samchain/econo-pairs-v1 huggingface dataset:
It has become fairly common to say that such groups should be resolved on a regional basis, ie broken up. Maybe. But, even if that is correct, it is obvious that “break it up” is an incomplete resolution plan. What happens to the broken-up parts? Under a “breakup” strategy, one needs a plan for each of the parts, both the distressed and the undistressed parts of the group. Under the FSB Standard (KA 11.8), it is clearly the responsibility of the home authorities of the group to ensure that a group wide resolution plan exists. There is no ducking that. It removes an ambiguity that has quietly haunted banking authorities for decades. Imagine that some of such a group’s regional/local commercial banks are smallish and simple, but that others are very large and complex. (Contrary to what is sometimes imagined, commercial banking can be complex!) To the extent that the group’s problems are in a bank(s) that is relatively small and simple, standard “Purchase & Assumption” techniques can be employed. Ie break up that bank into a good and bad bit; and effect a sale of the good and economically critical parts, aided by an injection of resources, in the usual way, by the Deposit Insurance Scheme, up to but not beyond what it would have had to pay out to insured depositors in a liquidation. The critical services are thereby maintained, and the DIS becomes a creditor in the administration and realisation of the rump.

The remedy would be a negotiated reconstruction of the firm’s capital structure, writing off the equity and partially converting debt claims into new equity. In the US, that goes by the name of Chapter XI. In banking, which is subject to depositor and counterparty runs, there is not time for a process involving negotiations between the different classes of creditors and shareholders under the jurisdiction of the courts. And the public policy priority is the stability of the system, not only the welfare of creditors. An administrative agency needs to make and execute some rapid judgments. That is precisely what so-called bail-in via resolution is about. The essential difference from other resolution tools is, as I have said, that losses are applied ex ante, up front rather than at the end of a process of running down the assets associated with “non-critical” functions. I have been making a simplifying assumption: one legal entity. Now imagine a cross-border group with subsidiaries in many jurisdictions and with a holding company. Under the provisions of the FSB Resolution Standard, recapitalisation through reconstruction of liabilities can also prospectively cut through a number of the long-standing impediments to resolution stemming from conflicts between home and host country insolvency laws; in other words, the cross-border problem. If the bail-in I have described were executed at the level of such a banking group’s holding company, there should in principle be no need to trigger default clauses in subsidiaries around the world that are not themselves affected by the problem causing the group’s losses.
As part of these initiatives, foreign financial institutions are allowed to establish International Islamic Banks, International Takaful Operators, as well as International Currency Business Units to undertake international currency business in Islamic finance with non-residents in Malaysia or abroad through a locally incorporated entity or a branch. This entity is granted attractive tax package in terms of a 10-year tax holiday. To date, ten financial institutions have been granted approval to set up international currency business units, and one institution has been granted approval to set up an International Islamic Bank. The strong sukuk market in Malaysia that accounted for about two thirds of the global outstanding sukuk issued in 2007 would further provide a conducive environment for the MIFC activities. II. New retakaful framework  Malaysian Government has also focus ed its efforts towards widening and deepening the retakaful sector in complementing the growth and expansion of the takaful industry. I wish to announce and declare here that Bank Negara Malaysia is inviting strong and qualified applicants to make Malaysia as their centre for retakaful activities. The application for retakaful licenses are open to qualified local and foreign players. Besides fulfilling the need for retakaful support of the takaful operators, the new retakaful licencees will assist in  4  BIS Review 95/2007  reducing the industry's dependency on conventional reinsurance support.

On that note, I wish you a successful and productive Convention. Wabillahi taufik walhidayah. Assalamualaikum warah matullah hi wabarakatuh. BIS Review 95/2007  5
One of the criteria for introducing the euro is that a country keeps its exchange rate stable within the bands set by the exchange rate mechanism ERM2, which allows a maximum movement in the exchange rate of 15 per cent up or down. The largest of the new member states - Poland, the Czech Republic and Hungary - today have a floating exchange rate. BIS Review 51/2004  1  In this regard there is a more theoretical and more immediate danger for the countries. The theoretical problem has to do with the pressures that high growth exerts on a country's economy and that, according to the Balassa-Samuelsson theorem, either leads to a rise in the exchange rate (nominal appreciation) or to a higher inflation rate than in other countries (real appreciation). If the new member states peg their exchange rates to the euro and at the same time have higher growth than the euro area countries, which they should, then according to the theory they will have higher inflation than the euro area. The problem is that one of the convergence criteria for introducing the euro is that inflation must not be more than 1.5 percentage points higher than in the three countries in the EU with the lowest inflation. This appears to be a potential catch-22 situation.

The future member states, which previously had been among Europe’s most closed economies, were transformed in a few years to the most open economies in Europe - foreign trade corresponds to more than 130 per cent of GDP in Hungary and the Czech Republic, more than countries of an equivalent size in the EU, such as Austria and Sweden. The EU became completely dominant in trade, while Russia and the former Soviet republics shrank to become a relatively small trading partner. The countries’ share of the old EU countries’ trade rose quickly. For Sweden the eight new member states have been the trading partners that have always increased their share steadily from the beginning of the 1990s - through the Asian crisis and the bursting of the IT bubble - and that today comprise 5 per cent of Sweden’s foreign trade, i.e. on a par with France and more than double China’s share. All indications suggest that the trend will both continue and deepen. The proportion of intermediate goods (components) produced in the new member states on behalf of Western companies is becoming an increasingly large part of trade, as is the proportion of goods with higher technological content from the new member states. Mobility for goods has gone hand in hand with mobility for capital. Several studies of the balance of earnings and costs associated with enlargement (e.g. from the European Commission and the independent institution CEPR) have high-lighted increased investment as one of the most significant advantages of EU entry.
Rather, I was conscious that the current stance of monetary policy – in which Bank Rate is very low and substantial amounts of liquidity are being injected into the economy – increases the likelihood that asset prices may move out of line with their fundamental values and that this could be costly to rectify were it to occur. It is a risk that we need to be alert to. However, as I suggested, it is important not to make too much of these differences; all MPC members – myself included – were of the view that a significant degree of monetary stimulus needed to be maintained in order to meet the inflation target. Conclusion The economy has come a long way over the past year. At the time of this annual breakfast a year ago, output was in freefall, the banking system was in near meltdown, business and consumer confidence had evaporated, and there was a very real risk of a serious economic depression. Monetary policy has played a critical role in the stabilisation of the economy. We have turned a corner on the road to recovery. But there is a long way to go with many challenges ahead as the economy moves into better balance. In facing these challenges, the Monetary Policy Committee will do whatever it takes to ensure that inflation remains on track to hit the target. References Eichengreen, B. and K.H. O’Rourke (2009), “A Tale of http://www.voxeu.org/index.php?q=node/3421, 1 September 2009. Two  Depressions”,  Romer, C.D.

Although output is estimated to have contracted in the third quarter of this year, there is a range of evidence from business surveys, from the Bank’s regional Agents, and from recent indicators that the economy has begun to stabilise and that we are likely to be moving into a period of renewed expansion. Whenever an economy is in recession, especially a recession as deep as this one, it can be hard to see where growth will eventually come from. However, as I have discussed, the easing in monetary and fiscal policy is providing considerable support to the emerging recovery. That stimulus is reinforced by the substantial depreciation of sterling. Sterling is around a quarter below its mid-2007 level and – as many of you here today will know from your own experiences – this has helped to improve the ability of UK companies to compete in both overseas and domestic markets. Output will also receive a further fillip as the adjustment of inventories by companies runs it course. However, the on-going structural adjustments that I mentioned are likely to give rise to a number of economic headwinds that may impede the recovery. Credit conditions are likely to remain tight for some time as banks repair their balance sheets. And the need for public and household finances to adjust to the changed economic environment will weigh on spending. Balancing these factors, my view of the outlook for GDP growth is in line with the projections contained in the Bank’s Inflation Report published last month.
First, because they generate sub-optimal outcomes, policy intervention can be justified. This policy intervention ought to act like a self-denying ordinance for financial firms, a protection against themselves. It ought not to be a tug-of-war between regulator and regulated. Rather, it aims to defuse a competitive tug-of-war among regulated firms. Second, to be effective this intervention needs to constrain behaviour across the financial system as a whole; it requires multilateral disarmament. Acting to constrain only those at the top of the league (those bearing most risk, trading at greatest speed, seeking greatest safety) will do nothing to defuse competitive pressures lower down the pecking order. Indeed, it might even conceivably intensify the competitive scramble. In the language of financial regulation, policy needs to have a macro-prudential, as distinct from micro-prudential, perspective.28 The need for a system-wide perspective to preserve the public good of the commons was recognised by Garret Hardin almost 50 years ago. It has been increasingly recognised by financial regulators over the past five years. Over that period, we have seen the emergence of explicitly macro-prudential agencies charged with safeguarding systemic risk in a number of countries. In the United States we now have a multi-agency Financial Stability Oversight Council (FSOC), in Europe the multi-country European Systemic Risk Board (ESRB) and in the UK the Financial Policy Committee (FPC). 27  Gai and Shin (2004) develop a model of a race to the exit, with investors seeking progressively to shorten the maturity of their investment to reduce risk. 28  Bank of England (2011a).

As with other forms of economic activity the financial services sector is subject to government intervention; indeed because of the sector’s critical importance such intervention - in the form of regulation and supervision of both the prudential behaviour and the business conduct of financial intermediaries - is more intrusive than in many other areas. And in this case, too, there is a need to strike a balance between the needs of social protection in its various relevant forms and market efficiency. Here, too, there are certainly areas where these objectives run in the same direction: market regulation can, for example, improve user confidence in the market and contribute to its depth and liquidity; and minimum capital and liquidity standards applied to individual financial institutions can protect not just the depositors or investors with that institution but the stability of the financial system as a whole. But clearly intervention can - if we are not careful - go too far, imposing excessive costs or reducing effective competition, which can impair the ability of the system of financial intermediation to fulfil its essential purpose. It is a particular - if rather special - case of the general proposition which I made earlier. Statutory regulation is not, of course, the only means of seeking to reconcile free market and social concerns. In many areas - including the financial services sector - dialogue and persuasion can be effective complements or even alternatives.
6 On the other hand, a more developed and efficient financial system can contribute to a more effective and smooth transmission of monetary policy. 7 At the root of the problems that led to the current financial turmoil is precisely this growing segment of the financial industry. As valuations of asset-backed securities and other assets declined rapidly, and, in fact, the whole securitisation model was shaken, the outstanding amount of structured products decreased significantly. Obviously, this affects bank credit: according to the latest bank lending survey conducted in the euro area, more than 80% of banks judged that difficulties in raising funds via securitisation have had a negative impact on bank lending. 8 Overall, the financial turmoil may have affected the efficient working of the banking sector and might have an impact on the supply of credit to the non-financial sector. In light of the fact that bank lending remains strong (the annual rate of growth of loans to non-financial corporations in August 2008 was a still robust 12.6 per cent), it is too early to quantify the extent to which the turmoil may influence the provision of loans. Needless to say, the Eurosystem, and undoubtedly other central banks, will continue to closely monitor the situation. 2  See Bernanke, B. and M. Gertler (1995): “Inside the black box: the credit channel of monetary policy transmission”, Journal of Economic Perspectives 9, pp. 27-48. For the euro area, see contributions collected in Angeloni, I., A. Kashyap and B. Mojon (eds.

Counterparty credit risk as well as uncertainty about the development of own liquidity needs have led banks to hoard liquidity and impaired the normal functioning of money markets. As a consequence, the liquidity provided to the market does not circulate as smoothly as it does in normal times. Moreover, the nervousness of market players sometimes implies stronger than anticipated interest rate reactions. 5. Conclusion  I would like to conclude by saying that monetary policy implementation has certainly become a more challenging task as a result of the current financial turmoil. At the same time, the flexibility of the ECB’s operational framework has very much helped us in coping with the turmoil. The ECB has been able to maintain control over the short end of the money market, though – not surprisingly – our influence on longer maturities, where prices are driven mainly by credit concerns, remained limited. At the ECB we believe that the separation principle, i.e. the separation of liquidity policy measures from any considerations about the monetary policy stance, has served us well. 9  On this subject, see Cassola, N., M. Drehmann, P. Hartmann, M. lo Duca, and M. Scheicher (2008): “A Research perspective on the propagation of the credit market turmoil”, ECB Research Bulletin No. 7, June 2008. 10  This has been modelled formally by Duffie and Lando (2001): “Term structure of credit spreads with incomplete accounting information”, Econometrica 69, pp. 633-664.
To reach that goal we have based our monetary policy on two “pillars”. As regards the first “pillar” we have set up a quantitative reference value, namely 4.5%, for the growth of the broad monetary aggregate M3; last December, we have confirmed this rate of growth of 4,5 % as an important factor for stabilising expectations. It should be noted that the concept of a reference value does not imply a commitment on the part of the Eurosystem to mechanistically correct deviations in monetary growth in the short term. However, the reference value for M3 is consistent with, and helps to maintain price stability over the medium term. The second pillar of the monetary policy strategy is a very comprehensive set of indicators that are important in our eyes in signalling future price developments in the euro area. This strategy, which ensures a great deal of continuity with the monetary policies of the participating national central banks, appears to have been understood by financial markets and the public at large. In particular, the yields on long-term bonds denominated in euros indicate clearly that the Eurosystem has kept intact the legacy of credibility that it has inherited. d/ Finally, the credibility of the euro also results from the Eurosystem’s constant efforts towards transparency and communication. I must stress here that the Eurosystem is one of the most transparent central banks in the world.

Further expansion of renminbi business into trade settlement and related financial services would bring convenience for traders and enterprises on both sides. More importantly, it will help to lay the ground work for the use of renminbi for trade related activities through a formal and supervised channel. The demand for a wider use of renminbi outside the Mainland is likely to increase further as the Mainland economy grows. In addition, the recent global financial turmoil has highlighted the need for a more diversified international monetary system, including more currency choices for international transactions. In time renminbi could be one of the obvious choices for many countries. In this process, using the well-established institutional framework of renminbi business in Hong Kong for pilot schemes will enable better monitoring and assessment of the flows, and mitigate the potential risks particularly on the domestic monetary policy management. One important pre-requisite for designing appropriate policies to facilitate the Mainland's capital account opening is a good understanding of the economy and financial system. Here at the HKMA, we have closely monitored, as well as undertaken in-depth analytical work on the Mainland economic, monetary and financial developments. Our Half-Yearly Financial Stability Report has a section devoted to the Mainland economy, and research reports on the Mainland are published as working papers available on our website. We also started in 2006 a China Economic Issues series dedicated to detailed analysis of economic and financial market issues in the Mainland.
In addition, the policy interest rate was lowered by 0.75 percentage points last year, the króna has appreciated by over 16%, the Central Bank has bought more than 350 b.kr. worth of foreign currency, the foreign exchange reserves have grown by over a third in foreign currency terms, and capital controls have been almost completely lifted in three large steps. These are substantial changes in a single year – changes that will presumably take their place in economic history. What lies behind these developments? How could the domestic economy grow by more than 7% in 2016 without overheating and unleashing inflation? Five major factors are presumably of considerable significance whose mechanism it is important to understand in order to assess what comes next and formulate appropriate economic policy responses. First of all, the supply side of the economy is more flexible than before, owing to increased economic integration with the rest of the world. The EEA Agreement plays a large role here, but so do other trade related agreements and 1  general market-driven developments in the global economy. Because of this, when demand pressures start to develop, it is easier than before to mitigate them: by importing labour and other production factors, by using foreign inputs in domestic production chains to a greater degree, or by moving a portion of operations out of the country. Last year, for instance, net migration among foreign nationals was closing in on the previous peak from 2006.

But could the Bank have gone further; for instance, by buying even more foreign currency or by lowering interest rates more than was warranted by economic conditions and the inflation outlook? Certainly it could have done so; it could even have gone as far as to more or less halt the appreciation of the króna. But 4  then large interest rate cuts would probably have been needed alongside the foreign currency purchases, perhaps even bringing real rates into negative territory, which is ill-suited to an economy with a positive output gap and very strong GDP growth. The reason is that in order to lower interest rates enough to materially increase residents’ appetite for investment in foreign securities, an interest rate cut of 0.25 or 0.5 percentage points would not be sufficient because of how wide the interest rate differential currently is. It is not a given, either, that long-term interest rates in the bond market would have followed suit in full, and bond market rates are more important for investments by pension funds and other investors than the Central Bank’s short-term rates are. The reason for this would have been that inflation expectations had risen, and if the reduction in short-term interest rates had not been in line with economic developments and prospects, expected short-term interest rates would have increased. This would not have occurred without severe side effects.