the first quarter of this year, 81 percent of the USD31 billion new issuances in the global primary sukuk market were by sovereign and quasi-sovereign issuers. Several more debut sovereign issuances are in the pipeline including issuances from United Kingdom, Luxembourg, Hong Kong and countries in Africa, namely South Africa, Tunisia, Mauritania, Senegal and Oman. Our own experience in 2003 showed that the private sector would start issuing their own sukuk once the government had shown the lead. The act of government issuing its own sovereign sukuk is the single most important initiative to prove its commitment to Islamic finance. Start with local currencies and follow up with non-domestic currencies when the timing becomes suitable.
Necessary conditions for bond markets To develop a domestic bond market, we need three essential components:  1  BIS Review 30/2000  First, there must be a deep and liquid government bond market to serve as a benchmark against which corporate papers can be priced. To ensure that the government bond market can continue to provide the benchmark yield curve, the supply of government bonds must be regular, predictable and transparent. In short, the framework of the budgetary process as well as debt management operation must support the continuing supply of bonds through operations such as automatic refinancing or refunding of maturing debt. Tools such as re-opening of benchmark issues, government bond buy-back schemes or repurchase operations are also essential for the efficient functioning of debt management operation. Second, there must be adequate infrastructure, both legal and operational, to support the trade and transfer of instruments and funds. Operational infrastructure includes such things as a delivery versus payment system that is safe, rapid and efficient to ensure finality of fund transfers. An efficient bond registration system is also essential to provide legal protection of ownership of bonds. Rules and regulations to support trading and financing operation such as repurchase agreements, securities lending, short positioning as well as hedging practices are all essential elements. Third, there must be a pool of market participants comprising both intermediaries such as dealers or inter-dealer brokers as well as end-users such as mutual funds, provident and pension funds, insurance.

It is a hard truth, but I fear a truth nonetheless, that it will be some time yet before trust between banking and society is established. That societal anger has motivated much of the reform effort that has been the story of the past 5 years. The message to politicians, policy makers, regulators and supervisors has been loud and clear: a repeat of the events of the crisis and recession will not be tolerated. Against that background, I want to look at the key new approaches that define the new landscape from the regulatory perspective. I do not want to list in detail the reforms that have been implemented and that are in prospect. It is an impressive list, especially when one looks at the amount of international agreement that has been reached on new international standards. •  Globally there is already more than $ loss absorbing equity capital in the system and,  •  for the first time, an international standard for the liquidity banks should hold. •  UK banks have £ more capital than before the crisis and their holdings of liquid assets have trebled. •  International standards are in prospect on leverage and on the amount of debt banks must hold that can be “bailed in” if a bank fails. Rather, I want to look at three fundamental changes in approach that have driven and will continue to drive these reforms. – macro-prudential policy, international governance and intensive supervision.
If we can make it function as a temporary reservoir to store the incoming water, and more slowly releasing it to the various users of fund within the country, at the right pace for absorption - if the market selection process can be made such that only the projects with really viable, economic prospects are granted the fund - and, if the foreign owners of fund can be persuaded to hold the instruments denominated in borrowers’ own currency, thereby shifting the position on the foreign  2  BIS Review 48/2002  exchange risks from the borrowers to the investors, then the bond market can be a safer channel for capital flows than the commercial banks. At this point you may disagree that if foreign investors in bonds want out, they will still sell the bonds, causing the prices to be sharply lower anyway. This is true. But price volatility in the bond market is still better than a run on your banks. Therefore an efficient bond market can help lessen the adverse impact that volatile capital flows may have on the financial institutions. A sound financial system is of course a necessary condition for the conduct of monetary policy. The role of non-bank financial institutions Let me now turn to the non-bank financial institutions. What can be your roles in relation to monetary policy? I can offer four suggestions. Number one, you can make yourself an efficient player in the market. The more efficient the competitors, the better the market is.

For the euro area, only a few additional data for economic indicators have become available, and the assessment of forthcoming GDP developments is currently complicated by the fact that the next release will be based on revised data in accordance with the new concept of the European System of Accounts (ESA 95). Industrial production declined at the beginning of this year, and data on retail sales volumes suggest that the pace of growth slowed down somewhat around the turn of the year, but recently there are preliminary indications of some improvement. Recent developments in the labour market show a somewhat decelerating  1  BIS Review 51/1999  employment growth towards the end of last year. The rate of unemployment remained unchanged in March 1999, following two consecutive declines in January and February. Industrial confidence declined further in the first quarter of 1999, but preliminary April figures from the European Commission point to a slight improvement. Given the latest developments up to April, it would appear that consumer confidence reached a peak at the beginning of this year since when it has moderated slightly. As expected, the trend towards decreasing inflation rates appears to have been reversed in March. In March the annual rate of increase of consumer prices as measured by the Harmonised Index of Consumer Prices (HICP) was 1.0%, compared with 0.8% in the previous four months. This was essentially a consequence of the substantial rise in oil prices which began in mid-February feeding through to energy prices in the HICP.
Additional capital is for example required to cushion the inventory risks of underlying assets and equity positions that are embedded in partnership contracts, therefore bringing the capital requirements closer to the true economic risks in portfolio of the financial institutions. To manage depositors' expectations and sustaining market confidence, Islamic banks are also permitted to set aside a portion of income derived from assets funded under Mudarabah contracts, in the form of profit equalisation reserves (PER), as a mechanism to address the impact of pro-cyclicality of their returns. This is reinforced by a combination of stronger governance and enhanced transparency to address the trust-based relationships which is a fundamental hallmark of Islamic finance. With increased globalisation and greater integration of Islamic finance with the international financial system, the higher will be the risk of the contagion effects from other markets and jurisdictions. In addition, Islamic finance will also be affected by the second round effects arising from slower economic growth and the reduction in global liquidity. An essential infrastructure in this environment is a well functioning liquidity management infrastructure to enhance the capacity of Islamic financial institutions to effectively manage their liquidity positions. Of importance, is the wide availability of Shariah-based Islamic financial market instruments to facilitate liquidity management. Such facilities for adjusting portfolio balances in a Shariah compliant manner ensure that the liquidity risks can be effectively managed.

The announcements following the recent G20 Summit and the associated announcements of the Financial Stability Board reflect the international economic regulatory cooperation that will set the agenda for the conventional standard setting bodies to put in place a framework to strengthen the international regulatory standards. It will also form the basis by which assessments will be made by multilateral agencies such as the IMF. It is therefore important for there to be engagement with the prudential standard setting entities for Islamic finance, not only to raise awareness of whether the new standards being introduced can be applied to Islamic finance and whether modifications need to be made but there could also be possible consequences that are unintended. Equally important is for there to be recognition of the standards that have been issued for Islamic finance specifically by the Islamic Financial Services Board. As a growing component of the international financial system, it becomes important for the interface and engagement with the international standard setting entities to take place given the common interest of global financial stability. Let me conclude my remarks. While the inherent strengths of Islamic finance have contributed to its viability and resilience, going forward into the future, the foundations for its sustainability as a competitive form of financial intermediation will continue to be strengthened.