samchain/econo-pairs-v1 huggingface dataset:
Banking regulation implicitly provides a trade-off between these considerations. The other main activity of banks is payment services, which are services we use virtually every day. Today, most people in Norway receive money as a bank deposit directly into their account. As long as there are payment solutions that give us cheap and simple access to money, the account is an efficient and safe wallet. Chart: Banks provide payment services But how is it that bank deposits can become money that we can use as payment? An important pre-condition is that there is an infrastructure to enable deposits to be efficiently transferred 2/7  BIS central bankers' speeches  between customers and banks. As the bankers’ bank, Norges Bank creates the money banks use to pay each other, so-called central bank reserves, which are the banks’ deposits at the central bank. Transfers of customer deposits between banks can take place without frictions because a corresponding amount of central bank reserves are transferred between banks’ own accounts at Norges Bank, where banks have a common and trusted means of payment and settlement system. This helps ensure that there is no difference between the money created by DNB and money created by Nordea. The money is interchangeable. For us, it is all Norwegian kroner. As such, banks play a key role in delivering services we want from the financial system, albeit subject to a framework designed by the Norwegian authorities. The banking sector is more strictly regulated than most sectors of the economy.

6  In order to limit their liquidity risk, banks tend to procure funding at longer maturities, eg by issuing bonds. In addition, banks must use equity to finance a portion of their assets in order to satisfy the applicable capital requirements. 7  BigTech companies’ activities in financial services and possible policy implications are discussed BIS (2021): “BigTechs in finance: regulatory approaches and policy options.” FSO Briefs No 12. 8  A detailed description of the FinTech sector is found in Claessens, S., J. Frost, G. Turner and F. Zhu (2018): “Fintech credit markets around the world: size, drivers and policy issues”, BIS Quarterly Review, September 2018. The business areas have a wide range and include both specialised payment solutions and proprietary platforms for channelling credit from savers to investors. 9 Adrian, T. and T. Mancini-Griffolio (2019): “The Rise of Digital Money”, FinTech Notes 19/01, provides a thorough  overview of new forms of digital money and discusses possible scenarios for the banking system. 10 A portion of household saving ends up in the equity and bond market. Fixed income funds, insurance  companies and other investors finance firms by buying bonds and short-term paper. An example is money market funds, which resemble banks without being banks. They receive bank deposits from customers as payment for fund units. The deposits are placed in a client account in a bank and are lent to firms or the government. Unlike a bank, the fund must obtain money before it can lend.
To this end, the Committee has been working to formulate a set of disclosure requirements that will ensure the availability of sufficient information to assess the appropriateness of a bank’s capital relative to risk, while taking into account the bank’s proprietary needs. This is particularly important in relation to the internal ratings approach to credit risk. In January of this year, the Committee issued a discussion paper detailing guidance for strengthening the third pillar of the new capital framework. This paper provides recommendations on disclosures of banks’ capital structures, risk exposures and capital adequacy. The Committee is continuing to expand on these recommendations as its work on the first and second pillars of the new capital framework evolves. As the Committee continues to fine-tune the new capital framework, we are focusing on issues of primary concern to the industry and supervisors world-wide, seeking to avoid getting bogged down in secondary issues that could slow the overall process. This most certainly is a broad-scoped effort that will not, indeed cannot, meet every priority and concern of everyone. But we are well aware that the perfect cannot be the enemy of the good. With this in mind, I fully expect that we will meet our goal of releasing a new capital adequacy framework by early next year, followed by a short international comment period and then implementation in each of the member countries.

More information can be found in Regulation D.  4  BIS central bankers’ speeches  short-term rates like GC repo have tended to be more variable and have, more than in the past, fluctuated with sometimes unpredictable spreads to federal funds. These periodic episodes of weaker linkages suggest that although the IOER rate effectively influences the marginal unsecured funding rate for eligible depository institutions, it may not be representative of, and may currently lie above, the marginal cost of funds more broadly across money markets, for example, secured financing costs faced by repo market participants. This weakening of the relationship between short-term interest rates represents a reduction in the precision with which the Desk is able to control them over the very short term. It’s difficult to know, though, whether the shift in dynamics across money markets we’re seeing is permanent or temporary. While some of the changes could be indicative of an increasing desire by market participants to focus on collateralized rather than uncollateralized markets, it could also reflect more transitory factors related to an elevated level of reserves that leaves banks with no need to borrow funds given the abundance of deposits. Of course, it’s also difficult to know with certainty how money market rate relationships will respond when the FOMC eventually begins to remove policy accommodation in an environment with a high volume of reserve balances.
In principle, these triggers could be tied to deterioration in the condition of the specific banking institution and/or to the banking system as a whole. There are many issues that would need to be worked out regarding how best to design such instruments, including how to determine their share of total capital as well as how to configure and publicly disclose the conversion terms and trigger. But, in my view, allowing firms to issue contingent capital instruments that could be used to augment their common equity capital during a downturn may be a more straightforward and efficient way to achieve a countercyclical regulatory capital regime compared to trying to structure minimum  6  BIS Review 125/2009  regulatory capital requirements (or capital buffers above those requirements) that decline as conditions in the financial sector worsen. So what might such a contingent capital instrument look like? One possibility is a debt instrument that is convertible into common shares if and only if the performance of the bank deteriorates sharply. While, in principal, this could be tied solely to regulatory measures of capital, it might work better tied to market-based measures because market-based measures tend to lead regulatory-based measures. Also, if tied to market-based measures, there would be greater scope for adjustment of the conversion terms in a way to make the instruments more attractive to investors and, hence, lower cost capital instruments to the issuer. The conversion terms could be generous to the holder of the contingent capital instrument.

Some of the firms that encountered difficulties in 2008 paid out large bonuses early in 2008 despite the deterioration in market conditions and in their own financial performance. There is an opportunity to rethink capital preservation policies to ensure that banks’ incentives are consistent with the supervisory objectives of a safe and sound banking system. Such capital conservation rules could operate on both sides of an economic downturn – conserving capital going into the downturn and rebuilding capital coming out. One example would be the imposition of constraints on the ability of banks to reinstate or increase dividends prematurely or to undertake share buybacks during a downturn or during the early stages of an economic recovery. Higher capital requirement for systemically important institutions Currently, some large systemically important institutions may have a competitive advantage because they are perceived to be “too big to fail.” Unless we address this disparity, we will have an ongoing moral hazard problem and inevitable market structure distortions as institutions take steps to become systemically important in order to gain a competitive advantage. The regulatory regime could lean against this in two ways. First, we could improve the resolution mechanisms for large, complex institutions and thereby reduce the costs associated with failure. A more robust resolution regime would make it more feasible to allow the failure of a large financial institution without that failure threatening the stability of the entire financial system.
The two policies I just mentioned – energy and infrastructure – , aside from their incidence in investment, could also result in higher productivity. Regarding employment, a recurrent topic in our country’s policy debates is female participation in the workforce. Despite some increases in recent years, it is still below the average of OECD economies (figure 3). As our population ages and grows at a slower pace, the larger female labor force participation can be a significant ingredient to boost our medium-term growth. Another ingredient could be extending the working life span of individuals, a trend that is gaining importance in many countries as the fraction of population over 65 is growing rapidly and is still able to contribute their bit to the economy. Finally, the challenges relating to increasing labor productivity that everybody recognizes are mainly to improve our educational and training systems. Now, let me describe the macroeconomic scenario that we see as the most likely for the coming quarters, and its associated risks. Macroeconomic scenario Annual headline inflation has remained above 4 percent, but with moderate variations in the past few months. This was more visible in the evolution of the CPIEFE – the CPI excluding food goods and energy prices – reflecting, on one hand, that the pass-through of the peso depreciation to inflation has been a significant development, but declining in intensity as time passes and, on the other, that the weak performance of the economy is already easing the pressure on prices.

It is key in formulating socio-economic programs including the Government Transformation Plan, the New Economic Model and the 10th Malaysia Plan. This commitment towards financial inclusion is reflected in the Central Bank Act 2009, where financial inclusion is legislated as an objective of Bank Negara Malaysia. The efforts to develop a more inclusive financial system have been fruitful. More than 80% of the Malaysian population currently has some form of savings account. Compared to the global median of 8.4 bank branches per 100,000 individuals, Malaysia has 15.5 branches per 100,000 individuals (31 March 2010) with the number of ATM cards in circulation increasing from 19.8 million (Dec 2006) to 28 million (April 2010), with an average annual growth rate of 11% in the last four years. Another important indicator is the total microfinance loans outstanding, which has increased from USD 45 million (RM 151 million) as at end-2000 to USD 757 million (RM 2.5 billion) as at end-March 2010, a compounded annual growth rate of 35.5%. While such positive trends are encouraging, we are also mindful of the associated risks, such as non-performing loans, over-indebtedness and consumption of financial products and services that are not suitable for the user. In this regard, efforts towards financial inclusion are always conducted within the framework of sound banking practices, risk management and adequate consumer protection. Importance of financial inclusion data in the growth and development of an inclusive economic system Policy formulation for financial inclusion is complex for a number of reasons.
The recent narrowing of spreads between benchmark issuances and triple A rated papers indicate that risk aversion has now eased. In the primary market, new corporate bond issuance has increased by about 40 percent to RM28.4 billion in the second quarter of this year. In the secondary market, the recent average daily trading volume has also increased by more than 50 percent. Demand for higher-yielding securities are also beginning to rise ahead of the recovery in the global economy. In addition, in view of the prospects for an earlier recovery in Asia, global investors in the current uncertain international environment will increasingly be looking at Asian financial markets for investment opportunities. This trend is already being observed through the substantial inflow of funds dedicated for emerging markets since the middle of April this year with an estimated average inflows of USD 144 million per week compared to the net outflow recorded in the early part of the year. This positive trend enhances the opportunity for Malaysia to further expand its bond market. Timely issuance of corporate handbook by AmBank The corporate handbook being launched by AmBank today therefore comes at an important juncture in the development of the bond market. Encapsulating the profiles of 100 conventional and sukuk issuers in the Malaysian bond market, it is indeed a commendable  2  BIS Review 27/2009  effort by AmBank to provide this comprehensive information to foreign and domestic investors to facilitate their investment decisions.

As a pioneer in the global sukuk market, Malaysia has remained firmly established as one of the largest issuers of sukuk, with 62 percent of the world's outstanding sukuk having originated in Malaysia. Malaysia's lead is also reflected in the innovative and competitive structures that have been pioneered such as the exchangeable sukuk musharakah and sukuks based on istisna' and ijarah. All these augurs well for Malaysia to evolve as an International Islamic financial hub and as a centre of sukuk origination. BIS Review 27/2009  1  Riding through the global financial market uncertainties The enhanced resilience of our financial system during this challenging international financial environment can be attributed to the comprehensive reform measures undertaken over this decade which has contributed to reduce the impact of the global financial crisis on our financial system and our economy. The domestic financial markets have remained orderly despite experiencing greater volatility, higher outflows and lower trading volume at the height of the crisis. The financial sector has also remained solid and has continued its intermediation function without disruption throughout this period. A number of pre-emptive measures has also been initiated to ensure continued access to the bond market for funding. This includes the establishment of Danajamin Nasional Berhad, a national financial guarantee insurer to provide credit enhancement for viable corporations to raise financing from the bond market. This initiative is expected to enhance the prospects for companies to tap the bond market.
An IMF study of twenty property crises in different countries shows that they entailed a fall in prices of 30 per cent. The countries’ GDP was on average four per cent lower three years after a property crisis had started than it would have been without the fall in prices. 1 The scars in the real economy may well be considerable and given this it is interesting to discuss how a central bank should react to changes in asset prices. In the international debate on asset prices and monetary policy there are several different points of view. A common view is that monetary policy should only react to changes in asset prices to the extent that these affect the central bank’s inflation and growth forecasts. One should thus not have a separate strategy for dealing with changes in property prices. Others think that a central bank can improve the outcome for inflation and production by reacting to changes in asset prices over and above their consequences for the inflation forecast. Two main arguments have been put forward. Firstly, monetary policy can alleviate the effect of the price change on the real economy. Secondly, the actual knowledge that the central bank will react should reduce the probability of exaggerated price movements occurring. The difficulty lies in determining whether or not prices are increasing at an exaggerated rate. It is not necessarily so that a central bank is better qualified to make such an assessment than the market participants.

While liquidity risk metrics remain complex and challenging, I believe that there is scope over time to achieve some degree of enhanced, consistent disclosure across institutions. The final lesson is the need for stronger oversight of banks’ liquidity risk management practices. The authorities’ role is to preserve financial stability by lowering the probability and impact of bank failures that could threaten the functioning of the financial system more broadly through contagion, spillover and damage to financial networks. There is no incentive  6  Senior Supervisors Group: “Observations on Risk Management Practices during the Recent Market Turbulence” March 2008. 6  BIS Review 50/2008  for private banks to bear this cost spontaneously, as their responsibility is to their shareholders rather than to users of the financial system more broadly. The objective of prudential supervision is to correct this misalignment between private incentives and public policy goals, by forcing banks to deliver higher standards of liquidity risk management and to build stronger defences than they would naturally provide of their own volition. That leaves open the formidably difficult question of the level of resilience to liquidity stress that the authorities should seek from individual banks. An answer to this question requires a balance to be struck between the risks to financial stability if resilience is set too low, and the risks of inefficiency of financial intermediation if buffers are set too high.
Unemployment Percentage of workforce, EU definition, 15-74 years of age, seasonally-adjusted data 14  14  12  12  10  10  8  8  6  6  4  4  2  2 0  0 80  82  84  86  88  90  92  94  96  98  00  02  04  06  08  10  12  Note: The dotted line indicates the Riksbank’s forecast. Data prior to 2001 has been chained by the Riksbank  Sources: Statistics Sweden and the Riksbank  BIS Review 98/2009  15  17. Inflation close to target Annual percentage change 5  5 CPI  4  CPIF  4  3  3  2  2  1  1  0  0  -1  -1  -2  -2 00  01  02  03  04  05  06  Note. Broken lines represent the Riksbank’ s forecasts. 07  08  09  10  11  12  Sources: Statistics Sweden and the Riksbank  18.

Loan losses increasing SEK billion net, totalled over four quarters, fixed prices, 31 March 2009 120  120 Results before loan losses Loan losses  100  100  80  80  60  60  40  40  20  20  0  0 -20  -20 90  92  94  96  98  00  02  04  06  08  10  Source: Finansial Stability Report 2009:1, the Riksbank  8  BIS Review 98/2009  3. World GDP growth Annual percentage change 8  8  7  7  6  6  5  5  4  4  3  3  2  2  1  1  0  0  -1  -1 -2  -2 70  75  80  85  90  95  Note. The broken column represents the Riksbank’s forecast. 00  05  10  Sources: The IMF and the Riksbank  4.
These protections mean that the coffee shop where I tapped my phone this morning does not need to worry that the value of my payment will change materially vis-à-vis the sterling-denominated price of the coffee by the time it reaches the shop’s bank account. And, when the payment arrives in the coffee shop’s account, the shop has a clear right to withdraw these funds, in sterling, and receive the same amount that was deposited. They also mean that, as a payments regulator, I don’t currently need to worry about large fluctuations in the money flowing through UK payments systems. I can instead rely on my colleagues in the Bank’s monetary policy and prudential regulation areas to do their jobs. Absent additional regulation, stablecoins may not offer these protections. Regulation of stablecoins will therefore need to be broader than the regulation of current payment chains. At minimum, where stablecoins are used in systemic payment chains as money-like instruments they should meet standards of stability and protections of holders’ rights equivalent to those expected of commercial bank money. It is tempting to view questions about the stability of value of the ‘money’ flowing through payment systems as a new issue – but in fact it is one of the oldest issues in economics. Indeed fifteenth century China’s leap backwards in payments was motivated by precisely this issue. Failure to properly ensure the stability of value led to the collapse and elimination of the innovation in payments.

As industry, you will have opportunities to engage in this work and I hope you will. I look forward to working with you – and to your questions. 8  All speeches are available online at www.bankofengland.co.uk/news/speeches  8
BIS central bankers’ speeches  9  Table 1 Annualized quarter-to-quarter GDP growth (percent) III.2011  Spain Italy Portugal Greece (y-o-y) Germany France Eurozone United Kingdom  0.2 -0.8 -2.5 -5.0 2.3 1.2 0.5 2.4  IV.2011  -1.2 -2.6 -5.0 -7.5 -0.7 0.3 -1.3 -1.2  I.2012  -1.3 -3.2 -0.4 -6.5 2.1 0.2 0.0 -1.2  United States Japan  1.8 7.8  3.0 0.1  1.9 4.7  China (y-o-y) India (y-o-y) Russia (y-o-y) Brazil Peru (y-o-y) Colombia Mexico Chile  9.1 6.7 5.0 -0.6 6.7 6.2 4.8 1.3  8.9 6.1 4.8 0.6 5.5 5.3 2.9 8.2  8.1 5.3 4.9 0.8 6.0 -5.3 5.7  Sources: Central Bank of Chile and Bloomberg. Table 2 International baseline scenario assumptions 2009  Growth Trading partners World at PPP World at market exchange rates United States Eurozone Japan China India Rest of Asia (excl. Japan, China and India) Latin America (excl. Chile)  2010  2011 (e) 2012 (f) Report Dec. 11  Report Mar. 12  Report Jun. 12  2013 (f) Report Dec. 11  Report Report Mar. 12 Jun.

The other question mark concerns the differences between countries, with inflation of 1.7% in Germany. However, following a temporary peak in the first quarter, German inflation is expected to remain under 2% on average throughout 2017. Moreover the inflation differences between countries are consistent with their different national economic situations: growth and employment are also stronger in Germany; and these differences could even contribute, via their impact on relative wages, to correcting the imbalances, hence achieving greater convergence within the euro area. I can naturally grasp the concern of German savers in the face of low interest rates. It is not our aim to keep interest rates low for too long: low interest rates are not a goal in themselves; they are merely the necessary condition today for gradually returning towards our inflation target, and ensuring lastingly higher interest rates in the future, as Mario Draghi himself has put it. This movement has already started for long-term interest rates, with the 10-year Bund gaining nearly 60 basis points since the end of September. In December, in view of the progress achieved, we decided to reduce the volume of our monthly asset purchases from 80 to 60 billion euro. I also repeat that although I am convinced that negative interest rates have their use, they have clear limitations. But, although QE will obviously not last forever, we clearly did not discuss tapering or any exit strategy.