samchain/econo-pairs-v1 huggingface dataset:
The most challenging recommendations found in the report are those requiring a change in mindset, such as the identified lack of awareness of AML risks in non-bank financial institutions and the wider professional community, resulting in a very low number of suspicious transactions reports  Page | 4  being filed by them. We all have a collective responsibility and nobody can procrastinate in getting our house in order. On a related note, our size will always present diseconomies of scale for large correspondent banks when evaluating their risk-adjusted returns from Maltese business. The risk aversion of these banks is impacting more heavily on the smaller jurisdictions. It is essentially a market failure, a true manifestation of asymmetric information. This does not mean, however, that we should be complacent and fatalist. While banks and authorities continue to search for technical solutions, we are all duty-bound to endeavour to convince these banks that they are dealing with a reputable jurisdiction and that our market players are fit-for-purpose in an age of increasing global financial transparency. These correspondent banks have neither the time nor the interest to understand risky business models or the overly-complex structures of your clients. As practitioners, you are the system’s first line of defence. The more layers of controls in the system, including a thorough understanding of clients and business models, and the less complex their corporate structure, the easier it is for banks to service them. There is indeed purpose in our cause to safeguard what we have achieved so far.

In July, the Central Bank of Malta joined the Network of Central Banks and Supervisors for Greening the Financial System, a collaborative structure that aims to green the financial system and strengthen the efforts of the financial sector in achieving the Paris climate agreement goals. This includes mobilising capital for green and low-carbon investments. Staff members have joined work streams to further research in this area and adopt a number of proposals. Furthermore, the Central Bank of Malta is also represented in the Sustainable Advisory Committee of the Bank for International Settlements and is working in aligning our international portfolio towards holding more green bonds. Page | 6
In the past year, for example, we have published papers on internal control systems for banks, interest rate risk management and operational risk that fill in some of the gaps in the Compendium related to risk management and internal controls. These were prepared by the Risk Management Subgroup, chaired by Roger Cole of the Federal Reserve Board and Christine Cumming of the Federal Reserve Bank of New York. We have work underway now in that Subgroup for future papers on supervisory issues in credit risk management, corporate governance and internal audit. As another example, we issued a paper on the framework for enhancing transparency last month. The Transparency Subgroup intends to build upon that framework, with special emphasis on trading, derivatives and credit risk disclosure. In addition, as noted, we published last week a paper on loan valuation and loss reserves. This probably is still not enough detail for many supervisors. The need for more detail may be better met through increased technical assistance provided by the Basle Committee on Banking Supervision, along with similar assistance programs of its individual members. Moreover, the International Monetary Fund, the World Bank, and regional development banks have stepped up their efforts to provide technical support as well. Often, the detailed street plan can be developed only with very specific knowledge of the marketplaces, banks’ powers and roles in the financial system, and the laws and regulations of the country in question.

Third, the banks assessed the consequence of identified and potential losses on their loan loss reserves. The Basle Committee has just this month published guidance on the valuation of loans and loan loss provisioning. It urges that loan impairment be recognized promptly, that loan loss reserves reflect the potential for loss in the credit portfolio, and that adequate disclosure about credit quality, loan loss provisioning and loans losses be made. Fourth, banks, often with the help of supervisors, assessed the adequacy of their current and prospective capital levels in light of the loan losses identified and the loan loss potential estimates reflected in the reserves. In most cases, this meant a need for additional capital, whether by raising capital funds directly from the market or from existing shareholders, or by considering a merger or sale of all or some of the bank. This issue of raising capital when the bank is under stress is one of the most difficult questions for bank management and for supervisors, but our collective experience suggests that solutions can be found even in very difficult markets. The key to success appears to be a clear disclosure of the existing problems, an action plan to address the problem, and a viable business strategy going forward. We know from experience that when a bank takes these steps, current and potential investors are far more likely to react positively. Indeed, there is a well-developed community of investors seeking bargains among distressed institutions with decent prospects for recovery.
But harmonization takes time as the devil is in the details. And harmonization may go beyond regulations on the trade or issuance of bonds. As cross border initiatives, they inevitably involve regulations over international capital flows which we need to also respect both host country and home country authorities. For instance, the home country may allow their savers to invest abroad, but the recipient countries still maintain controls on inflows. Other regulators may permit non residents to make use of tools such as repo, as liquidity enhancing mechanism, but others may look at this measure as way to engage currency speculation. These are all delicate balancing acts which we would need to tackle as we strive to integrate our financial markets further. And while we pursue development and liberalization objectives we also need to strengthen our regional safety net. Today our regional cooperation has multilayer safety net consisting of Cross Border Collateral Arrangement (CBCA) for our banks to avail themselves of liquidity from the host central bank using collaterals at their home or head office, bilateral foreign exchange swap line, and the Chiang Mai Initiative Multilateralisation (CMIM) serves as second line of defense and should continue to be enhanced to counter possible market turbulence. As you have heard from the Minister of Strategy and Finance of Korea, Mr. Bahk Jaewan, the ASEAN+3 Finance Ministers and Central Bank Governors have made progress on important features of the CMIM. We have announced the doubling of the total size of the CMIM from $ billion to $ billion.

This led to the third exacerbating factor: Instead of helping the situation, off-balance sheet investment vehicles established by the banks made it far worse. Suddenly, these investment companies could no longer refinance themselves in the market and the banks were therefore forced to inject their own liquidity. Initially, the liquidity bottleneck manifested itself in the US dollar money market, above all. On the one hand, this was due to the fact that sub-prime losses and refinancing needs mainly affected US dollar positions. On the other, it was because liquidity hoarding also occurred chiefly in US dollars. US dollar liquidity was particularly tight for European banks. Thus  BIS Review 150/2007  1  tensions spread rapidly from the dollar money market to the euro money market, but also to the Swiss franc money market. The extent of the upheaval on these three money markets can be seen in graph 1 which shows the path of risk premiums, using three-month funds as an example. Before the crisis, these risk premiums were almost negligible. They now amount to between 50 and 100 basis points, depending on the currency. The graph also shows that, so far, the crisis has moved forward in two waves. After normalising to some extent in October, the situation became increasingly tense from mid-November onwards, after more bank losses had been reported. Stabilisation by central banks The turbulence on the money market is challenging central banks.
For many statistical products and for different stages of the statistical process, central banks mainly rely on their own capabilities, running different IT systems and developing autonomous projects in each country. Here, some synergies can probably be harnessed and costs reduced if collaboration between central banks is further strengthened in that statistical process. Concluding remarks Allow me to conclude. Modern technologies offer a wide range of possibilities for obtaining and assessing information at much lower costs than in the past. Here we have a technological challenge, but another we face is to recruit our staff and to provide them with the skills needed to address these new issues. This may be a long process but we need to tackle it now. As I have tried to explain today, the potential benefits for economic policymaking are very significant. At the same time, there are other obstacles in the way of improving our knowledge of the rapidly changing world. These have more to do with institutional factors and even some cultural traits. They are not easy to remove, either; but we cannot deny we have a major role to play in gradually changing our mind-set and overcoming the barriers which today hamper, for example, data-sharing among institutions and open data for scientific purposes. My impression is that we need to be very ambitious if we do not want to miss that train. We also have more possibilities of succeeding if we join forces with other institutions, both at the national and the international level. 8

I’ll conclude by emphasizing two of the next steps that I think are most essential for the successful reform of LIBOR. First, the definition of LIBOR should be broadened so that it more accurately reflects the observed funding patterns of large banks and puts the rate on a broader, more stable base of observable transactions. The LIBOR administrator is actively considering ways to do this while remaining true to the spirit of LIBOR and how it is used in financial contracts. Accomplishing this will make markets that need a reference rate that embodies bank credit risk more robust and resilient and will strengthen the financial system. Second, we still face the problem that the reference rate for a large stock of derivatives contracts is based on a relatively small, underlying cash market. This means there still is a powerful incentive for individuals to attempt to manipulate the rate for their own gains. One promising solution, outlined in Governor Powell’s recent speech on reference rates, is to work with market participants to find an alternative reference rate that is based on a deeper underlying cash market and that meets the needs of all market participants. Of course, any rate that serves as a critical financial benchmark must meet the principles for good governance and production outlined by IOSCO.
These latter two sources are particularly relevant in Romania, where changes in indirect taxation and regulated utility prices have played a significant role in the recent inflationary spell, adding to the underlying inflationary pressures stemming from the opening of the positive output gap (to which contributed a persistently expansionary fiscal policy), increases in wage costs, and, last but not least, an upward adjustment in inflation expectations. As a matter of fact, significant acceleration in wage growth is a common feature of the non-euro EU member group. Nevertheless, in most cases this has not led to a deterioration in the current account positions, which remained in surplus. Unfortunately, Romania appears as an outlier within the group: while its current deficit is well below pre-crisis levels, it widened rapidly from a minimum of 0.7 percent in 2014 to 3.4 percent in 2017, which puts Romania closer to the group of EU candidate countries (around 5.5 percent in Serbia and Turkey). Against such a background, it is no wonder that – while the monetary stance remains largely accommodative –, the picture is quite heterogeneous regarding inflation expectations, inflation targets, and policy tools used. Romania has already started the tightening of monetary policy by hiking the rate three times this year, after further narrowing the corridor around the policy rate last year, but going forward we believe a gradual approach is warranted. And this brings us to the issue of monetary policy normalisation.

In this chart this is shown as the dark blue bars. The return on the fund has been solid, as shown as the light blue bars. The accumulated income from financial assets makes up a significant part of the fund’s current value. The yellow bars in the chart show fund withdrawals used to finance the structural non-oil budget deficit. Both returns and exchange rates vary over time. Rising equity prices have generated substantial gains for the fund in recent years. But this means we must also be prepared for losses when markets turn, as they did last year. As I have said, Norwegian society has gained in several ways from petroleum extraction. The earnings from selling oil and gas are only a part of the story. The emergence of a highly advanced and skilled offshore industry is another part. This is the third experience I would like to share with you. From the start of Norway’s petroleum era, we needed foreign technical expertise. Foreign oil companies were required to develop the petroleum fields in partnership with a stateowned oil company. Just as important as a certain degree of national control was the transfer of knowledge. There was also a clear expectation from the very beginning that Norwegian industry and service providers should be involved. The timing was perfect. In the 1970s, the Norwegian shipbuilding industry faced a sharp drop in demand for ships. The industry had resources and skills that could be reoriented to production of platforms and other oil industry inputs.
The value of the banknotes and coins in circulation has fallen from 9.6% of GDP in 1950 to 2.9% in 2010. So, the question is: Should cash be compared with the extinct Neanderthals or the surviving Crocodiles? But why is this of interest to the Riksbank? Well, a first obvious answer is because it is the Riksbank that issues banknotes and coins. Another, and more complicated, answer is because one of the tasks of the Riksbank is to promote a safe and efficient payment system. This may sound a little high-flown, but it means, among other things, that we should promote the development of safe and efficient payments. This is why we have a natural interest in cards and cash. Hence, we are interested in the evolution of the market for payments, and that is why I am standing before you today. What I intend to talk about today is why I believe that cash will continue to play an important role in our payment system for the foreseeable future (even though not 85 million years) and why cards and other technological developments will not be able to fully take the place of cash. Ironically, part of the explanation for this lies in the strong position that debit and credit cards hold on the Swedish market. As usual I would like to make clear that my speech is an expression of my own views and that it may not necessarily be shared by my colleagues in the Board of the Riksbank.

  In Indonesia, the urgent need is to shift fiscal spending from costly food and fuel subsidies to infrastructure investment and human capital development. The newlyelected President Jokowi has just announced a “working cabinet” and a resolve to deliver on reforms.   In Singapore too, we are in the midst of economic restructuring – to reduce our dependence on labour inputs, move into higher value-added activities, and increase productivity as the basis for sustained and healthy wage growth. Structural reforms are often painful. They take time to bear fruit and entail significant adjustment costs in the interim. Growth may slow temporarily, as margins are squeezed and resources flow from declining activities to emerging ones. Restructuring is a process of creative destruction, and quite often the destruction of the old must take place before the creation of the new. But if reforms are delayed, or worse still reversed, in response to short-term pains, the long-term health of the economy suffers. Countries ranging from China to Singapore are facing this trade-off today, between the imperative to restructure the economy for more sustainable long-term growth and the need to minimise the transitory effects on short-term growth. Governments must get businesses and workers to understand these trade-offs, and work together to press on with restructuring while smoothening its rougher edges. But avoiding reform or restructuring is not a choice. Financial development and integration is an enabler for the broader structural reform effort underway in Emerging Asia.
Percent 8  80  6  60  4  40  2  20  0  0  2020Q1  2021Q1  2022Q1  2023Q1  2024Q1  Imported goods Domestically produced goods and services Energy products (rhs)  2025Q1  Sources: Statistics Norway and Norges Bank  And even if Norges Bank cannot influence global prices in foreign currency terms, we can influence the exchange rate. A higher interest rate normally leads to a stronger krone exchange rate and weaker imported price inflation. Inflation does not come down on its own. The chart shows our forecasts from December (Chart 8). We expect energy prices to fall further out and imported inflation to ease, thereby curbing consumer price inflation ahead. Domestic inflation is likely to remain elevated for longer. The labour market is still tight, and business costs have increased. The effects of this will persist for a while and will contribute to propping up inflation. Had we not raised the policy rate, we would have run the risk that households and firms had started planning for high inflation in price and wage setting. In that case, it could have been necessary to tighten even more at a later stage to bring down inflation, which we want to avoid. The policy rate is being set with the aim of bringing inflation down towards the target of 2 percent. We could have raised the policy rate higher and faster than we have so far. Inflation might then have come down faster.

In the 1980s and 1990s, central banks in many countries are granted greater independence from the political authorities. This mitigates the time-inconsistency problem. Central banks can – and should – make unpopular decisions when necessary. Central banks are given the responsibility for ensuring low and stable inflation. An explicit numerical inflation target is introduced in more and more countries. The first one to do so was New Zealand in 1990. In Norway, the authorities continue to pursue a fixed exchange rate policy for a while, but in 2001, the Government introduces an inflation target in Norway.4 In the initial period of inflation targeting, central banks are concerned with building confidence in their targets. Many central banks practice inflation targeting fairly rigidly and seek to guide inflation back to target relatively quickly after a deviation. Once confidence is established that inflation will remain low and stable over time, central banks can give more weight to other considerations, such as promoting high and stable employment. Inflation targeting gradually becomes more flexible. Norway’s experience with inflation targeting is positive. In spite of a global financial crisis and large swings in oil prices, inflation remains low. Monetary policy is used actively to stabilise the economy. In the revised monetary policy mandate adopted in 2018, it is specified that monetary policy shall be forward looking and flexible. But monetary policy does not operate in a vacuum. An appropriate division of roles in economic policy is decisive. 3.
It might be the case that, given the depth and severity of the crisis, some workers have remained in the labour force but have been without a job for so long that they have become virtually unemployable – that is, that they have become structurally unemployed. This would also have a negative effect on growth potential. The natural starting point to assess the magnitude of such effects is to consider estimates of the NAIRU. What we see here is that, in certain countries where unemployment rose sharply and where there was a strong sectoral dimension to the crisis, estimates of structural unemployment have indeed risen significantly. Current real-time estimates from a variety of international institutions, for example, suggest that Spanish structural unemployment increased by over three percentage points in the aftermath of the crisis, to around 17%. At face value, this would suggest that virtually all of the unemployment that we currently observe in Spain is of a structural nature – and that the crisis has left permanent and irreversible scars. And although current estimates do not suggest a notable increase in structural unemployment for the euro area as a whole, this was not true just a few years ago.

Funds investing in less liquid assets should extend their notice periods or ensure redeeming investors receive only a ‘quick sale’ price for their share of the funds assets. 16 The FCA has announced that it will “look to consult later this summer on finding a way in which funds could safely transition to a structure in which liquidity promises to investors are better aligned with the liquidity of fund assets”.17  Properly and consistently implemented, changes like this will help to level the playing field. With this would come the opportunity for both closed end funds and for open ended funds offering a longer redemption notice period to attract more investment. And that would open up the possibility of greater investment in growth capital. The fund industry – through the Investment Association – has been working on a proposal for a Long-term Asset Fund (LTAF). Properly designed, such an open ended structure could in principle allow investment in truly illiquid assets. I look forward to seeing the next stage of their proposals soon. If we can remove the current bias against the growth of closed ended and long-term asset funds, new opportunities for issuers and investors can be created.