samchain/econo-pairs-v1 huggingface dataset:
With returns sky-high, there was then a great sucking sound as both people and monies were drawn into banking, in particular the high-risk/high return, sharp-suited parts such as investment banking. A generation of scientists’ and mathematicians’ heads were turned towards finance. Funds flowed into the bank money machine, with balance sheets rising fivefold in less than 20 years, much of it to support short-term trading activities rather than long-term investment. Yet even while it was still inflating, this bubble was already having silent costs – costs to the economy and indeed costs to other parts of banking. Many of the best people and the best financial resources were drawn away from other sectors, including the retail banking sector. Industries outside of finance were starved of sunlight. The costs of this great sucking sound are only now being properly understood. Recent research by the Bank for International Settlements suggests that, once bank assets exceed annual GDP in size, they begin to act as a drag on growth.3  1  Philippon and Reshef (2009). 2  Haldane (2011). 3  Cecchetti and Kharroubi (2012). 2  BIS central bankers’ speeches  Why? Because human and financial resources are drained from elsewhere in the economy. The sectors hardest-hit by this financial vacuum-cleaner effect are R&D-intensive businesses (who might otherwise have attracted the scarce, skilled labour that flowed into finance) and businesses reliant on external funds (whose financial cake was instead being eaten by the banking system). These are the very businesses that today we are seeking to re-nurture.

Right now, the FPC is playing its part in trying to cushion the effects of the credit squeeze I mentioned, by freeing up banks’ capital and liquidity reserves to enable loans to be made to companies and households. If these sound like small steps for mankind, then they are giant ones for regulators. This is the first time in the Bank’s 318-year history that it has attempted such “macro-prudential” regulation. Of course, it is impossible for the FPC or anyone else to eliminate mini-booms and mini-busts in credit. But the FPC can legitimately aim to head-off the maxi-booms, such as the pre-crisis one, and the maxi-busts, the like of which we are currently experiencing. That should be good for medium-term growth, by preventing a build-up of excessive leverage. And because financial booms and busts are inherently inequitable, it ought also to be good for the distribution of this growth across society. Fifth, we really must do a much better job of promoting competition in financial services. The most shocking statistic is that, up until 2010, no new bank had been set up in this country for a century. We need to raise our levels of ambition when breaking down barriers to entry into banking, to ensure bank customers get a fair and efficient deal. Although there is no silver bullet solution to the competition problem, I am attracted to recent proposals which would place some core banking services in the hands of a shared utility, storing customer account details.
One of the most important and immediate consequences would be impact on trade finance which is a critical issue for emerging economies and Asia. This is because our economies and financial structure is more dependent on it, compared to some western economies. Let me elaborate. International trade is a major driver of GDP as our export is part of the global and increasingly integrated regional supply chain. However, many of our exporters are SMEs not large conglomerate. These local SMEs rely on bank financing, as our financial system remains more bank-based than market-based. Supplier of trade financing is still banks in western countries, especially European banks. The deleveraging of European banks can reduce the supply of trade financing and impact growth and development. To address this, it is important that Basel Committee recognizes that trade financing has relatively large impact on Asia, compared to the western economies for which Basel III is mainly geared. Treatment of trade financing in leverage ratio framework will create incentive for banks to shift away from trade financing towards other types of financial transactions, including derivatives which have lower impact on leverage ratio, but can earn higher return. This is because they are assigned lower credit conversion factor even though trade financing is less complex, more familiar, has low liquidity risk as they are self-liquidating, and most importantly, it clearly serves real sector. We believe these rationales argue for a more appropriate treatment of trade financing to ensure that the Basel III framework is appropriate for Asia.

Durmuş Yilmaz: Globalization and monetary policy Speech by Mr Durmuş Yilmaz, Governor of the Central Bank of the Republic of Turkey, at the conference on “Globalization, Inflation and Monetary Policy”, Istanbul, 21 November 2008. *  *  *  Dear Guests, I would like to welcome you all to the conference on “Globalization, Inflation and Monetary Policy”, organized by the Central Bank of Turkey. This conference will host a select group of central bankers, experts and academics today and tomorrow. It is a great pleasure for us to host this conference and such a distinguished group of participants. During these two days we will have the opportunity to discuss the globalization and monetary policy aspects in the context of current financial turmoil. Dear Guests, We have in the midst of fast changing economic agenda. When invited to an international conference in the Spring of 2008, I was requested to make a speech on inflationist pressures faced by world economies. The title of the session was “Inflation: Is it back to stay?”. In Fall 2008, a few weeks before the start of the conference, the organizers informed me that they had changed the theme of the conference. The new title was “How to cope with deflationary risks?”. In a very short span, the main talking points of the policy makers have shifted from “decoupling”, “high energy prices” and “food inflation” to “deflation”, “recession” and “credit crunch”. Today, international financial system shaped more and more by globalization is on the brink of a crucial stage.
The second broad area of opportunity in a post-LIBOR world comes from the potential for concentrating sterling liquidity into a single interest rate curve referencing compounded overnight SONIA. Today, someone managing a portfolio of sterling interest rate risk can easily find themselves having to deal with multiple different reference curves, each based on a different interest rate index. Figure 3 illustrates five commonly-traded curves (based on SONIA and the one, three, six and twelve month LIBOR fixings) at the start of August 2017 (shortly after Andrew Bailey’s 2017 speech announcing the 2021 deadline for LIBOR transition). Figure 3: Zero coupon swap yield curves (as of 1 August 2017)  Source: Bloomberg data and Bank calculations 7  All speeches are available online at www.bankofengland.co.uk/news/speeches  7  It is challenging enough to manage five or more different interest rate levels. But, to make matters worse, the gaps between these curves – so-called ‘basis’ – can also change quite sharply over time, reflecting variations in the credit premium associated with different lending tenors, structural flows, and other factors. Figure 4 illustrates how the basis between a three year sterling swap referencing the 6 month LIBOR fixing and three swaps referencing 1, 3 and 12 month fixings has moved since 2008. Managing interest rate risk in the presence of such movements is a risky and administratively complex process.

I am doubtful whether a further easing of monetary policy in this group of countries would be able to help move the yield curve in the desired direction. It could actually have the opposite effect - if investors perceived it as heralding a weak euro. In any event, given the current level of short-term interest rates, monetary policy’s margin for manoeuvre is extremely limited. It is possible that the level of real long-term interest rates in Europe reflects, partially at least, that of real interest rates worldwide. Europe has no influence over that effect. BIS Review 67/1997  -3-  Europe can, however, have an influence on the effect which comes from the constant increase in public sector indebtedness in our countries. As a reminder, between the end of 1991 and the end of 1996 the general government debt rose from around 56 to above 73% of GDP for the European Union as a whole. This development, together with the worry that it might not yet have run its course, are not likely - to say the least - to lead to a fall in real interest rates. Nor do they create the climate of confidence necessary for consumers and investors to modify their current prudent behaviour. On the other hand, the certainty that governments are tackling the underlying causes of the public deficits which are responsible for the constant increase in the debt burden could well bring about such a change in behaviour.
A mandate provides a regulator with legitimacy in two ways. First, it ensures there is democratic control over the shape of the regulatory regime; e.g., the objective or objectives of the prudential regulation, the types of firm in scope, the issues the regulator must have regard to in making policy. Second, it makes possible to hold the regulator into account. Figure 1: Links between the principles of ‘stylish’ regulation and ideal features of the institutional structure of prudential regulation  Alternative models for the institutional structure  There are broadly four alternative models for the institutional structure for prudential regulation. The first model is that prudential regulation is specified in primary legislation. The approach to prudential regulation that the EU takes is an example of this model since for example regulatory requirements are mostly specified in the Capital Requirements Regulation and Capital Requirements Directive. This means that many of the technical details that make up prudential regulation are included in legislation. This would include, for instance, the mathematical formulae used to calculate risk weights. I would like to thank Matthew Willison, Hugh Burns, Nicolo Fraccaroli and David Swallow for their assistance in preparing these remarks 4  This model provides legitimacy because the legislation in which the prudential regulation is set out has been passed by a parliament. It is also time consistent, because a deviation from regulatory standards would require a change to legislation.

Klomp, J and de Haan, J (2009), ‘Political institutions and economic volatility’, Journal of Financial Stability, Vol.5(4), pages 311-26. 12  All speeches are available online at www.bankofengland.co.uk/news/speeches  OECD (2016), Being an independent regulator, OECD Publishing. Quintyn, M, and Taylor, M W (2002), ‘Regulatory and supervisory independence and financial stability’, IMF Working Paper WP/02/46. 13  All speeches are available online at www.bankofengland.co.uk/news/speeches  13
This was presented as a global stabilisation mechanism in which the IMF would act as kind of whistle-blower by using its surveillance activities to identify events that risk triggering market unease, which in turn could lead to problems in the financial system. In addition, the IMF could propose measures that aim to reduce the risk of problems spreading from country to country, mediate contacts between countries and central banks to arrange swap lines, involve regional financing arrangements and, of course, also provide loans itself.6 However, proposals of this type find it difficult to “take off”. This because  5  This is also taken up as a recommendation in the IEO’s report; see IEO (2011), “IMF Performance in the Run-Up to the Financial and Economic Crisis, IMF Surveillance 2004–2007”. 6  Proposals for the build-up of an international structure for the financial system are also presented in the Palais Royal Report, which was published in early 2011. This report was written by 18 former central bank governors  6  BIS central bankers’ speeches  although the economy is globalised, policy remains largely national. Governments want to retain their national sovereignty and central banks their independence. So, to sum up, many good proposals are now under discussion and we need to continue to clearly pursue our issues here. But building supranational structures is complicated, as the on going development of institutions in the euro area reminds us. And there it is a question of “only” 17 countries and governments that have to compromise and reach agreement.

It is a rulebased organisation that ensures the influence and equal treatment of the member countries. It is against this background that I believe the IMF is the organisation that is best suited to being responsible for overseeing, identifying and analysing risks in the global financial system. Greater focus on financial surveillance My view is that the IMF has taken several steps in the right direction in its work with financial surveillance during the years that I have followed its activities. For example, the IMF has begun to integrate the analysis of financial stability with the traditional macroeconomic analysis of the member countries. Now, for instance, the financial economists of the IMF also take part in some of the annual country reviews (the Article IV consultations). The Baltic countries, among others, are able to testify to how effective this is. When Latvia experienced problems, the IMF was quickly able to put together a reform and support package thanks to its sound knowledge of the country. This shows that it is important to have knowledge of both the macroeconomic and financial developments, and seen in retrospect the Latvian programme is a good example of this. A further major step forward is that the Financial Sector Assessment Programmes (FSAPs), which was previously voluntary, was made compulsory by a decision in 2010 for the 25 most systemically-important countries – including of course the United States, the United Kingdom, Japan and the Euro Area, but also Sweden.
It received so much of media attention due to three reasons: sheer magnitude of the amounts defrauded, high-society profile of some of the investors and the glamorous sainthood that had long been afforded to the man responsible for losing people’s money. There are many more such schemes where people willingly invest without properly assessing the risk and the return. They often fail to ask the simple question which anyone with a fortune may have asked before parting with his money: could the schemes continue to generate a high income to pay a high return indefinitely in the future. But the desire to become rich quickly mars their rational mind and they unknowingly fall victim to the promise of high returns. What can microfinance learn from this? A lot. When one analyses the sakvithi episode, by disaggregating its tragic final outcome into sub components of devices employed, each such sub component teaches us a valuable lesson. These lessons, when viewed from a centric point, boil down to two important aspects of microfinance: the governance structure which microfinance institutions have to adopt and the self-discipline which microfinance beneficiaries should cultivate. Both these important elements in microfinance should not be mere eye-washes to satisfy someone who demands of such behaviour by the respective parties. They should be faithfully and vigorously followed in order to prevent the microfinance industry from meeting with an untimely death. What normally happens in Sakvithi-style investment schemes?

The promise of high returns is so tempting that individuals who are in other circumstances perfectly rational and ready even to advise others of good investment outlets get carried by enchanting talks and end up losing their money. 2  BIS Review 82/2009  The responsibility of microfinance practitioners The wide-spread existence of spurious microfinance institutions in the society projects the entire microfinance industry as a fraudulent activity in the eyes of the public and law enforcement authorities. This is not a healthy sign for the future of microfinance industry at all. Microfinance practitioners should put a stop to this unhealthy development by establishing a proper governance structure in microfinance institutions. They teach the poor of the importance of and the need for leading a responsible life. This responsible life includes behavioural traits like being truthful, being honest, being respectful and being exemplary. The cultivation of these qualities in life makes the poor wholesome individuals and that is the ultimate goal of any microfinance intervention in the society. If the microfinance practitioners do not practise what they preach, then, it is a serious lapse of the governance structure of microfinance institutions. Since governance principles are rules of good behaviour and there is no effective way of ensuring their proper practice, the practitioners should make an extra effort to follow them. It requires full commitment and devotion on the part of microfinance practitioners and, in turn, depends on the personal qualities which they have cultivated in themselves.
And the pace of policy reform – in the UK, but also in the EU and globally through the International Association of Insurance Supervisors (IAIS) – is likely to be on a longer timetable due to Covid-19 being a shared and pressing priority. We recognise that there are certain aspects of the design and implementation of the Solvency II regime that do not fit so well to UK specificities. Our views on these areas are well known, and I believe shared by industry. We understand that the first priority for the industry is the Risk Margin. The current design is too sensitive to long term interest rates and this has the unintended and perverse consequence of driving a high proportion of longevity risk on new business offshore. We are committed to reform of the risk margin. The timing and nature of reform depend, like many questions of regulatory reform, on the final relationship between the UK and the EU. There is a wide range of options that could be pursued and it is encouraging that EIOPA intends to look at the design of the risk margin in the final stages of the 2020 review. Second is the matching adjustment. The PRA supports the concept of the matching adjustment. It provides the right incentives for insurers to invest in assets that are suitable for their business models. This in turn also reinforces a macroeconomic role of insurers, who provide stable, long-term investment.

Indeed, the Islamic financial services industry in Malaysia has experienced robust growth in addition to being reinforced by enhanced market discipline and transparency, and the vibrancy of the Islamic financial market developments in Malaysia. The latest financial indicators show that the Islamic banking industry remains well-capitalised with a risk-weighted capital ratio of 14.8% as at end-August 2006, while the net non-performing financing ratio has declined to 4.2%. Clearly, therefore, the industry is strong, resilient and well-positioned to meet emerging challenges and to capitalise on new opportunities for the mutual return of its stakeholders. Secondly, this partnership comes at a significant juncture when Malaysia is enhancing the international dimension of its Islamic banking and financial market, with the introduction of increased foreign participation. In line with the aspiration to position Malaysia as an international Islamic financial centre (MIFC), new licences and business divisions to conduct international currency Islamic banking business, tax and other incentives have been introduced to attract global Islamic financial institutions to make Malaysia the hub for their regional business operations. These measures and incentives are also expected to attract international investors, including from the Middle East, to leverage on Malaysia as an investment gateway to tap the rapidly growing investment opportunities in the East Asian region. Thirdly, this partnership also serves to enhance Malaysia as a centre of product innovation in Islamic finance. Indeed, conscious efforts have been made to ensure a conducive environment for innovation in Malaysia, including the development of the necessary pool of expertise and talent to drive such innovation.
During the same period, the key rate in Sweden was lowered by 2.25 percentage points, but from a lower level. Two years after we started lowering interest rates in Norway, there are signs that inflation is moving up, albeit slowly. The interest rate cuts have had a pronounced impact on demand, output and employment. BIS Review 15/2005  3  We cannot expect the interest rate to have the same impact from one period to the next. The economy is also exposed to unexpected disturbances. As a result, we cannot fine-tune economic developments using the interest rate, but avoid the largest effects when the economy is exposed to disturbances. The experience of Norway and Sweden may indicate that inflation expectations remain stable even if inflation varies somewhat, as long as the interest rate is used actively to moderate the effects. With our highly open economies, we may have to accept somewhat wider swings than some countries. 4  BIS Review 15/2005

Gent Sejko: Address - Assembly of the Republic of Albania Address by Mr Gent Sejko, Governor of the Bank of Albania, to the Assembly of the Republic of Albania presenting the Annual Report of the Bank of Albania for 2022, Tirana, 6 July 2023. *** Honourable Speaker, Honourable Members of Parliament, Allow me to start this communication by stating that the Bank of Albania adheres to an open and transparent communication with the Parliament of the Republic of Albania. This communication is important as it ensures the BoA's accountability and responsibility as well as the improvement of the process for compiling and implementing the economic policies through the establishment of a common vision on the challenges ahead and the best ways and instruments for addressing them. Dear ladies and gentlemen, A series of frequent, complex and unprecedented shocks have battered the Albania economy in recent years. After the 2019 earthquake and the pandemic in 2020 and 2021, we faced the economic and financial lingering consequences triggered by the Russia's invasion of Ukraine over 2022. This aggression caused a sharp surge in food, oil and energy prices across global markets, heightened uncertainty amid economic and financial agents, as well as an increase in the overall financing costs both in Albania and globally. The new economic and geopolitical reality tested the sustainability of the economic and financial equilibriums of Albania, posed serious challenges to the Albanian enterprises and households, and called for the fast and coordinated reactions from public authorities.