samchain/econo-pairs-v1 huggingface dataset:
Malaysia is well positioned to realise this growth potential in renminbi bond and sukuk, given our market size and supporting infrastructure. Malaysia not only has the largest debt securities market in Southeast Asia, but it is also a leading international centre for sukuk issuance. Both markets are evolving as a multi-currency bond and sukuk market. As the renminbi market expands, more information would be needed to provide awareness on market developments. As we transition to using other currencies for trade settlement it will also require businesses to gain new expertise, develop new arrangements and to build new networks. Let me now conclude my remarks. As Asia, and in particular, China’s greater prominence in the global economy, a dynamic response is required in this new operating environment that is now upon us. One of the changes that will shape the international financial system in the years to come is the wider role of the renminbi in trade and finance. While existing international reserve currencies will remain to be important, this will represent an additional currency in the international financial system. This is an expected development as the world economy becomes increasingly multi-polar. In a more complex and more challenging economic and financial environment that is prone to greater volatility and increased uncertainty, there will be a greater trend to diversify risks. This will also contribute to overall global stability in the international financial system.

This serves to provide a safe and efficient clearing and settlement platform that supports trade and investment flows in renminbi. A nationwide awareness program by the banking institutions and the business chambers is also creating greater awareness on renminbi for trade settlement and investment. The Bank has also participated in the Chinese interbank bond market. In 2011 alone, the size of renminbi trade settlement in Malaysia expanded by four times from the level a year ago, reflecting a growing interest in renminbi as a settlement currency. The expansion in renminbi usage has also been underpinned by a diffusion of corporate players, both in size and across the sectors. Not only has the number of corporate players increased, but there has been a shift in relative significance in the use of renminbi as a trade settlement currency from the smaller to the larger corporations. There has also been more widespread corporate participation from a larger cross-segment of economic activities, namely the commodity based industries, manufacturing and services sectors that also includes tourism and education. There has also been an increase in the number of financial institutions participating in renminbi trade settlements. There are now 19 financial institutions that facilitated such trade settlements, double the number in 2009. More recently, there has been an increase in the use of the renminbi as an investment and funding currency. In the first seven months of this year, renminbi deposits in the banking system had tripled.
So policymakers need to manage a trade-off between, on the one hand, the impact of the underlying shock on inflation and, on the other hand, the impact of any policy mis-calibration on inflation. Managing this trade-off implies a less aggressive response to any specific shock than would be desired if there were no uncertainty about the parameters of the economy, and thus no scope for policy mis-calibration. 6  All speeches are available online at www.bankofengland.co.uk/news/speeches  6  On occasion, policymakers have embraced this Brainard view in rationalising their decisions. Former Federal Reserve Vice-Chairman Alan Blinder went so far as to state that the FOMC should first “estimate how much you need to tighten or loosen monetary policy to ‘get it right’. Then do less”.14  But other strands of the engineering literature offer guidance pointing in the opposite direction. One thread falls under the label ‘robust control’. Broadly speaking, the desire for robustness in policy design starts from the premise that ‘the perfect should not become the enemy of the good’.15  In the face of uncertainty about the outlook for and structure of the economy, policy should be based on principles that give good outcomes across a broad set of possible eventualities, rather than an optimal outcome in one specific context, especially if the optimality of that outcome is fragile to changes in context.

Sunil Mendis: Risk management in Sri Lankan banks in the changing environment Inaugural address by Mr Sunil Mendis, Governor of the Central Bank of Sri Lanka, at the CRISILSLBA seminar on risk management in Sri Lankan banks in the changing environment, Colombo, 15-16 November 2004. *  *  *  Good morning ladies and gentlemen, Let me first thank the SLBA (Sri Lanka Banks Association) and the representatives from CRISIL India (Credit Rating Information Services of India Ltd) for the initiative taken to organize this Seminar on a very important aspect of banking business - risk management. As we all know, risk management in banking is a continuous process of planning, organizing and controlling a bank’s assets and liabilities, their volumes, maturities, rates and yields. This is the most simple definition that I can think of. However, its implications on banking business are what we concern ourselves with, especially from the regulatory point of view. In the context of Sri Lankan banks at least, of the major risks confronting financial institutions, credit risk remains the predominant or core risk. Risktaking is part and parcel of banking. The highly leveraged nature of banking business itself illustrates the risk exposure level of banks. Therefore, what is important is how we manage these risks, how we measure and price risk and above all what measures we take to mitigate these risks.
Hence the need to have a policy domain, such as macroprudential policy, which seeks to mitigate the insurgence of systemic risk, i.e. the risk that the whole financial system is disrupted and becomes unable to provide services to the real economy. Of course, the targets and instruments of macroprudential policy and microprudential supervision exhibit a certain degree of overlap. However, while macroprudential policy instruments are used to counteract risks of a systemic nature, microprudential supervision applies its instruments to individual institutions or limited groups of institutions to strengthen their resilience. [58] Moreover, some macroprudential policies may require the use of fiscal instruments. This explains why, at national level, fiscal authorities are sometimes involved in systemic risk boards. http://www.ecb.europa.eu/press/key/date/2017/html/sp170330.en.html[03.04.2017 15:53:14]  Central bank independence revisited  However, at EU level, no fiscal authority exists. Therefore, macroprudential policy should remain at national level. Concluding remarks To conclude, the rationale of the principle of central bank independence, as set out in the Treaty and interpreted by the CJEU, is to protect the ECB from political influence primarily when defining and implementing the Eurosystem’s monetary policy. The additional mandates and functions conferred on the ECB after the financial crisis with regard to micro- and macroprudential supervision and crisis management are not covered by the very high level of independence provided to the ECB under Article 130 of the Treaty.

As regards the tasks allocated to the Commission and the ECB by the ESM Treaty, these are in line with the various tasks which the Treaties confer on these Union institutions. In the specific case of the ECB, by virtue of its duties under the ESM Treaty, the ECB supports the general economic policies of the Union, in accordance with Articles 127(1) and 282(2) of the Treaty. This approach was confirmed by the General Court in its  http://www.ecb.europa.eu/press/key/date/2017/html/sp170330.en.html[03.04.2017 15:53:14]  Central bank independence revisited  Ledra[48] judgment. The role of the Commission, in liaison with the ECB, was finally mirrored in Union legislation strengthening economic governance in relation to euro area Member States under a financial assistance programme of the ESFS/ESM. [49] This brings me to the conclusion that the ECB has no decisionmaking powers of its own in the context of its liaising role in the ESM/EFSF programmes, but is acting essentially as a technical advisor to the ESM/EFSF. Therefore, the protection provided to the ECB by the requirement of central bank independence in the Treaty is simply not relevant in this field, as the ECB does not adopt any decisions and does not have its own instruments for the implementation of decisions. This is without prejudice to the financial independence of the ECB because if the ECB did not have sufficient financial and human resources to perform its technical advisory tasks, this might undermine its ability to perform its tasks under the Treaty.
The main arguments against a more expansionary policy that have been put forward lately are that this type of policy would be too risky, given the size of household debt.3 Let me therefore use this argument as a starting point for my reasoning. The discussion among the Executive Board members to a large extent reflects a broader international debate on the relationship between monetary policy and financial stability, on whether household debt is too high and, if so, whether monetary policy should be used to try to limit indebtedness – although the Swedish debate does contain a number of specific characteristics. In brief, one can say that those who believe the repo rate should be held extra high appear to think as follows.4 If the interest rate is too low, households take on too much debt. A large share of the loans households take on are used to buy housing, which also pushes up housing prices. If indebtedness and house purchases are based on overly optimistic calculations, there is a risk of a heavy fall in housing prices when the mood changes, for some reason. If prices were to fall, many households would find themselves in a situation where their assets have substantially declined in value, while their debt remains unchanged. They may then want to pay off some of their debt to come down to a more suitable level. This means they will prioritise saving over consumption. Demand in the economy will then decline and unemployment will increase.

We faced the challenge to prepare and submit nine new or appropriately adjusted categories of data, out of which seven are within the competence of the NBRM, and two within the competence of the Ministry of Finance:  1/2  BIS central bankers' speeches  -real sector data - statistics of sectoral financial accounts which is actually an overview of the structure of financial assets and liabilities of individual sectors, their mutual exposure, financial flows and, accordingly, possible accumulation of risks;  - financial sector data – statistics of non-bank financial institutions (more detailed data not only for the banking system, but also for the pension funds, insurance companies, investment funds, financial companies, leasing companies), statistics of debt securities and seven financial stability indicators that enable better identification of the risks in the financial system;  - external sector data – data on the currency structure of the foreign reserves, the coordinate direct investment questionnaire and the coordinate portfolio investment questionnaire which provide more detailed findings for cross-border links and the possibility of transfer of the effects from the external shocks to the domestic economy, and  - fiscal sector data – general government statistics and data on gross debt of the general government. Aware of the challenges that the countries faced with and the need for making extremely great efforts to produce them, the IMF allowed, at the time of application for this standard, fulfillment of the dissemination requirements of at least five from the nine mandatory indicators.
In Asia, at the national level, we see a region-wide move toward a more flexible exchange rate regime, with a disciplined framework in the conduct of monetary and fiscal policies. As for the financial sector, after the initial restructuring and consolidation, the framework of policy has moved towards risk-based supervision, to an adherence to international standards, and to the undertakings of formal financial sector assessments either under FSAP or within the country’s own financial stability evaluation framework. At the international level, the IMF has also come up with many new and important initiatives. As for the financial sector, its financial surveillance process has been deepened with the introduction of FSAP and the surveillance of international capital markets under the Financial Stability Forum, and the publication of the Global Financial Stability Report. More importantly, the recent initiatives on the new direction of financial sector surveillance is another important step in understanding the linkages between macroeconomic stability and financial vulnerabilities. The new direction aims to integrate financial sector analysis and issues with the Article IV process, and then to link the bilateral surveillance with multilateral surveillance. In our view, this is an ambitious undertaking, but is a move in the right direction. BIS Review 95/2006  1  The challenge, as we see it, will come from the implementation process, especially on the issue of what should be the adequate scope in terms of issues to be covered, choice of countries, and the analytical approach to be used.

Such developments can create difficulties for emerging markets through spillover effects, large and persistent capital inflows, and the risk of sudden stop and capital reversals. So, it is in this context that IMF surveillance on emerging markets, in addition to the new directions that we have discussed, should pay attention to the sources of the externally-induced risk and vulnerabilities, and to assist members, through Fund policy advice, on how best to prepare. To help emerging market members become better prepared for these risks, I have a few suggestions to make on the Fund’s current efforts. First, for the new direction on financial sector surveillance to be relevant for crisis prevention, it is important that the key systemically important economies participate. As with FSAP, this is an area that is likely to be a challenge. Ideally, most systemically important economies and those with potential financial vulnerabilities should participate if the new direction were to have a strong relevance to the global surveillance objectives. The second suggestion is in financial markets surveillance. Again, if surveillance is to have a strong relevance for emerging markets, we will need to have a more policy-oriented surveillance of the global financial markets, focusing on the key financial flows, and on keeping members informed of what the Fund sees as the current trends and risks in the global financial markets.
Financial reform needs to go beyond the banking sector on which so much attention has been focused. We also have to look very closely at non-bank financial institutions and at the set-up and functioning of financial markets. Leverage cycles, for example, have been a constant source of instability for centuries. If left to their own devices, their ultimate outcome has regularly been financial disruption, wealth destruction and economic hardship for our people. Let me start by elaborating first on risk before and after the crisis and then turn to monetary policy. I want to share with you the European Central Bank’s approach to dealing with the balancing act, in which we have sought a combination of bold action as regards nonstandard measures, while entirely preserving our clear focus on medium and long term price stability. Risk before and after the crisis Risk is inherent in economic activities because economic pay-offs are uncertain. Even the prototype model of finance – the competitive economy studied by Gérard Debreu and Ken Arrow – is subject to stochastic shocks. Therefore, economic returns are risky, because they are not known with precision ex ante. But the type of risk that we faced in the crisis was of a different nature. It was not triggered by stochastic variation in the real economy – by shocks to “endowments, technologies and tastes” as theory would predict. At source, it was financial risk.

It seems to me, however, that in this respect the ECB has relatively little reason to change fundamentally what has served our monetary policy well, both in normal and crisis times. The speed and path of the phasing-out of non-standard measures will depend on developments in financial markets and the economy. The current situation of ample liquidity in euro area money markets guarantees a continued positive impact on financing conditions. As regards the monetary policy stance itself, it will be designed as always to deliver price stability, in the medium and long term, in line with our definition. Crisis prevention Governments and central banks have been focused on financial reform since October 2008. The new financial architecture will build on the assumption that a re-pricing of risk around its fundamental value is needed. Price discovery within the market in pursuit of a fundamental equilibrium in risk pricing – one that can be sustained by long-term trends – is likely to take time and experience some further oscillations. A question that remains is: Where will this process end? As aggregate – undiversifiable – risk diminishes, this will be reflected in lower premia that financial markets pay for risk-taking. We know that the commitment by central banks to keep inflation low and stable, communicate clearly about their price stability objectives, and then act on those objectives, has all contributed to a long-term reduction in macroeconomic risk. The fraction of the reduction in risk compensation related to having a stable macroeconomic framework is a steady acquisition of modern societies.
Starting with monetary policy, the primary aim at the current juncture is to strike the right balance between accommodating domestic recovery while ensuring stability in the long-term. As mentioned earlier, recent monetary policy actions were geared towards temporarily addressing risks to growth. In the context of a sharp contraction in economic 2  BIS central bankers’ speeches  activity from the floods, moderating inflationary risks, and pronounced headwinds from the global economy, the MPC judged this to be most appropriate. Such policy actions have helped to shore up confidence and hasten the recovery process. However, with clearer signs of a pickup in economic activity and the recent rise in global oil prices, upside risks to inflation has become more elevated. It is unlikely though that inflation would accelerate to the extent that would threaten economic stability. Nonetheless, monetary policy will remain watchful as the pick-up in public and private spending and cost-side pressure stemming from various government stimulus packages may add extra inflationary pressure in the period ahead. From a longer-term perspective, let me reiterate our commitment to the inflation targeting framework. Since its adoption over 10 years ago, this framework has endowed monetary policy with a degree of flexibility and credibility that has proved extremely valuable. Especially through trying times with high levels of uncertainty, the framework has imparted a degree of stability by helping to anchor public expectations of monetary policy. In delivering our primary mandate of macroeconomic stability, inflation targeting will continue to be a central pillar.

The Stability and Growth Pact and all the efforts of the Eurogroup over the years to maintain a coordinated and disciplined fiscal policy have been vital and should be continued in the future. But in addition to continuing along these lines in the coming decade, efforts should focus on designing and adopting the necessary structural policies. If we observe how these divergences are perceived in the different countries, we can gain insight into the importance of efforts to push through structural reforms. Many in Spain believe that the divergence problems witnessed in the Spanish economy in recent years are to do with the fact that certain euro area countries are lacking in dynamism and therefore have much lower growth potential than we do. And it's true. Spain has a higher degree of privatisation that makes its economy much more dynamic. Also, the weight of public spending in the economy is much lower. Advances in competition in many industries affords higher growth potential for Spain than for other euro area countries. The problem of being in an area with countries with lower growth potential is that when the ECB set its interest rates in the 2000-2004 period, it did so at a level which, though arguably high for these other countries, was very low for Spain. And that entailed higher debt, higher inflation and, therefore, a loss in competitiveness for our country. But look now how such divergences are seen from the other countries.
I do not intend to say a great deal about any conclusions in the material in this brief introduction. The point is that it is the Committee on Finance that assesses us. However, I would like to raise several issues of principle about assessment in general and about assessing monetary policy in particular. These issues have in various ways left their mark on the formulation of the material. For several reasons, it is important that we are assessed. As I mentioned earlier, one reason is that we become more efficient and develop our work methods. Monetary policy acts with a lag and must therefore be based on forecasts. If we are to be as proficient as possible in forecasting future developments then we must continuously take heed and incorporate new knowledge, both new theories and everything else that is happening in the economy “right now”. One might say that it is similar to navigating with a nautical chart that is continuously being redrawn a bit. But it is not enough to have the latest shipping forecast and an up-todate chart in order to be a skilful skipper. In order to learn just how much the rudder needs to be adjusted in rough seas, one has to learn from experience. Hopefully, one becomes more skilful at maintaining one’s course each time one has to parry. And, for monetary policy to be as efficient as possible, we must, in the same way, learn from past events. Another reason concerns our role as an independent authority.

However, over a long period of time these errors offset one another and on average good forecasts should therefore not over-estimate or under-estimate the actual events. For shorter periods it may be interesting to study individual forecasting errors in greater detail to try to analyse their causes. But even if such an analysis is valuable it cannot be used to draw general conclusions about the forecasting performance. While accuracy is very important, even more is required for a forecast to be good in a monetary policy context. A good forecast for inflation, for instance, should correspond with the forecasts for other variables. And the driving forces behind the forecasts should be explained in a comprehensible manner. Why does the forecast look the way it does? What are the mechanisms acting as a motor for this development? These qualities are also required for a forecast to function as part of the decision-making base for practical monetary policy. BIS Review 22/2008  3  Consideration to the real economy Another factor to take into account in an assessment of monetary policy is that there may sometimes be reason to deliberately deviate from the inflation target. Normally we focus our policy on attaining the inflation target within two years. This is partly due to it taking time before monetary policy has its full effect. But it also has to do with the Riksbank thereby being able to contribute to a more stable development in production and employment. However, it does assume that the inflation target is not threatened.