samchain/econo-pairs-v1 huggingface dataset:
Prices for imported consumer goods showed a considerable smaller decline than in the three preceding years. Our inflation projections were revised downwards in the light of actual developments through 2006. Underlying inflation has recently picked up somewhat and is more closely in line with that expected one year ago. At the same time as inflation has been low, growth in the mainland economy has been strong, and stronger than expected. The Norwegian economy is booming, after a strong upturn since summer 2003. The upturn followed a period of slow growth from 1998 and a mild recession in 2002 and into 2003. Growth has been stronger and occurred earlier than in the cyclical upturn in the mid-1990s. When Norges Bank reduced the key policy rate in 2003, demand and output rapidly recovered. Strong productivity growth supported the upturn, which was reflected in exports, petroleum investment and  BIS Review 47/2007  3  after a period in general government demand. So far in this cyclical upturn, the mainland economy has grown by an average of a little more than 4 per cent annually. The upturn is now in a mature phase. Even though production increased rapidly, it took a long time for employment to pick up. Employment growth was lower for a long period compared with the upturns in the 1980s and 1990s. Moreover, high growth in labour productivity partly reflected a marked fall in sickness absence in 2004.

Further interest rate hikes are expected in the euro area, Sweden and the UK, while interest rates in the US may fall over the next year. In Norway, the interest rate was reduced to a very low level in 2003 and 2004 when inflation fell and approached zero. There is a dynamic inherent in interest-rate setting. Low interest rates stimulated demand and production and eventually led to prospects for higher inflation, to which we are reacting by raising interest rates. Interest rate developments must be seen in the light of actual price developments and inflation, output and employment prospects. 10  BIS Review 47/2007  It normally takes some time for interest rates to have an impact on prices via changes in expectations, exchange rates or capacity utilisation. Consequently, interest rate setting must be based on our expectations of developments ahead. The interest rate was raised in response to the strong increase in capacity utilisation and the associated inflation prospects. The interest rate has thus been increased well ahead of an actual rise in inflation. Growth in capacity utilisation has been stronger than projected one year ago. The interest rate has thus been increased somewhat faster than Norges Bank presented as the most likely path at that time. In the interest of enhancing the transparency surrounding our conduct of monetary policy, we have published our own interest rate forecast over the past year and a half.
If, against our hopes and expectations, that proves not to be the case, authorities in Europe and elsewhere will need to think through what if any measures we could sensibly take to make our part of the global financial system more resilient to the faultline that the money fund industry currently represents. One possibility would be for   bank supervisors to limit the extent to which banks could fund themselves short-term from US money funds and from other fragile/flighty sources, including CNAV money funds domiciled elsewhere. I should stress that such a policy need not be targeted at US funds per se. It is also a question of the prudence of the banks that borrow. So it could be cast in terms of the liability structure and sources of funding of the banking system. The Basel 3 Net Stable Funding Ratio may help a bit with this. And I should add that on some fronts – notably transparency – Europe should aim to catch up with the progress the US has already made. Securities dealers, finance companies Some shadow banks are “businesses”, not funds or vehicles. These non-bank financial intermediaries finance themselves externally in the markets. Some such financing is short-term and so effectively runnable, as events showed. In those cases:   If they are financed materially by short-term debt, they should be subject to bank-type regulation and supervision of the resilience of their balance sheets. That would apply to some kinds of finance company. It might apply to securities dealers too.

Zeti Akhtar Aziz: Regulatory and governance for Islamic finance Speech by Dr Zeti Akhtar Aziz, Governor of the Central Bank of Malaysia, at the Brunei Darussalam Islamic Investment Summit 2013 “Regulatory and governance for Islamic finance”, Bandar Seri Begawan, Brunei, 19 June 2013. *  *  *  It is my great pleasure to be here in Brunei Darussalam to speak at this Islamic Investment Summit 2013. My remarks today will discuss the current landscape of Islamic finance in Asia in the context of the growing role of Asia in the global economy, and the important priorities for Islamic finance to strengthen its prospects for future growth and stability. Asia and the global economy The global economic landscape is now significantly evolving as it progresses towards a new more multi-polar world. This is being shaped by the increasing contribution of emerging economies to global economic growth, with some of the most vibrant and dynamic emerging economies being in the Asian region. In 2012, the Asian region contributed 56% to global growth. This advancement takes place at a time when the world economy continues to be significantly challenged by the lingering effects of the 2008 global financial crisis, with a sustainable economic recovery yet to be secured. Asia’s growth trajectory has been underpinned by several favorable fundamentals, which will continue to support its prospects for growth going forward. Asia is a highly diverse region in terms of its economic and demographic structure, market size, stage of development, and political systems.
I should like to underline – once again – that these two responsibilities are clearly distinct and should not be mixed. Since early August last year, tensions have been observed in money markets and during the last months banks expressed particular concerns about their liquidity needs over the yearend. The year-end period is traditionally a period of scarce liquidity, as market activity is subdued and banks are preparing their year-end balance sheets. In its open market operations, the ECB therefore pursued its endeavour to contribute to the smooth functioning of the euro money market. In early August, we responded to the sudden  2  BIS Review 3/2008  upward pressures on the overnight interest rate by lending significant amounts of liquidity through overnight fine-tuning operations. We also carried out, and later renewed, two supplementary longer-term refinancing operations in order to reduce banks’ concerns over their longer-term funding during a period when the longer-term repo and deposit markets turned illiquid. In the main refinancing operations the ECB has allotted larger amounts of liquidity than under normal circumstances with an aim to limit the volatility of very short term rates around the ECB’s minimum bid rate. These large amounts of liquidity have always been absorbed later on during the maintenance period, so that the ECB has only provided banks with the liquidity needed for the fulfilment of their reserve requirements on average over the maintenance periods. Let me also underline that we only provide such operations against solid collateral, as always.

Clarity is also needed concerning liquidity commitments to off-balance sheet vehicles, and the magnitude of assets that may be  BIS Review 3/2008  3  re-intermediated back onto the balance sheets of euro area financial institutions. The process of improving clarity, which started when Q3 2007 financial statements became available, will be advanced further when institutions publish their annual audited accounts for 2007 as a whole. Given the uncertainties, the adjustment process in the financial system in the coming period may be challenging, and we have to be prepared to the materialisation of risks at any time. That being said, there are mitigating factors, including a broadly favourable economic outlook, the largely sound balance sheets of households and firms, and the generally sound capital positions of core financial firms. This should not, however, provide any grounds for complacency given the heightened uncertainties. In a fluid environment where financial system conditions may unexpectedly change, prudence is of the essence both for policymakers and financial institutions. Concerning the role of financial institutions and supervisory authorities in coping with the financial turmoil, I would submit three observations. First, given the underlying factors of the financial stress, and in order to re-establish confidence within the financial system, it is crucial to promote a widespread consistent valuation of complex structured products as well as an adequate disclosure by banks of all their exposures, in particular related to the US subprime mortgage sector.
Even if we need to wait for the Parliament's proposal and the outcome of the trialogue discussions, this agreement is overall positive. On the supervision side, it provides the European Union with all the prudential ratios of the international framework. It also provides for the gradual introduction of the revised market risk framework, the Fundamental Review of the Trading Book (FRTB), which is still being finalised in Basel. In addition, a first step has been taken towards recognising the euro area as a single jurisdiction, in which cross-border exposures within the Banking Union are considered domestic exposures for measuring the systemic importance of European banks. On the resolution side, we have obtained an agreement to broaden the subordination requirement of the Minimum Requirement for Own Funds and Eligible Liabilities (MREL) to  Page 4 of 6 beyond global systemically important banks (G-SIBs), thereby reducing the threshold effect between G-SIBs and other banks. In addition, the text defines a subordinated debt ceiling, very close to the international Total Loss Absorbing Capacity (TLAC) standard. However, this agreement contains a number of more problematic aspects about which we shall remain vigilant. To name but one, as regards the internal MREL, cross-border exemptions within the Banking Union similar to the methodology for calculating the capital surcharge for systemic banks would have been desirable.

The rules require banks to appreciably increase the quality and quantity of regulatory capital. Further, they increase the instruments at supervisors’ disposal to restrict the risks of bank operations and to ensure financial institutions have sufficient loss-absorbing capacity, and, more generally, to safeguard the stability of the financial system as a whole. Yet the mission to strengthen the regulatory framework in order to minimise the likelihood of banking crises, together with their associated costs, is far from complete. You will be aware that the Basel Committee on Banking Supervision is working on the definition and appropriate parameterisation of new liquidity requirements to complement the solvency requirements. At the same time, one task to be undertaken in the near future is the enhancement of the current tools for measuring and provisioning risk on bank balance sheets. Specifically, the Basel Committee has advocated the advisability of working on improving the methods for calculating risk-weighted assets and thus increasing their consistency and homogeneity. Indeed, an appreciable degree of heterogeneity has recently been evident in the internal models banks use to calculate risk weightings under the advanced approach, whose use must be approved by the supervisor. Supervisory practice indicates the technical difficulty entailed in approving the models presented by banks and, in particular, in gauging their ability to properly measure the sensitivity of the various portfolios to risk.
Most of the emerging markets do not have deep and developed government securities markets, which imply very limited availability of these assets, as a basis for fulfillment of the liquidity requirements-”highly marketable” which is more restrictive than the eligibility criteria for central bank refinancing operations (and central bank liquidity is the most reliable form of liquidity). The options for investing in foreign securities might be  2  BIS central bankers’ speeches  viable, but at the same time it also increases the exposure to foreign exchange risk. Some of the countries might opt for the central bank placements as an alternative, but this is also seen as a solution, which increases the cost of liquidity and hence, increases the costs of finance. The problem of limited availability of proper assets also holds for corporate bonds, which should have a proper credit rating and certain liquidity features to qualify for the LCR. This is difficult to be fulfilled in countries with thin financial markets, and with sovereign and hence corporate credit rating usually bellow the Basel III requirement. So measures that restrict banks ability to finance bond holdings may hamper the further development of the local capital markets. One remaining issue is the interaction between the LCR and the provision of central bank facilities (The Basel Committee committed to work on this during 2013). – The second “dimension of problems” arises from the calculation of the NSFR that requires shift from short-term to more stable funding of assets and business activities.

It is clear from this economic integration that the fear of the region’s borders considerably compromising economic development cannot be confirmed. Rather, the diminishing, relative importance of intra-regional foreign trade and intra-regional cross-border direct investment is due more to globalisation and the ensuing increase in the influence of Eastern European and Asian economies than to weakening ties within the Upper Rhine region. Thirdly, the most notable aspect of the relationship between the region’s two currencies since the introduction of the euro in 1999 is its stability. That does not mean, however, that the issue of Switzerland’s ascension to the EU is of no consequence. Having its own currency allows Switzerland to conduct an independent monetary policy that is tailored to suit its needs. Finally, the economic policy can help the region thrive further by removing remaining hurdles, such as those in the labour market and in the exchange of goods and services (Cassis de Dijon principle). A well-integrated economic region is the key to a prosperous future. “Three nations, two currencies, one economic area” - the title of the paper - not only describes the reality, it also maps out the way forward. BIS Review 45/2005  1
With regard to the Bank of England, their Inflation Report published in August (Bank of England 2010a) contains a forecast that is also based on the policy rate following market expectations, where inflation falls slightly below the target in two years’ time, and GDP growth is close to its historical average, and the GDP level is still lower than before the crisis. This and the minutes from the meeting in October (Bank of England 2010c) do no indicate that the Bank of England will follow a policy rate path that is higher than market expectations. 7  7  After the Riksbank’s monetary policy meeting the Inflation Report and minutes from the meeting in November have been published (Bank of England 2010b, c). Neither do they indicate a policy rate path above market expectations. BIS Review 158/2010  9  If the statements and signals from these central banks indicate interest rate paths in line with or below market expectations, it is not reasonable, in my opinion, to assume – as the main scenario does – that foreign interest rate paths will be clearly above market expectations. In this situation it is more reasonable, at the very least, to proceed on the basis of market expectations according to implied forward rates. One reason for assuming higher future policy rates than the market pricing may be that these abnormally low nominal and real interest rates are not compatible with the Riksbank’s usual models and with the historical patterns for how foreign inflation, GDP and interest rates interact.

However, if the repo rate path becomes credible, the long market interest rates will increase substantially and actual monetary policy will be much tighter. This risks cutting off the recovery. Higher long market rates would also lead to a much stronger krona. A stronger krona would lower inflation and in particular affect exports, entailing a further tightening of monetary policy, in addition to the increase in long market rates.   In my opinion, the krona appreciation that would ensue if the repo rate path is credible is underestimated in the main scenario of the Riksbank’s Monetary Policy Report. This appears to be because it is assumed in the main scenario that long market rates abroad are much higher than the observed market rates. Alternatively, it is assumed that the long market rates abroad will rise gradually in pace with Swedish long interest rates. However, these questions have not been properly analysed. Behind this is an assumption that certain central banks, namely the US Federal Reserve, the European Central Bank (ECB) and the Bank of England, will begin to raise their policy rates long before what is indicated by market pricing. These assumptions appear unrealistic, given the statements and signals from these central banks regarding continuing low policy rates.
The diversity in funding brought by market-based finance, as an alternative to retail banking, means that peer-to-peer lending has potential to provide some consumers and small businesses with affordable credit, when retail banks cannot. At the same time, this implies that borrowers in some segments may be placing increased reliance on this source of funding. How stable this funding will prove through-the-cycle is not yet clear, as the sector’s underwriting standards, and lenders’ tolerance to losses, have not been tested by a downturn. Due to its small scale and business models, the P2P lending sector does not, for now, appear to pose material systemic risks. That said, as a general rule, it always pays to monitor closely fast-growing sources of credit for slippages in underwriting standards and the promotion of excessive borrowing. Moreover, it is not clear the extent to which P2P lending can grow without business models evolving in ways that introduce conventional risks, including maturity transformation, leverage and liquidity mismatch, or through the use of originate and distribute models such as those seen in securitisation in the 2000s. Were these changes to occur, regulators would be expected to address such emerging vulnerabilities. In wholesale banking and markets, robo-advice and risk management algorithms may lead to excess volatility or increase pro-cyclicality as a result of herding, particularly if the underlying algorithms are overly sensitive to price movements or highly correlated.

For a more detailed discussion, see Cimadomo, J. Hauptmeier, S., Palazzo, A.A. and Popov, A. (2018), “Risk sharing in the euro area”, Economic Bulletin, Issue 3, ECB. 2. Draghi, M. (2018), “Risk-reducing and risk-sharing in our Monetary Union”, speech at the European University Institute, Florence, 11 May. 3. More details on financial integration, including the latest data, can be found on the ECB’s website. 4. Some caution is necessary when interpreting these movements at present, given the potential impact of Brexit on measurement. 5. The findings of the ECB’s ongoing quantitative assessment of climate-related risks are discussed in more detail in Alogoskoufis, S. et al. (2021), “Climate-related risks to financial stability”, Financial Stability Review, ECB, May. 6. More details on the findings to date of the joint workstream of the ECB and the European Insurance and Occupational Pensions Authority (EIOPA) on the insurance protection gap will be published in EIOPA’s forthcoming June Financial Stability Report. 7. These are funds that select assets based on environmental, social and governance criteria. 8. De Haas, R. and Popov, A. (2019), “Finance and decarbonisation: why equity markets do it better”, Research Bulletin, No 64, ECB, 27 November; De Haas, R. and Popov, A. (2019), “Finance and carbon emissions,” Working Paper Series, No 2318, ECB, September. 9. Lagarde, C. (2021), “Towards a green capital markets union for Europe”, speech at the European Commission’s high-level conference on the proposal for a Corporate Sustainability Reporting Directive, 6 May.
The Riksbank must take asset prices into consideration to the extent that they affect price stability or financial stability. These are the areas that the Riksbank is responsible for. The inflation target can be threatened if asset prices lead to households and businesses increasing their demand so much that the use of resources in the economy exceeds potential growth. At present, the use of resources in the Swedish economy is still low which creates space for a time for a higher increase in demand than would be sustainable in the long term. There is accordingly space for the stimulation that increasing share and property prices create and which is inter alia reflected in increased indebtedness in the household sector. In a somewhat longer perspective, however, household debts probably cannot increase at the rate we see today without this indicating a growth in consumption that is higher than permitted by the inflation target. The effect of asset prices on demand and inflationary pressure is, however, only one of many factors that affect the assessment of inflation and the conduct of monetary policy. This also applies for the assessment of financial stability. In general, it is moreover probably hardly possible or advisable to attempt to dampen an increase in share and property prices by monetary policy, even though it is possible to conceive of situations where the Riksbank would want to be able to do so on some future occasion, eg with a view to avoiding the risk of recession and falling prices.

The number of cross-border REITs listed on the Singapore Exchange has increased, further consolidating Singapore’s status as a regional REITs hub. These REITs offer global investors exposure to properties throughout Asia Pacific via the Singapore market, including properties in China, Hong Kong, Australia, Indonesia, Vietnam, Malaysia and Japan. To sharpen Singapore’s edge as an Asian REITs hub, it is crucial for us to maintain a conducive environment both for issuers and for investors. To this end, MAS regularly reviews its regulatory regime to keep pace with market development while providing adequate safeguards for investors and issuers, in close consultation with the industry,. Despite substantial growth in market capitalization of REITs in Asia, from approximately $ billion in 2005 to $ billion in 2006, estimates suggest that the current market only represents 4% of investible-grade real estate in Asia, whereas in Australia estimates lie in the region of 50% to 60%. This suggests immense potential for increased securitization of Asian real estate assets, and for diversification beyond the conventional types of properties. Innovations in property finance The success of our REIT market has also spurred growth in other areas. Take for example our debt market. Singapore-listed REITs have also been large issuers of commercial mortgage-backed securities, contributing 20% of all issuance of mortgage-backed securities in Asia-ex-Japan last year. Indeed, Asia’s largest ever commercial mortgage-backed security was issued jointly by two Singapore REITs – CapitaMall Trust and CapitaCommercial Trust.