samchain/econo-pairs-v1 huggingface dataset:
Prior to that, they will have to comply with guidelines on internal control and trading book policy, as well as submit call reports on the calculation of the volume of trading book transactions and the calculation of the capital charge against market risk. Ladies and Gentlemen, Another factor which will have crucial implications for the banking sector is the Basel II implementation. With the recent release of the Basel II framework, it is inevitable that we get ourselves ready for this international standard of capital adequacy. We all would agree that the New Capital Accord is for the betterment of banking system soundness for it signifies a move away from the one-size-fits-all approach to credit risk assessment in accommodation of evolving more sophisticated risk management of modern banking. Specifically, under the New Accord, it provides more comprehensive and risk sensitive approach to calculate regulatory capital, augmented by supervisory review process of Pillar II and market discipline enforcement of Pillar III. Despite the novel complexity of capital calculation under Pillar I, if a bank adopts the standardized approach, its calculated regulatory capital is only a proxy of the actual risks. I suspect that standardized approach is the one that most banks in emerging markets will adopt before they can meet the preconditions of IRB, or the internal-rating-based approach, especially in the areas of data quality and risk management practices.

Hence, the second major challenge for banks is to put in place a good data base and systems to identify, measure and manage all banking risks to optimize their use of capital and price their products according to risks. In addition, when taking into account the risk associated with business cycle, banks must be prepared to beef up financial strength during favorable economic conditions so that they could weather vulnerability during the downturns. These are daunting tasks and again require the full attention and commitment of the Board. Banking is all about customer relation; this is particularly true for personal banking segment. The needs for financial institutions to properly take care of customer complaints are occasionally highlighted by a few high profile cases in the media. This type of issue will gain more importance, given the growing retail banking sector. To remain competitive and maintain customers’ trust, banks must be fair and transparent about their provision of financial services, a challenge which is very much in line with the Basel II’s Pillar 3. Ladies and Gentlemen, I have not forgotten the capital market, another integral part of the financial market, which makes it vibrant and offers diversification in terms of channels of financial intermediation. Deeper and broader capital market can avert or at the very least lessen the liquidity crunch effect on corporations in the event of a banking crisis. Efforts, therefore, have been made to develop the capital market to curtail dependence on the banking sector.
When some investors sought to sell their shares in exchange for gold early in 1720s to secure their gains, the party came to an end. The bank attempted to persuade investors to accept banknotes instead, but this led to a sharp increase in the money supply. Inflation surged and in January 1720 it had exceeded 20 percent per month. In late spring 1720, the bubble burst. People lost all confidence in banknotes. Coins resumed their status as means of payment, and to the extent that bank-like institutions were established in France in the next 150 years banks were designated using other names such as “caisse”, “credit”, “sociétè” or “comptoir”. John Law was sacked and allegedly fled the country disguised as a woman. At about the same time a similar project in England led to the South Sea Bubble. Under an agreement between England and Spain in 1713, the South Sea Company was awarded a contract for delivering slaves to the Spanish territories in America. The South Sea Bubble also burst in 1720. In contrast to the Mississippi bubble, however, the South Sea Bubble involved extensive insider trading and fraud, and a reaction new and stricter financial regulation was introduced in England through the Bubble Act and Sir John Barnard's Act. There is a large body of literature dealing with these speculative bubbles in France and England in the early years of paper money, see for example Larry Neal (1990, 2011), “The rise of Financial Capitalism.

The need for directors to possess this blend of technical knowledge plus independence is critical, given the increased complexity of most banking activities and the rapid pace of change in financial markets and practices. Getting the right balance of expertise and independence so that the board does not rubber-stamp the decisions of top management is a major challenge. Now, turning to Saudi Arabia, as the Central Bank and the Banking Supervisory Authority, SAMA has played a leadership role in strengthening corporate governance in the banking industry in Saudi Arabia since its establishment. You may be surprised to learn that as early as 1981, SAMA issued a document entitled "Powers and Responsibilities of the Board of Directors of Commercial Banks in Saudi Arabia". This document, in a comprehensive manner, guided the Board members on compliance to Banking Control and Company Laws, required the implementation of a system of accounting and internal controls and assigned the Board the responsibility for monitoring the assets and liabilities, investments and profitability of the bank. This was followed by a guidance document in 1996 on the role of the Audit Committee of the Board. This document in substantial detail provided guidance to the Banks on the composition, mandate, role and responsibilities of their Audit Committees. In 2004, SAMA issued another important circular affecting the Bank Directors and Senior Managers entitled: "Qualifications and Requirements for Appointments to Senior Positions in  2  BIS Review 83/2007  Banks licensed in Saudi Arabia".
See, for instance, Brunnermeier and Sannikov (2013). BIS central bankers’ speeches  3  I think that the division into these three main views provides a good reflection of the current debate. But there are of course no sharp dividing lines between them, rather the dividing lines are relatively fluid. And where one finds oneself on the scale ultimately depends on which argument or arguments one allocates the greatest significance. It will probably come as no surprise to those of you who follow the monetary policy debate in Sweden that I myself have great sympathy for the principle that monetary policy needs to support macroprudential policy. I would therefore place myself fairly close to the second view in Smets’ description. So what has led me to this view? Allow me to begin by giving my interpretation of what a monetary policy that leans against the wind entails. What does it mean that monetary policy leans against the wind? There are different ways of illustrating how and why financial imbalances and risks should be included in the monetary policy deliberations. Essentially it is a question of avoiding scenarios where the imbalances will lead to very negative effects on GDP, unemployment and inflation. So in principle it is a question, as usual in monetary policy, of stabilising inflation and the real economy.

But even if this were the case, it would not automatically lead to the conclusion that macroprudential tools are significantly more effective. Some of the tools are new, some have been around for a while but used partly for other purposes. The practical experiences gained so far are thus fairly limited and it is difficult to draw any conclusions from them. It is therefore natural that a number of questions should be raised as to how effective macroprudential policy will be in practice and whether it may need support from monetary policy.15 Uncomfortable measures may be difficult to implement One question concerns their feasibility – will measures be taken in time, or even at all? Some of the macroprudential policy measures have a direct impact on households’ finances, similar to fiscal policy measures. They can be perceived to create relatively major changes in the  14  As Narayana Kocherlakota, the President of the US Federal Reserve Bank of Minneapolis, has put it, monetary policy needs to deal with the “residual risk” that remains. See Kocherlakota (2013, 2014). 15  Critical discussions on the effectiveness of macroprudential policy tools and the implications for monetary policy can be found, for instance, in White (2009, 2013), Mishkin (2011), Borio (2011a), Blanchard, Dell’Ariccia and Mauro (2013), IMF (2013) and Davies (2014). BIS central bankers’ speeches  5  economic playing-field and thus risk obtaining little acceptance from households, which could make it difficult to implement such measures.
Although the trend in Medicare expenditures has flattened out in recent years as healthcare inflation has moderated and utilization growth has slowed, the CBO nevertheless projects that such expenditures will rise from 3.2 percent of GDP in 2016 to about 4.0 percent of GDP in 2026. Consequently, significant pressures on the federal budget are still very much in train. It will be important that fiscal policy be managed so it retains the capacity to be used for macroeconomic stabilization. Structural challenges While we have made steady progress over the past year toward our twin goals of maximum sustainable employment and price stability, significant challenges remain for the economy that lay largely beyond the scope of monetary policy. The three I would highlight are the sharp slowdown in labor productivity growth, the increase in income inequality and the low rate of income mobility. I draw attention to the slowdown in productivity growth for two reasons. First, productivity ultimately drives living standards and how people assess their economic well-being. Second, beyond ensuring a stable macroeconomic and financial environment, monetary policy can do little to improve productivity growth. 4/6  BIS central bankers' speeches  Annual productivity growth has averaged only 0.7 percent during the past five years, near the lowest 5-year pace since the early 1980s. There are a number of competing explanations for the slowdown. These include weak capital investment, a flattening out of educational attainment by new labor market entrants, less new business formation, understatement of quality improvements and, hence, output, and fewer ground-breaking innovations.

2  BIS central bankers’ speeches  industry, some partnerships became public companies, in part, so that they could more easily obtain the capital needed to expand rapidly. For example, when Goldman Sachs went public in 1999, it had about 15,000 employees and $ billion of assets. Just eight years later, the firm had expanded to 35,000 employees and $ trillion of assets. In the mid-1990s, the top five banks in the United States had total assets of $ trillion or about 14 percent of gross domestic product (GDP). The top securities firms had total assets of $ billion, or about 9 percent of GDP. By the end of 2007, the top five banks had assets of $ trillion or 49 percent of GDP. Similarly, the top securities firms accounted for $ trillion, or about 27 percent of GDP. In addition, the firms’ off-balance-sheet exposures rose sharply. Second, the complexity and interconnectedness of the largest financial firms increased markedly. Factors behind this include the adoption of a universal banking model by some commercial bank holding companies and the rapid growth of trading businesses, especially the over the counter (OTC) derivatives market. In the early 1980s, there were no true U.S. “universal banks” that combined traditional commercial banking with capital markets and underwriting activities. By 2007, there were several operating in the United States, including Citigroup, J.P. Morgan, UBS, Credit Suisse and Deutsche Bank.
Thus, prudential tightening may not be able to be transmitted to a significant part of the banking sector but it may affect only smaller locally-owned banks. It follows from our discussion that the supervisory authorities may gain by the increasing transparency in financial markets which will allow consumers and other bank borrowers to be more aware of the risks inherent in foreign currency borrowing. Efforts to enhance this transparency could be encouraging or requiring banks to discuss exchange rate risks explicitly with borrowers before contracts are signed. On the other hand there is a need to discuss with banks means of assessing the risks arising from foreign currency denominated loans and adjust existing loan classification schemes or provisioning if warranted (FSAP recommendation for Albania). Monetary policy is constrained by the degree to which policy instruments are able to transmit into the economy. A tightening of policy interest rates’ effect may be constrained even in floating rate or adjustable peg regimes. A moderate tightening of policy may not be very effective in slowing the economy because of the high degree of euroization and the uncertainty associated with the final effect of exchange rate changes in balance sheets and the real economy. Many of the above issues require a significant degree of co-ordination between home and host authorities that can help fill supervisory gaps, given the very high levels of foreign bank ownership. In the process of improving the regulatory base, standards set by international institutions and especially the ECB are crucial in orienting regulators. 6.

However, increasing credit to GDP ratio in all countries, ranging from 23 percent in Macedonia to 76 percent in Croatia also raises the concerns for a possible credit boom. There are some important trends worth being noted: Credit composition is dominated by consumer credit and less oriented to enterprises; Credit/deposit ratio has steadily increased indicating banks willingness to extend their lending activity at a faster pace than the growth of savings. However, the average of credit/deposit ratio of the region is still below the level of the new EU member; Lending is mostly in foreign currency as a result of high euroization of the economies and lower interest rates in foreign currency; Another structural change in credit portfolio relates to the upward trend towards longer-term lending, which at least in three countries of the region (Albania, Macedonia and Bosnia & Herzegovina) consisted of 50 percent or more than total lending; The spread between interest rates of deposits and credits remains high. There are several explanations to this such as lack of efficiency and competitiveness among banks, high premium risks of the economies in the transition period, collateral problems, legal system obstacles etc. However, it’s worth mentioning that the spread between deposit interests and credits has declined in the recent years, as a result of increased competition in the banking system. Despite these characteristics must be admitted that the share of the banking system in the economy is relatively small by European standards.
And today I am pleased to announce a launch date, June 2021. The exercise will explore three different climate scenarios, testing different combinations of physical and transition risks over a 30-year period. We expect to use the exercise as a tool to size the risks faced in these scenarios, to understand how different bank and insurance business models will be affected and how they might respond, and finally as a way of improving firms’ risk management practices through the process of carrying out the exercise. We set out our proposed approach to this exercise in a discussion paper at the end of last year. Building on feedback we received in response to that paper, ahead of the launch, we will share with participants more detail on some key aspects of the exercise – for example around data requirements and scenario variables. This active engagement with participants, which we will map out this week, will help build their assessment capabilities and prepare for the exercise. We will not use the results to size firms’ capital buffers. But that does not mean firms should not be thinking about near-term capital requirements. As we have set out in our supervisory expectations, firms must assess how climate risks could impact their business and review whether additional capital needs to be held against this. Investments that look safe on a backward look may be existentially risky given climate risks.

To support this, we need to see a strong focus on public metrics that set out the climate impacts 5  Climate BES was first announced in the July 2019 Financial Stability Report and further detailed provided in the December 2019 Discussion Paper 4  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  4  of both investment and corporate activities. In turn, this will help to facilitate the development of capital market instruments that package risk and return and asset allocation strategies that align portfolios with the transition. The Bank will support the work to make this happen, consistent with the objective of our Financial Policy Committee to support productive finance and thus the economy. Returning to Bretton Woods for a moment. The UK economy and financial system is very open, and like Covid, climate is a common global risk and we cannot hope to insulate ourselves through domestic action alone. We are committed to working closely with willing international partners through initiatives such as the Network for Greening the Financial System (NGFS), of which we are a co-founder and very active member, and where much progress has been made in raising our collective ambition as central banks and regulators as well as identifying best practice in identifying and mitigating climate risks in the financial system.
In particular Chapter III, Part III and IV of the BFSA deal with the boards of directors of banks and financial institutions.

Ownership structures of banks in Zambia are varied with some banks being foreign owned, others owned by private entities while others have some degree of state ownership. Each type of ownership structure poses governance challenges. In all instances, transparency and fairness in banks’ lending and investment decisions, becomes a critical requirement. Banks also operate on the basis of trust and therefore reputation risk becomes a critical factor that can affect a bank seriously if not properly managed. For this reason, banks need to adopt good governance practices and customer services standards in order to build public confidence in the credibility of their operations. It must be remembered that banks operate in a volatile environment where perceptions in their dealings could trigger a run on a banks’ deposits. For instance some of you in this room may remember that in 1997, First Merchant Bank Zambia Ltd, experienced a run and was subsequently closed two days later after a local newspaper reported that a customer of the bank was involved in money laundering. Ladies and Gentlemen, the importance of the payment system to an economy cannot be over-emphasized. The payment system provides the means by which vast numbers of transactions are made each day. The payment system involves many different components, including systems for settling large, inter-bank and inter-corporate payment transactions, and systems for handling a number of smaller transactions. However, the payment system operators also face a number of risks including operational risks.
In the world of finance, some of the questions being asked today are: What makes a bank a bank? Will digital currency ever replace central-bank issued money? Or more likely, will central banks issue their own versions of digital currency and in the process, disintermediate banks? Are banks selling financial products, or are they offering a lifestyle, opportunity and the freedom to pursue a new and different path in life? What business are banks really in? When everyone stopped using film in cameras, one wonders if Kodak realised that it was actually in the business of capturing memories. Or when smartphones burst into the mobile handset market, did Nokia realise that their business was not selling mobile handsets, but connecting people with the world around them? Three years ago, McKinsey predicted that technological advancements will redefine the landscape of finance, and then went on to argue that incumbents had – at most – a brief window of five years to adapt or risk becoming obsolete. You may or may not agree with this, but I think it would be hard to deny that a shake-up of the industry is already present. To some extent, the finance industry has been responding. Total IT spending is estimated at over $ billion every year across the regions of North America, Europe, Asia Pacific and Latin America. In 2016, a single global bank spent $ billion, or 16% of its expenses on technology.

In the blockchain space, the industry in a number of jurisdictions has pooled resources to defray the cost of experimentation involved in developing scaleable use cases for the technology’s application. In Malaysia, nine banks have done this by coming together to develop blockchain applications for trade finance. Establishing shared networks, or opening up previously closed ones, is also gaining traction. This can be seen in the growing use of Open Application Programme Interfaces (or Open APIs). Over the last five years, publications of APIs in the financial sector have increased exponentially, with an estimated 200 new APIs published every year. In a survey that we conducted earlier this year, more than half of banks and insurers in Malaysia indicated plans to roll out open APIs in the near to medium term. At the industry level, the Bank has established an open API implementation group with members drawn from the industry, fintech community and key stakeholders to develop open API standards 2/5  BIS central bankers' speeches  for the financial sector as part of efforts to broaden access and promote innovation and competition. On the risk management front, the World Economic Forum announced less than three weeks ago the creation of a consortium to facilitate more coordinated efforts in addressing cybersecurity risks. This entails developing common principles for risk assessments, guidance for implementation, and a scoring framework. In the area of payments, the Bank has just last week issued the Interoperable Credit Transfer Framework (ICTF), which promotes collaborative competition or ‘co-opetition’ for mobile payments.