samchain/econo-pairs-v1 huggingface dataset:
The corresponding figure for the United States is just below 1 per cent, or USD 100 billion.3 Eurostat has calculated the figure for the EU as a whole at 0.7 per cent, or EUR 90 billion.4 But these figures are only the direct public costs of keeping the financial system more or less on its feet. The real social costs of the crisis are significantly higher. Financial crises lower output and the growth path. In addition, a part of the effect is permanent, even if it is difficult to say how large a part. A historical estimate of the cost of financial crises, calculated as a present value, is about 60 per cent of GDP. For the global financial crisis, this figure is considerably higher.5 The banks are playing an important role in the sovereign debt crisis The banks are also central to the problems that succeeded the global financial crisis, which is to say the sovereign debt crisis in the euro area. As I mentioned, several governments in Europe were forced to manage problems in the banking sector, often at great expense. Those countries with domestic property bubbles were hit particularly hard. But financial exposures to the United States and the other countries most affected by the crisis impacted the banking systems of several countries. These stresses led to financial problems in many European banks and countries, and, eventually, to the current sovereign debt crisis.

For 2012, the inflation rate will amount to –0.7%. For 2013, we expect inflation of –0.1% and for 2014, 0.4%. In the foreseeable future, therefore, there is no risk of inflation in Switzerland. The third quarter of 2012 saw weak growth and a decline in trading activity worldwide. Although growth in the US economy and some of the emerging economies picked up, a mild recession persisted in the euro area. In Switzerland, real GDP in the third quarter increased again following a temporary downturn. For the fourth quarter, however, we expect significant weakening in growth. Consequently, economic growth in Switzerland for the year 2012 is likely to remain unchanged at around 1.0%. For 2013, we expect growth of 1.0–1.5%. The downside risks for the Swiss economy remain considerable. Although the measures announced by the European Central Bank (ECB) have significantly reduced the probability of extreme developments in the monetary union, there is still substantial uncertainty in connection with the management of the debt crisis in the euro area. It also remains to be seen how far the upcoming budget consolidation in the US will hamper growth. This question is weighing on the sentiment in the financial markets and the real economy. Moreover, momentum in the Swiss residential mortgage and real estate markets remains strong, and has led to a further increase in risks for financial stability. Global economic outlook I would now like to outline the outlook for the global economy and Switzerland in more detail.
Expectations concerning future inflation and economic stability have considerable impact, not least in the foreign exchange market. In the long term, output and employment are determined by the supply of labour, capital and technology and restructuring capacity. Monetary policy can contribute to smoothing fluctuations in output and employment. Norges Bank weighs stable inflation against stable output and employment. The economy grows over time. Output will in some periods lie below long-term trend growth and in others above trend. Stabilising output growth means seeking to maintain actual output near trend. The output gap is a measure of the difference between the actual level of output and potential output. Developments in the output gap provide a basis for assessing cyclical developments and can thus also shed light on domestic price and cost pressures in the economy. It is difficult to know how high capacity utilisation is at any given time. Output and employment figures are often revised and do not therefore always present an accurate picture of the current economic situation. Norges Bank therefore also uses a number of other indicators to gauge the temperature of the Norwegian economy. The period of high capacity utilisation that began in 1997 came to an end in winter 2003. The Norwegian economy was hit by a pronounced downturn in the global economy. An economic turnaround has now occurred in Norway, with a soft landing after the long period of high domestic cost inflation and sluggish external activity. Output is showing a marked increase, but inflation is low.

The region is very export-oriented. The county of Sogn og Fjordane is Norway’s second largest in terms of exports per inhabitant, while Møre og Romsdal ranks third. After declining in recent years, exports have now picked up in both counties. Møreforskning in Molde relays information regularly from our contact enterprises in Sogn og Fjordane and Møre og Romsdal. In September, these enterprises reported a rise in demand and output in all industries, with the exception of the fishing and fish processing industries. Output in the construction industry, retail trade and manufacturing output focused on the construction industry have also picked up. The public sector reports considerable investment needs, for example in connection with health sector projects. This snapshot report on the current situation in this part of the country and similar reports from the other regions provide information that is important to interest-rate setting. Employment has shown only a moderate increase since last summer, even though output growth has been high. The labour market has thus improved somewhat. The number of persons employed in Norway began to increase in summer 2003 and unemployment stabilised. Adjusted for seasonal variations, LFS unemployment stood at 4.5 per cent of the labour force in July. The most recent figures from the Directorate of Labour show that in September unemployment rose in the health care sector but declined in manufacturing, construction and science professions. Unemployment has fallen in most regions.
Mr Duisenberg reports on monetary policy in the euro area Speech by the President of the European Central Bank, Dr Willem F Duisenberg, at the New Year’s reception organised by the Deutsche Börse, at the Chamber of Commerce and Industry, Frankfurt/Main, on 25/1/99. Thank you for the invitation to speak at this New Year’s reception. 1999 is a special year: the year in which the euro was launched, and the year in which it will have to become a stable currency. This is the challenge which lies ahead. The introduction of the euro was a very happy event for all involved. The euro is present on all major financial markets around the globe. Currency trading in euro has commenced and for three weeks now shares have been denominated in euro on most European stock exchanges. Although not yet embodied in the physical form of new banknotes and coins, there is no doubt that the new currency is set to play an important role, both in the euro area and beyond. The euro is a symbol of the achievements of Europeans in the pursuit of common goals. It is unprecedented in European history. After years of intensive preparations and successful efforts towards convergence, the single monetary policy for the entire euro area is being determined by the European Central Bank (ECB).

The choice of M3 as an aggregate is supported by empirical evidence regarding the long-run stability and leading indicator properties of this aggregate. Moreover, conceptual arguments pointed to the considerable importance of including in the monetary aggregate those assets which have a high degree of substitutability with narrower definitions of money. Therefore, in addition to currency in circulation and deposits, repos, units or shares of money market funds and money market paper as well as short-term debt securities, all of which are close substitutes for more traditional bank deposits, have also been included in this definition. The first reference value for M3 growth has been set at an annual rate of 4½%. This reference value is consistent with the maintenance of price stability over the medium term, while allowing for sustainable output growth and the trend decline in the velocity of circulation of M3. In setting the reference value for monetary growth, the Governing Council has taken account of various factors and emphasised its medium-term orientation. First, the Governing Council is committed to maintaining price stability according to the definition enshrined in the Treaty on European Union. This requires increases in the HICP for the euro area of “below 2%”. Second, the Governing Council takes the view that a figure in the range of 2% to 2½% per annum for the trend growth in real GDP in the euro area appears to be reasonable.
Further, in the last few years Spanish institutions have shown notable skill in managing operating costs, becoming some of the most efficient players in the world. In the current circumstances, progress along these lines is even more necessary. Third, and very importantly, some of the international markets on which Spanish institutions have raised financing in recent years have narrowed substantially. In this respect, the lack of discrimination seen in the last few months is surprising, as the markets have similarly penalised products whose features, in terms of level of complexity and risk, are substantially different. This is the case, for example, of Spanish securitisations which, on account of their simplicity, the high quality of the securitised collateral and the low level of bad debts recorded, bear no relation to the more complex structured products used by banks in other countries. A particularly striking case is mortgage covered bonds, whose credit quality is very high and easily measurable. This quality resides in their legal characteristics, since they are backed by the whole of the issuer's mortgage portfolio and their minimum level of overcollateralisation is 25%. However, financial market participants have not taken these arguments into consideration. In fact, banks have to keep explaining to the market the differences in their issues. An effective way of doing so is to start issuing medium-term securities again. And, as mentioned above, congratulations are in order because this is the path successfully taken by some banks in recent months.

Miguel Fernández Ordóñez: Turbulence in the world markets – a Spanish view (five lessons and some homework) Address by Mr Miguel Fernández Ordóñez, Governor of the Bank of Spain, at the “Círculo Financiero”, Barcelona, 14 May 2008. *  *  *  Let me begin by thanking you for the invitation to deliver this speech. I shall not be going into details today on either the sequence of events that have triggered the turbulence in international financial markets, or on the various suggestions for reform that may prevent a similar situation from arising in the future. We currently have several reports by various institutions addressing these matters in depth, including, for example, the most thoroughgoing report by the Financial Stability Forum. The scope of my speech this evening will be more modest: to examine the Spanish banking system in the context of this turbulence. The central idea I wish to convey is as follows. Spanish banks and savings banks have not contributed to any extent either to the generation or to the subsequent propagation of the turbulence, which in principle puts them in a sound position to withstand it. However, and as recent events have clearly reminded us, we live in an increasingly global world. Accordingly, the Spanish financial system cannot remain immune to the consequences of the current problems, which affect not only those who originated them but all of us.
The personal computer, for example, is a great tool that enhances the productivity of people with lots of education, while it may actually be a substitute for unskilled labor. In addition to its effect on earnings, higher education improves one’s quality of life by improving other outcomes, like health. Even when the large net benefit of college attendance is accurately perceived, there are significant financial constraints on many families’ ability to finance a college education. After all, the costs of college are concentrated in a few years at the very beginning of a career, while the benefits are spread out over a long period that comes later. Borrowing is a natural solution to problems like these, but there is limited enforceability of uncollateralized debt  BIS central bankers’ speeches  1  contracts and the private sector may be willing to provide less than the optimal amount to support good educational outcomes. In this environment, even optimal private debt contracts will not account for the second important part of the benefit of higher education: that which accrues to society as whole. Better-educated workers are higher paid and so pay more taxes, and they have a lower incidence of dependency on programs like unemployment compensation and welfare. There are positive spillovers from educated workers to others, raising aggregate productivity. Better-educated workers produce more innovation and are more civically engaged. In a democracy we are all better off when our fellow citizens understand the issues facing the country. Overall, a more skilled workforce is beneficial to us all.

This conclusion has been reinforced in the recent publication of the Senior Supervisors Group (SSG) in which the PRA participates (Senior Supervisors Group (2015)). The SSG has concluded that “key supervisory concerns centre on whether the risks associated with algorithmic trading have outpaced control improvements. The extent to which algorithmic trading activity, including HFT, is adequately captured in banks’ risk management frameworks, and whether standard risk management tools are effective for monitoring the risks associated with this activity, are areas of inquiry that all supervisors need to explore”. As supervisors of almost all of the world’s major trading banks – through their operations in London – we can provide some helpful assessment of these events. We have observed that the balance between aggregate buy and sell orders submitted to banks’ electronic trading systems can shift instantaneously, and sometimes violently, upon this type of occurrence. 4  BIS central bankers’ speeches  The impact is often exacerbated by the simultaneous reduction in order book depth on organised multilateral electronic trading venues. The electronic trading contribution was more evident on 15 January, as a foreign currency market event than the 15 October (a bond market event), reflecting the different patterns of trading in these markets. On the 15 January, the ability of banks’ e-trading systems to hedge positions consistently through automatic risk management broke down as the necessary reference prices became discontinuous and unreliable.
Norway was close to being placed under IMF administration. In fact, it was not possible to steer the economy towards permanent prosperity. The old doctrines collapsed.6 New ideas for managing the economy took shape because the old system no longer functioned. Underlying the new truths was the notion that economic policy needed to operate through the proper market incentives and that economic policy must be sustainable and predictable. At the Ministry of Finance, the new ideas took hold primarily because a younger generation was taking over, just as when Nissen was pushed aside. Political micro-management lost considerable traction. Through the 1990s and up to the mid-2000s, economic growth was high and both inflation and unemployment low in much of the world. Cyclical fluctuations were moderate. The new truths appeared to be working well. This period is known as the Great Moderation. But underneath the positive developments, imbalances were building up both within and across countries. As we have all experienced, it is easy to ignore the bill as long as the food keeps coming and the conversation keeps flowing. Countries and governments can live with deficits for a while, but sooner or later the bill has to be paid. 5  Einar Lie provides a detailed account of the break between classical and the new, more Keynesian thinking at the Ministry of Finance in the book Norsk økonomisk politikk etter 1905 [Norwegian economic policy after 1905], Pax forlag, 2012.

4  See the box ”Uncertainty regarding future interest rate movements”, in Inflation Report 2006:1. 4  BIS Review 33/2006  In the second method, the uncertainty interval is instead calculated with the aid of the market’s pricing of interest rate options. The current prices of interest rate options reflect expectations of future interest rates. This method is therefore forward-looking and based on the fact that the redemption price for identical options can vary. This variation reflects the market’s assessment of the uncertainty in the future price of the asset on which the option is based. Since this variation can be observed, it is possible to construct an uncertainty interval around the implied forward rate curve. These uncertainty intervals are largely similar to the uncertainty intervals based on historical deviations (see Figure 5). To summarise, the strategy for monetary policy is being maintained with the new interest rate assumption. We normally try to attain the inflation target within a two-year period and we take the real economy into consideration. However, monetary policy cannot as before be described by the simple rule of thumb that was based on the assumption of a constant repo rate. Instead the forecasts that are based on the assumption that the repo rate will follow implied forward rates are studied and assessed. It is the whole path of inflation and the real economy that is important in monetary policy decisions.
The IFRS Foundation plans to set up by the end of this year an International Sustainability Standards Board (ISSB) as a global standard setter. An IFRS work group is already developing a prototype climate reporting standard. The IFRS work group’s recommendations on the prototype will be reviewed by a technical expert group co-chaired by MAS and the US Securities and Exchange Commission, under IOSCO’s Sustainable Finance Taskforce. The expert group will assess if the prototype could be a basis for developing the ISSB’s standards. MAS and SGX will set out roadmaps for mandatory climate-related financial disclosures by financial institutions and listed entities respectively. The roadmap will take a phased approach. A more ambitious timeline can be considered for listed entities that are larger or more exposed to climate risks. Larger financial institutions can similarly be prioritised. These details will be worked out in consultation with the industry in the coming months. SGX will soon consult the industry on making climate-related reporting in line with the recommendations of the Task Force on Climate-Related Financial Disclosures (TCFD). SGX already subjects listed entities to annual sustainability reporting on a “comply or explain” basis, but without specifying any particular framework for them to follow. The TCFD recommendations provide a good baseline disclosure framework. They have gained broad acceptance internationally and will be the basis for future ISSB climate reporting standards. MAS will consult the industry later this year on mandatory climate-related disclosures by financial institutions.

Although the market itself can manage most of the conflicts of interest, it may take some time before a common practice is established. Experience also shows that good practice and good ethics can be eroded rather quickly in certain market situations. This is where the supervisory authority can help to develop and maintain confidence  4  BIS Review 47/2004
Muhammad bin Ibrahim: The “Islamic Finance Country Report for Malaysia 2015” Keynote address by Mr Muhammad bin Ibrahim, Deputy Governor of the Central Bank of Malaysia (Bank Negara Malaysia), at the launch of the “Islamic Finance Country Report for Malaysia 2015”, Kuala Lumpur, 30 June 2015. *  *  *  Thank you for the invitation today to officiate the launch of the “Islamic Finance Country Report for Malaysia 2015” published by IRTI, the research and training arm of the Islamic Development Bank. This country report is the fifth in its series and features Malaysia’s ongoing initiatives and prospects in transforming into a high income economy and the contribution of Islamic finance in this endeavour. Islamic finance in Malaysia has undergone three decades of progress and its current state of development is the reflection of the collaborative effort between the industry and the government. While Malaysia has achieved a number of successes, a lot needs to be done still. Islamic finance needs to advance from domestic-centric growth and expand beyond our borders. The next phase of achievement would very likely hinges on our ability to collaborate successfully with others and harness our capabilities to ensure that Islamic finance will progress and expand transactional activities across borders to remain competitive and dynamic.

These indications show that businesses are seeing the economic and business merit of Shariah-compliant products and services and that its appeal extend beyond the traditional captive market. However, growth of the magnitude that Islamic finance experienced over the last decade would increasingly become more difficult if the industry does not continue to be nimble and agile in its approach. Innovation is therefore a key priority for Islamic finance players to keep expanding and gain market share. As indicated by the results of the retail consumer banking and insurance survey in the country report, the demand for Islamic banking by survey respondents far exceeds that for its conventional counterpart. This should be an encouragement for Islamic banks to boost its innovativeness in meeting customers’ needs. The Islamic Financial Services Act 2013 is already paving the way for the development of Islamic banking solutions that are differentiated from conventional products by allowing funds to be mobilised either through deposits or investment accounts. This classification brings greater options for the  BIS central bankers’ speeches  1  public and reflects an enhanced risk-sharing approach to Islamic banking. It also gives the industry additional options to create creative solutions for its customers. Greater engagement and collaboration between industry and academia would also ensure mutually-reinforcing efforts in driving innovation through the development and implementation of new research findings and breakthroughs.