samchain/econo-pairs-v1 huggingface dataset:
BIS central bankers’ speeches  5  Completing the fiscal consolidation process must remain an overriding priority of Spain’s economic policy. This effort is necessary to maintain the confidence of economic agents, to continue to advance in the normalisation of financing and to restore the room for manoeuvre in budget policy. Meeting targets is crucial first for containing and, subsequently, reducing the public debt/GDP ratio. It will be difficult to curb the rising trend of public debt now the latter has reached high levels and the outlook for economic growth and inflation is moderate. If the interest on the debt is higher than the nominal growth rate of the economy, the public debt/GDP ratio grows inertially, even when public revenue and spending are balanced. This effect stems from the pressure generated by the interest burden, arising from high debt which cannot be countered by growth in real GDP and changes in inflation. In this situation, then, in order to avoid an increase in debt, it is not enough to attain an overall balanced budget (that is, net of the interest burden); rather, sizeable primary surpluses must be achieved and maintained, which is particularly difficult in a setting of low growth and low inflation. Furthermore, the short-term negative effects on economic growth of the fiscal adjustment should be considered, which contributes to the above-mentioned inertial increase in debt.

The move enhanced further the vibrancy of the Islamic interbank market. The efficiency of the Islamic interbank market is enhanced by the Real Time Gross Settlement System (RENTAS) and the Fully Automated System for Tendering (FAST). RENTAS facilitates larger value interbank funds transfers and scriptless securities while FAST facilitates the tendering process for Islamic securities including government securities, commercial papers and private debt securities. Funds are raised to finance long-term infrastructure and development projects through the issuance of Islamic private debt securities. Recognising the importance of the capital market, Malaysia initiated the development of a private Islamic financial securities market in the early nineties, about six years after the establishment of the Islamic bank, with the issuance of the first Islamic financial instrument. Subsequently, more instruments were issued and these created an investment environment conducive for investors, including banks. The introduction of the Islamic capital market has reduced the over-dependence on the Islamic banking system for long-term financing and allows Islamic banking institutions to diversify part of the risks emanating from asset and liability mismatches. The existence of the Islamic capital market plays an important role in reducing a potential source of financial vulnerabilities and enhances the robustness and resilience of the Islamic financial system, leading to greater financial stability. A significant development in the domestic Islamic financial market was the recent issuance of ringgitdenominated Islamic debt securities by two multilateral financial institutions. This has heightened confidence in the Malaysian Islamic financial market.
The takaful sector needs to develop strategic and high-performing leaders who will be able  BIS Review 13/2006  3  to lead the way and are committed towards building a stronger organization that is able to contribute towards the tremendous growth potential for takaful. 16. In the area of technical expertise, the takaful sector has to intensify its efforts in the training and development of expertise in such areas as actuarial, underwriting, specialist claims and product development capabilities. In the actuarial area, for example, an issue that needs to be addressed is the scarcity of qualified actuaries to serve the takaful sector. The expertise of actuaries is needed to quantify the appropriate contribution rate to be charged to the pool of takaful participants. Additionally, the proper pricing of the contribution rate will ensure the ability of the takaful fund to fulfill the requisite obligation to participants. The actuarial methodology is also required to ensure prudent distribution of surplus to participants. The increasing roles of the actuary in the family as well as general takaful underscore the importance of developing takaful actuaries who have the understanding of the takaful business and the unique characteristic of the takaful operation. 17. Perhaps it is timely for me to share initiatives taken by Malaysia in talent development at all levels in Islamic finance.

At the strategic leadership level, Malaysia has established the International Centre for Leadership in Finance or ICLIF as part of an effort to spearhead the development of a new generation of world class leaders in Islamic banking and finance who can steer the financial services sector including the Islamic finance towards high performance and excellence. An endowment fund of RM500 million has been allocated for this institution. 18. In the development of technical expertise, the Islamic Banking and Finance Institute Malaysia (IBFIM) and the Securities Industry Development Centre (SIDC), which are the industries' training arms, have played an active role in producing well-trained, high caliber individuals and management teams with the required expertise in the Islamic finance. IBFIM and the SIDC work closely with the industries to ensure that their training and education programmes are tailored to meet the evolving needs of the industry. In the case of IBFIM, the programmes on offer include the fundamental aspects of Shariah, Islamic banking and takaful and risk management in Islamic financing. Bank Negara Malaysia has provided a benevolent loan to IBFIM to complement industry contributions. 19. Recognising the need to simultaneously equip the regulators with the necessary skills in Islamic finance, we have in the pipeline for introduction shortly, a special programme for regulators called the Central Banking Course in Islamic Finance. This programme will be tailor-made to provide international regulators with knowledge on conceptual and practical aspects of Islamic finance as well as the update on the regulation and supervision of Islamic financial institutions. 20.
Nor Shamsiah Mohd Yunus: Keynote address - Global Islamic Finance Forum 2022 Keynote address by Ms Nor Shamsiah Mohd Yunus, Governor of the Central Bank of Malaysia (Bank Negara Malaysia), at the Global Islamic Finance Forum 2022, Kuala Lumpur, 5 October 2022. *** It is a pleasure to be here at the seventh Global Islamic Finance Forum today. At GIFF 2018, I made a call for us to "rethink value, risk and human capital" in charting a new path of Islamic finance beyond profits. And so, I thought that it would be fitting for my remarks today to reflect on the progress made, and how Islamic finance has measured to its promise, especially in the context of developments globally since 2018. Indeed, a lot has happened in these four years. The world also continues to face various challenges as we speak. We weathered an unprecedented pandemic, transitioned into the endemic phase and are now on the path to recovery. But the road continues to be rocky. Next year, global growth is expected to moderate. This challenging environment is further complicated by inflationary pressures which is leading major central banks to tighten monetary policy aggressively. We have also entered a period of strong US dollar, leading to almost all major and regional currencies – the ringgit included – depreciating. In addition, the heightened geopolitical tensions have also fuelled global food and energy security concerns. All these challenges are also complicating the green and climate transition.

With that, I wish everyone a successful forum and hope you continue to have engaging conversations ahead. Thank you. 4/4  BIS - Central bankers' speeches
The short-term interest rate fell while more subdued inflation prospects and a flight to "safe" investments caused a drop in long-term rates as well. The low interest rates together with the search for safe investments spread to other asset markets. The price of gold increased, and there was a rise in housing prices in several countries as households took advantage of the low level of interest rates to boost their housing consumption. The rising property prices counteracted the fall in the value of households' financial assets. This in turn has led to households in several countries continuing to increase their indebtedness, particularly to finance housing. However, these historically large changes in the asset and debt markets have thus far proceeded smoothly. In spite of the fact that we have seen the biggest decline in share prices since the 1930s, the largest suspension of national debt payments in history (Argentina), the biggest corporate bankruptcies (Enron, WorldCom), one major terrorist attack and a wave of small ones, the financial markets have been strong enough to handle this. Risk diversification and the emergence of new financial derivatives are two explanations for the preserved stability in the financial system. While developments in the real economy have been affected by the balance sheet and income statement adjustments, the business cycle bottomed out at a higher level of growth than was feared, given the considerable imbalances that existed at the height of the bubble in 2000.

Last year industrial output declined markedly in all major regions of the world economy. In the US it appears that the decline may be coming to a halt. Developments in Japan are still highly uncertain. In the US, confidence indicators have recently shown some signs of improvement. The decline recorded following the terrorist acttacks on 11 September last year has been partly reversed. Nor does it appear that households in the euro area have become more pessimistic in the last few months. However, the indicators suggest that they still consider the economic situation to be fairly negative. Various institutions’ growth forecasts for 2002 were lowered substantially through 2001. Due to sluggish economic developments, many central banks reduced their key rates last year, in some cases quite appreciably. With the exception of Japan, no significant further downward adjustments of growth forecasts have been made in the last few months. Norges Bank expects international consumer price inflation to be low both this year and in 2003. This will contribute to a low, and in some cases negative, rise in prices for imported consumer goods. During the autumn of 2001, we saw signs that the international turnaround was also being felt in Norway. Some export industries, travel and tourism were most vulnerable. The oil price fell sharply. Since last autumn the oil price has hovered around USD 18-20 per barrel. The price of oil futures has remained stable at around USD 20 per barrel.
15  Table 1 Domestic scenario  2021  GDP Domestic demand Domestic demand (w/o inventory change) Gross fixed capital formation Total consumption Private consumption Goods and services exports Goods and services imports Current account (% of GDP) Gross national savings (% of GDP) Nominal gross fixed capital formation (% of GDP)  11.7 21.6 18.0 17.6 18.2 20.3 -1.5 31.3 -6.6 18.8 24.0  2022 (f) 2023 (f) Jun.22 MP Sep.22 MP Jun.22 MP Sep.22 MP Report Report Report Report  2024 (f) Jun.22 MP Sep.22 MP Report Report  (annual change, percent) 1.5-2.25 1.75-2.25 -1.0/0.0 -1.5 / -0.5 2.25-3.25 2.25-3.25 1.4 1.2 -3.4 -4.7 2.5 2.2 1.0 0.9 -3.4 -4.6 2.5 2.6 -4.8 -3.3 -2.2 -4.7 3.0 2.9 2.8 2.2 -3.7 -4.6 2.4 2.4 2.1 1.4 -4.1 -5.7 2.5 2.5 1.3 1.3 5.7 5.5 3.0 3.0 0.0 -1.4 -3.0 -5.5 2.3 1.2 -6.6 -6.3 -4.5 -3.6 -4.0 -3.3 18.4 18.9 20.0 20.0 20.1 19.9 23.3 23.5 22.8 22.2 22.4 22.2  (f) Forecast. Source: Central Bank of Chile.

Figure 3 Imacec (index, September 2019 = 100, seasonally-adjusted series)  135  Total  Manufacturing  Trade  Services  125 115 105 95 85 75 Jan.19  Jul.19  Jan.20  Jul.20  Jan.21  Jul.21  Jan.22  Jul.22  Source: Central Bank of Chile. 11  Figure 4 Private consumption (index, 2019Q3 = 100, seasonally-adjusted series)  160  Private consumption  Durable goods  Non-durable goods  Services  140 120 100 80 60 15  16  17  18  19  20  21  22  Source: Central Bank of Chile. Figure 5 Employment by occupational category  Online job postings and applications  (difference w/ respect to January 2020, thousands) (index, base 100= 3/March/2020, moving 15-day average) No. vacancies Salaried, formal Salaried, informal 260 140 500 Self-employed  No. applications (right axis)  Other (*)  0  220  120  -500  180  100  -1.000  140  80  -1.500  100  60  -2.000  60  40  -2.500  20 20  21  22  20 19  20  21  22  (*) Includes household help, employers, and unpaid family work. Source: Central Bank of Chile based on National Statistics Institute and Project SABE of Labor Observatory SENCE and ISCI-WIC, Universidad de Chile, taken from websites trabajando.com and laborum.com.
During this crisis, the precipitate rise in liquidity premia and fall in asset prices may have called into question the viability of many banks had their assets been fair-valued. Consider again the banking book of UK banks on a mark to market basis. Chart 7 shows the loss of value on this book, which would have peaked at over £ billion during the early months of 2009. The total capital resources of UK banks at that time were around £ billion. In other words, the UK banking system in aggregate would have been technically insolvent on a mark to market basis. The recent recovery in asset prices has been almost as remarkable as the preceding fall. It has meant UK banks were back in the black within a matter of months.   “Liquidity and fire-sales”  The act of marking to market may itself have a bearing on asset price dynamics. This arises because of its potential effects on banks’ behaviour. If swings in perceived solvency cause banks to sell assets, these fire-sales may themselves add to downward pressures on asset prices. Under mark to market, these pressures are felt by all institutions, not just the seller. In effect, fire-sales by one firm have negative externalities for all others. And as other banks adjust their own balance sheets in response, there is a risk the downward dynamic is perpetuated. 18  8  Khan (2009).

A more ambitious alternative would be to seek a more systemic and standardised valuation methodology in the first place, against which different approaches can be cross-checked. The key here would be to establish an objective measure of expected loss, less susceptible to the excess volatility of market prices but adept at picking up its timely signals. In the language of George Shackle, stricter valuation standards would help place some bounds on the expectations and imaginations of bankers. This is a role which neither accountants nor regulators are best placed to carry out. It would require a body with both expertise in valuation and objectivity. It would seek consistency and, as far as possible, accuracy in valuations across asset classes, institutions and countries. An International Valuation Standards Board already exists. But it standards have only been adopted in around half a dozen countries. Accounting and regulation already have fora to support consistency of standards. During this crisis, valuation practices have been every bit as important. Perhaps they too need international recognition.   Business models matter, especially for banks  Accounting standards already reflect characteristics on the assets side of banks’ balance sheet. For example, IASB standards require consideration of the cashflow characteristics of assets (for example, specified cashflows of interest and principal) and the intentions of the holder (for example, to collect the contractual cashflows). But for banks the characteristics of their liabilities may be every bit as important as their assets. Indeed, at times of stress in funding markets, liability characteristics may be more important.
The good economic situation can also be attributed to the country’s sound financial health. National savings are high, the external accounts are solid, and public finances are on the way to recovery. The National Bank has contributed to this success by ensuring confidence in the Swiss franc – a key factor for the smooth functioning of the economy. As I have pointed out, this commitment is not new, but has been a constant throughout our history. As our predecessors, we are honouring it by following rules that are as clear as possible, while knowing that the uncertain environment in which we operate requires the ability to adapt. Mistakes have certainly been made in the 100 years of the National Bank’s existence. It must be acknowledged, in retrospect, that certain situations were not analysed correctly, that certain decisions were taken too late or were simply inadequate. In some instances, the SNB opted for strictly following the rules rather than searching for solutions that would have been better suited to the realities of the moment. Nevertheless, the outcome has been positive overall. Switzerland has been spared the monetary problems that afflicted so many other countries. However, the purchasing power of the Swiss franc has not been preserved as successfully as one might have wished. The general price level has increased by an average of 2.5% a year since 1907, although this is still only half a percentage point above the range we now equate with price stability.

Aggregate demand would thus grow at the expense of higher inflation or an increase in imports. This policy would be appropriate if the economy were in a situation of severely depressed demand relative to its supply capabilities. In an economy operating at relatively high employment levels with a deficit in the external current account, however, a fiscally-driven expansion in aggregate demand would only produce short-lived growth. At this juncture, therefore, the best contribution that fiscal policy can make to the economy’s growth prospects lies in the further consolidation of public finances, a policy stance that has already contributed positively to Malta’s standing with credit rating agencies and the IMF. 2  BIS Review 83/2001  Some commentators think it is possible to stimulate the economy via monetary policy, that is through the lowering of interest rates. As I have often had occasion to explain, the intermediate objective of monetary policy in Malta is to maintain a stable exchange rate by pegging the lira to a basket of currencies of low inflation countries. This restrains volatility in import and export prices, thereby contributing to lower costs; mitigates domestic inflationary pressures and contributes to export price competitiveness. If we are to continue enjoying the benefits of the exchange rate peg, our interest rates will have to shadow those prevailing in the currency basket countries, especially as restrictions on international capital flows are being lifted. The alternative would be to risk outflows of funds and a possible financial crisis.
In the case of the present crisis, those developments included: low long-term real interest rates associated with high savings rates in emerging market economies; an unusually stable macroeconomic environment, with an associated apparent reduction in risk; and financial innovation which purported to distribute risk more widely rather than leaving it concentrated in the banking system. With hindsight, we now know that much of that financial innovation in fact left risk concentrated in the banking sector; it was in effect simply shifting maturity transformation off balance sheet, where it was not subject to the same regulatory requirements. To that must be added: the underestimation of risk, coupled with inadequate risk management; distorted incentives facing the originators of US sub-prime mortgages and the ratings agencies  1  See page 48 of our August 2008 Inflation Report. 2  One forecasting organisation in the sample was consistently more pessimistic than others throughout the latter part of the sample. Though that organisation therefore did better at forecasting the Great Contraction when it came, it only did so by systematically underestimating growth in the years preceding the crisis. 2  BIS Review 142/2010  responsible for assessing complex structured finance assets. Finally, the complexity of those products and the high degree of interconnectedness between financial institutions meant that the financial system, instead of becoming more stable, had in fact become more vulnerable to failure.

But financial institutions and policymakers could – and should – have been more alert to the vulnerabilities that were building during the years leading up to the crisis and therefore to the possibility of a major shock to the financial sector and to the economy more generally. It is somewhat analogous to seismologists trying to predict earthquakes along a fault line. It is impossible to predict the day and magnitude of a shock with any precision, but it may be possible to say something about the likelihood of an earthquake occurring within a given period from seismic measurements and indicators of latent stress. Now it might seem natural to measure the severity of a recession by the magnitude of the fall in output. Indeed, a recession is sometimes characterised in the media as being two or more consecutive quarters of falling output, with the end of the recession being marked by a return to expansion. But that is not a very useful definition, as the mere resumption of growth will still leave some plants idle and some workers unemployed. From an economic perspective, it should be the margin of unused resources in the economy – the difference between actual and potential output – that we care about. And it is also the margin of unused resources that determines how much the economy can grow during the recovery before it puts significant 3 upward pressure on inflation , the control of which is the MPC’s primary objective.