samchain/econo-pairs-v1 huggingface dataset:
As we all know, the choice of exchange rate regime is of critical importance for a central bank. The empirical findings show that in economies with serious balance sheet mismatches, the policy makers prefer fixed or controlled exchange rate regimes 5 ..  2  Eichengreen, B.; Hausmann, R. (1999); “Exchange rates and Financial Fragility”; NBER Working Paper No:7418. 3  De Nicolo, G.; Honohan, P.; Ize, A. (2003); “Dollarization of the Banking System: Good or Bad?”; IMF Working Paper; WP/03/146. 4  Galindo A.; Leiderman L. (2003); ”Living with Dollarization and the Route to Dedollarization”; Inter-American Development Bank; Working Paper; 526; p. 14. 5  Choi, W.; Cook, D. (2004); "Liability dollarization and the bank balance sheet channel"; Journal of International Economics; Vol. 64(2), p. 247-275. 2  BIS Review 124/2006  On the other hand, flexible exchange rate regimes provide more room for monetary policy that enables to respond to external shocks freely. It has also been found by using cross-country data for the banking sector that more volatile exchange rates reduce the share of the foreign currency denominated loans and deposits 6 , thus contributes to prevent dollarization. However, even if a flexible exchange rate regime is chosen de jure, dollarization and high pass through effect from exchange rates to inflation may cause “fear of floating”, thus monetary authorities are put under pressure to intervene in fluctuations in exchange rates at all costs.

The quality of loans has improved due to more prudent underwriting and capital levels appropriately support the risk profile. As of 4Q 2018 on average, Second District ratios were slightly above the national peer average for tier 1 and total risk-based capital ratios. In terms of profitability, return on average assets was 0.95% in 2018 for community banks in the Second District, only slightly trailing the national average of 1.1% for all community banks. Another relevant metric is the more diversified loan mix on the balance sheets of community banks. Commercial Real Estate (CRE) is a major source of asset growth, and in our geography, real estate continues to be in high demand and continues to outperform certain parts of the country. For example, in the Second District non-owner occupied CRE concentration remains higher than the national peer average. Our examiners, however, have noted more robust risk management practices and oversight, and commensurate levels of capital as mentioned earlier. As supervisors, we will continue to stress to the region’s bankers that a financial institution’s decision to assume certain types of risk is a decision for the Board of Directors and senior management. Also, as supervisors, we will continue to expect to see the appropriate level of risk management in place to manage and mitigate the risks assumed. This means having the appropriate expertise on the management team, robust information systems and technologies to monitor and manage those risks, proper controls and oversight, reasonable limits, and an action plan to take corrective measures when necessary.
When you put them all together and it runs like clockwork, you have a powerful ecosystem that would be very hard to replace. This kind of infrastructure is so sticky that it’s “hard to move” – to quote a senior executive at a leading global asset manager, who just reaffirmed that Hong Kong will remain their one and only Asian hub. 21. Because our system functions so smoothly, even under stress, it’s easy for people to take it for granted. At the HKMA, we can never do that. As a market facilitator, we are always looking for new opportunities for our financial sector. And, as a supervisor, we are constantly working to create policy headroom so that market players can seize those opportunities. Opportunity — China 22. As we speak of opportunity, the future of finance – from Hong Kong’s perspective – can be summed up in three words: China, green and technology. 2/5  BIS central bankers' speeches  23. By China, I mean connecting the Mainland and international financial markets via Hong Kong. Hong Kong is the only gateway of its kind to the Mainland’s capital markets. Only Hong Kong can play this role – because of a combination of advantages that only Hong Kong has. 24. We are part of China, supporting the country’s economic development for more than four decades. That’s why the financial infrastructure connecting Hong Kong with the Mainland has continued to grow. And we provide global investors with a familiar, trusted point of access to Mainland markets.

This conflict has not been talked about much, if at all, even in central banking forums; but it is, I am quite sure, one important contributing factor to the making of financial crises. Financial intermediaries are often, and rightly so, rewarded handsomely for their innovative efforts, which, it is claimed, bring a higher rate of return for those with surplus money and a lower cost for those in need of money; in other words, a narrowing of the intermediation spread, or greater financial efficiency. But there is an internal contradiction in this phenomenon. Greater profits for financial institutions and larger bonuses for those employed in them mean, to me at least,  BIS Review 106/2009  1  a widening, rather than a narrowing, of the intermediation spread; in other words, lower financial efficiency. Yet we do observe greater profits and larger bonuses in the financial system along side (probably apparent) improvements in financial efficiency. For example, the innovative effort variously described as "securitisation", "originate-and-distribute", and "credit risk transfer" did raise the rate of investment return and lower the cost of credit. The explanation for this, if I may venture a guess, is in the time dimension. The observed narrowing of the intermediation spread comes at the expense of, or presages, a future, possibly sharp widening that often occurs in the context of a financial crisis.
The profitability of about two-thirds of the investments has been evaluated. The calculations capture time saved and reduced costs related to accidents and the environment. Investment costs and future operating costs are deducted. The projects show a total loss of NOK 20 billion. There seems to be few road projects that are economically profitable. A rare example is the Finnfast tunnel project that connects the mainland to the beautiful island group here in Ryfylke. When projects cannot be expected to increase the future revenue base in society, it is important that the investments are financed from current government revenues within a long-term and sustainable framework. Alternatively, projects that involve a large number of users can be financed by user fees. A road, infrastructure or research reports for that matter can provide benefits and satisfaction over time, but they are not liquid and do not generate a flow of returns that can be used for spending. If the investments are made at the expense of the savings plan for the sovereign wealth fund, future generations will have to bear the cost. 6  Professor Thore Johnsen has brought to my attention that the government discount rate is calculated using an arithmetic mean, while the return on the oil fund is measured as a geometric mean. If the fund’s return had been calculated using arithmetic mean, the return would have been about 0.7 percentage point higher for the period 1998–2009.

Svein Gjedrem: A diversified economy Speech by Mr Svein Gjedrem, Governor and Chairman of the Norges Bank (Central Bank of Norway), at the seminar “Oil in the economy” at the Norwegian Oil Museum, Stavanger, 8 June 2010. The text below may differ from the actual presentation. This speech does not contain assessments of the economic situation or current interest rate setting. *  *  *  “Look what I found!” shouted Askeladden (the Ash Lad) in the Norwegian folktale “The Princess Who Always Had to Have the Last Word”. He found a dead magpie, a willow hank, a bit of broken saucer, two ram’s horns, a wedge and a worn-out shoe sole, which he managed to transform into a princess and half a kingdom. Askeladden is often perceived as the embodiment of sound Norwegian values such as a sense of adventure, courage and helpfulness. Askeladden is nevertheless someone who succeeds by pure chance. Like Askeladden, we also found wealth, but under the sea floor. We were lucky. An abundance of natural resources is in principle of benefit to a country’s economy. The production of petroleum and other natural resources generate gains that exceed the normal return on invested capital, economic rent. But oil is also associated with challenges. As early as in 1974, the Storting 1 deliberated the economic challenges relating to oil production. We were able to learn from the experience of other countries.
Mohd Razif bin Abd Kadir: Islamic banking products – theory, practice and issues Opening remarks by Mr Mohd Razif bin Abd Kadir, Deputy Governor of the Central Bank of Malaysia, at the 2nd Foundations of Islamic Finance Series Conference: “Islamic banking products – theory, practice and issues”, Kuala Lumpur, 8 March 2011. *  *  *  I am delighted to be here today and would like to thank the organisers for inviting me to deliver the opening address at this 2nd Foundations of Islamic Finance Series Conference. Following the success of the inaugural conference held last year in Dubai, this years event is a commendable collaboration between the organisers; the International Centre for Education in Islamic Finance (INCEIF), the International Shariah Research Academy for Islamic Finance (ISRA) and the University Putra Malaysia, to provide an avenue for discussions on various literatures in Islamic finance by eminent practitioners and scholars, with the aim to produce quality publications for the industry. The theme of this years conference, “Islamic Banking Products: Theory, Practice and Issues” is most timely as waves of innovation are pervasive in Islamic finance in the recent years, fostering the generation of a wide spectrum of Islamic financial products and services. As the next frontier of development in Islamic finance evolves through innovation, we have to be mindful that innovation within an environment of constant change and increasing uncertainties is indeed a challenge.

He justified his limitation arguing that “many central banks and national economies have come to grief because governments have had too easy access to central bank credit”. Hence, he argued that it would be wise to limit such credit just to meet only the very short term cash requirements of the government arising from seasonal requirements of funds. This wisdom of Exter was not followed and, as a result, provisional advances which were meant to be short term credit facilities for six months became permanent credit. As a result, the level continued to increase to a new high level in each successive year with increased estimates of government revenue. It has, therefore, provided permanent free funding to the government, almost similar to the annual profit transfer which the Central Bank makes to the government. 2. The Central Bank has been authorized to acquire Treasury bills from the primary issues and it, therefore, constitutes another form of lending to the government. The Bank has been prohibited to subscribe to primary issues of or, underwrite, the other types of government securities, viz., Rupee securities or Treasury bonds. Exter justified this prohibition on the ground of the obvious possibilities of abuse by governments. Even the purpose of investing in Treasury bills was not to finance the government but to acquire the necessary liquidity for conducting smooth open market operations. This was explained by Exter as an injunction familiar to central bankers and commercial bankers alike that a bank should look to the liquidity of its portfolio.
Provisions of the new Act are being implemented through the newly established Department of Foreign Exchange in the Central Bank focusing on reducing restrictions, excluding ambiguities, simplifying processes and enhancing efficiency associated with foreign exchange transactions while striving for clarity and convenience. A significant amount of work needs to be done to improve Sri Lanka’s global ranking in the implementation of Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) regulations. The Financial Intelligence Unit of the Central Bank is taking several measures to address this with the assistance of key government Ministries and Departments as well as stakeholders such as Licensed Banks, Licensed Finance Companies, Regulators, Stock Brokers and Insurance Companies, and continued to enter into new MOUs with other country FIUs. The Central Bank has already initiated several measures to enhance the economic stability of the country and it will continue with this endeavor in the future as well. Given improved economic fundamentals and stability, it is expected that the government will implement the  6  necessary policy reforms to uplift the economy from the prevailing low growth trajectory to reach its potential level. The government’s Vision 2025 unveils the future policy direction of the country. The Vision envisages transforming Sri Lanka into a hub of the Indian Ocean, with a knowledge-based, highly competitive, social-market economy. Accordingly, considering the limited scope of the domestic market, sustained future economic growth would have to be generated from external demand.

No matter what supervisory approach you take in respect of IRB validation, it is only one of the major questions to which we need to find an answer. Banks and their supervisors in Asia are going to face a variety of challenges ahead in the implementation of the Basel II IRB framework. Through today’s outreach event, I hope that there will be stimulating discussions on these issues and that participants will be able to take away ideas that can help them make the implementation of the IRB framework in their jurisdictions a success. I also hope that the AIGV, the AIG and the Basel Committee can take account of the views of the Asian region, and of the particular issues we face. Thank you. BIS Review 120/2007  3
In balance sheet terms, the younger buyers were acquiring housing assets and debt; and the older sellers were swapping free equity in houses for financial assets. In consequence, for a while, the ratio of aggregate household debt to assets remained fairly stable; and the ratio of financial and housing assets-to-income rose steadily. Taken as a whole, households were vulnerable to falls in asset prices. Households now face lower asset prices, somewhat lower house prices, tighter credit conditions, a lower path of demand and output, rather less job security, and a much greater sense of uncertainty. Younger households in particular have a strong incentive to save more (Chart 7) to repair indebted balance sheets, or to accumulate the deposits that are once again needed to buy a home (given banks’ policies on loan-to-value ratios). By contrast, taken as a whole, the corporate sector has been running a cash surplus throughout – in the run up to the crisis, and since. Some of that is no doubt down to firms having learned lessons from flirting with excessive leverage during the “telco” boom nearly a decade ago. But quite a lot of the cash surplus has resided in oil companies and, since the crisis, in financial firms, which face the task of gradually deleveraging and reliquifying.

Another way of thinking about it is that, at an aggregate level, our purchases reduce the scale of assets that the private sector needs to finance by borrowing from the banks. This is not just a UK thing. That being so, we should not be too surprised that there has been a sharp fall in the utilisation of central banks’ liquidity facilities during 2009. The size of central bank balance sheets (Chart 12) remains much the same as about a year ago, just as QE was getting underway; but the composition of our asset portfolios has changed. The bottom line is that we are still providing an enormous amount of liquidity to the banking system as a whole, but with revived wholesale money markets distributing that assistance to where it is needed. So our monetary instruments and financial stability instruments shade into one another – unsurprisingly. And that means that when planning our so-called exit strategies from monetary easing, central bankers will need to weigh the effects on bank funding conditions, which in turn affect credit conditions and demand in the economy. Five issues for the policy framework for maintaining macro economic stability I want to look beyond the immediate conjuncture. I don’t plan to say anything today about financial sector reform, but will concentrate on the overall framework for preserving macroeconomic stability. That there are lessons from the crisis is obvious. Don’t be seduced by the appearance of stability The so-called Great Stability was, with hindsight, in some respects a surface phenomenon.
Proposals for possible solutions From this discussion, I would like to propose the following possible solutions to the Swedish monetary policy problems: We should consistently choose the repo rate path that best stabilises inflation around the inflation target and resource utilisation around a normal level, regardless of whether GDP growth is high or low, and regardless of whether the repo rate is high or low. If the chosen repo rate path then offers a threat to financial stability – which would appear to be a rare situation – this should be taken into account and this repo rate path excluded if it is appropriate. The motives for these actions should then be explained. When choosing a repo rate path, we should take into account house prices and household borrowing if they affect the forecasts for inflation and resource utilisation in the short or long term. If such considerations affect the repo rate path, we must carefully justify our decision. For instance, we should explain why potential advantages in the longer run are greater than potential disadvantages for inflation and resource utilisation in the short run. If house prices and household borrowing become unsustainable, or are judged to entail other problems, then other and better instruments should be used to deal with this than the repo rate. Trying to use the policy rate to slow down house prices and household debt could lead to high costs for the real economy in terms of lower production and employment, and higher unemployment.

Area-wide equity indices have been made available by various market participants, thus providing investors with opportunities to monitor area-wide equity positions as well as, in some instances, positions in area-wide industrial sectors. The fact that the euro area (and EU) equity markets are becoming more integrated, more liquid and deeper is good for market efficiency, and a more efficient allocation of capital should mean that equity financing becomes more readily available for companies. I should also like to mention that a prudent, harmonised regulatory framework, on the one hand, and harmonised market practices, on the other, are key factors guaranteeing a favourable outcome for these structural changes. In these areas a lot of work is under way, and much has still to be achieved in order to pave the way for truly integrated financial markets. Harmonisation in, for example, repurchase agreements, national company laws including bankruptcy laws, and other aspects of the legal and regulatory framework, would enhance legal clarity and certainty and thereby improve the efficiency and stability of the financial markets. Indeed, the European Commission recently published an Action Plan containing priorities and timetables for measures aimed at improving the single market for financial services. In the Action Plan, measures are proposed to advance the harmonisation of the legal framework and market information, as well as to facilitate investors’ operations throughout the single market. In this respect, I should also like to pay tribute to the International Organization of Securities Commissions (IOSCO) for its efforts.
The analyses are based on the technical assumption that the interest rate will move in line with expectations in financial and foreign exchange markets, implying that the interest rate will remain at the current level well into 2004. Thereafter, the interest rate in Norway is assumed to rise gradually in pace with interest rates in other countries. The forward exchange rate implies a moderate depreciation of the krone through the projection period. Such interest rate and exchange rate developments would be consistent with the monetary policy objective and would probably also contribute to keeping inflation expectations at around 2½ per cent. Overall, growth in mainland GDP is projected at ¾ per cent in 2003. Growth was about zero in the first half of the year, but is projected to pick up in the latter half of the year and be high in 2004. Mainland GDP growth is projected at 3 per cent in 2004 and 2¾ per cent in 2005. In 2006, mainland output is expected to grow below but close to trend, which we estimate at 2½ per cent. As the fall in the krone exchange rate feeds through in the economy, inflation will gradually rise. As early as next year, inflation will probably be considerably higher than the current level. The inflation projections are uncertain. The uncertainty may be illustrated by intervals calculated on the basis of historical deviations in actual price developments in relation to projections. Inflation may move on a different path than projected for several reasons.

The Government has included a further increase in the deficit, measured as above, in the National Budget for 2004. However, the budget balance figures are influenced by transactions that have little effect on demand. For 2003 and 2004 as a whole, fiscal policy will probably generate some stimulus to activity in the Norwegian economy. As cyclical developments will probably stabilise, our forecast is based on the technical assumption that the structural deficit will not increase in 2005 and 2006. This would also seem to be consistent with the practical application of the fiscal rule, cf. the discussion by the Ministry of Finance in the National Budget for 2004. According to the fiscal policy guideline, the use of petroleum revenues over the central government budget shall over time correspond to the expected real return on the Government Petroleum Fund. At the same time, fiscal policy shall contribute to smoothing fluctuations in output and employment. Since the introduction of the fiscal policy guideline in spring 2001, the scope for manoeuvre in fiscal policy has been reduced. The projection for the Petroleum Fund’s expected real return has been revised down substantially since the Revised National Budget for 2001. Wage growth in the years 1998-2003 indicates that the degree of labour shortages in all sectors of the labour market plays an important role in wage formation.