samchain/econo-pairs-v1 huggingface dataset:
This was made possible only in the case of Korea which has helped the country recover from the crisis and was able to bring down interest rate much faster than other crisis countries. The case of Indonesia further led the IMF to reform towards more careful and focused policy prescription. The abrupt close-down of Indonesian commercial banks under the IMF program added to a sense of panic, which led to a broad-based bank run. Moreover, the conditionalities did not focus on the more critical macroeconomic adjustments which were directly related to the problems of the crisis but also included unrelated changes such as requirement to abolish import restrictions on all new and used ships. Secondly, policymakers must be ready to take away the punch bowl. In the past we used to talk about monetary policy being on the alert to take away the punch bowl. This crisis has proven that public policy in general need to observe this principle as well. Fiscal policy must guard against falling into the populist trap. Financial supervisors also need to be vigilant and watch out for signs of excessive credit creation, and act pre-emptively for the cost of cleaning up the crisis far outweigh the brief euphoria and exuberance of the moment. Central bank must maintain independence and credibility in order to voice and conduct appropriate policies that may not be favored politically.

I will start with a brief recap of the Asian crisis, drawing some lessons and comparison with the European debt crisis. I would briefly discuss the economic setting and policy reform that brought Asia out of the crisis and end with some thoughts and reflections on the post crisis recovery period. Ladies and gentlemen, As a well-known American author, Mark Twain puts it, “history doesn’t repeat itself, but it does rhyme”. So despite the differences in the context and details of both the Asian and the European crises, the underlying root causes are not dissimilar. First, both crises, like most others in the recent economic history of the world, are often associated with the mispricing of risk and distorted incentives structures. In the case of Asia, our problem was both a currency and a banking crisis. We had to abandon the pegged exchange rate system which led to massive devaluation of our currency. With the corporate sector largely overleveraged and loaded with foreign debt, the sharp depreciation of the currency technically bankrupted firms overnight. Banks NPLs shot up and brought on with it the banking crisis. It was clear that the region’s “original sin” was well beyond redemption. We borrowed in foreign currencies and used it to finance projects that did not generate foreign exchange earning to service such a debt. In the case of Thailand, the amount of private external debt was over three times the level of international reserves.
Securities such as ABS and RMBS, which have always been accepted by the Eurosystem, are now accepted by all other major central banks;  -  an extension of the list of eligible counterparties, in particular in the United States, where investment banks now have access to the Fed’s lending facility;  -  a greater degree of coordination between central banks: this not only includes joint statements aimed at reassuring the markets about the provision of liquidity when the need arises, but also the signing of swap agreements between central banks. This facility enables any European bank which needs US dollars to pursue its activities to secure this funding from the ECB or the SNB. 3)  Were central banks right to take these steps? The fast spillover of the US subprime crisis to other market segments, and subsequently to other countries through the seizing up of the commercial paper market and the major strains on money and interbank markets, called for rapid central bank intervention. This not only included providing liquidity to the market as a whole but also, in some countries, granting emergency liquidity assistance to systemic institutions. These interventions have raised a number of questions: did not central banks, by adapting their operational framework to fit the circumstances, increase moral hazard? Did they not unduly save institutions that did not deserve to be saved, in particular those which had taken  2  BIS Review 78/2008  excessive risks?

But our present degree of knowledge means that, in the terminology of Frank Knight (1921), there is both risk, which can be quantified, and uncertainty, which cannot. The extent of past uncertainty about life expectancy can be seen in the revisions to its forecasts made over the past 20 years by the Government Actuary’s Department. Nor has the financial sector itself proved better at forecasting. Chart 5 shows successive forecasts of expected length of life for men aged 60 published by the Actuarial Profession, a body of life assurance companies and annuity providers. It shows how reductions in mortality were expected by the industry to lead to rises in length of life. For example, the pink line shows the Actuarial Profession forecast made in 1980 that a man who was 60 in that year could expect to live another 20 years. At that time, it was thought that someone who reached 60 in 1999 would live a further 21 years. But by 1999 the forecast was that a man of 60 would live another 26 years. Over a twenty year period, expected length of life was revised up by 5 years. Length of life has risen faster than the industry anticipated, as can be seen by the  5  The first estimates of mortality rates using bills of mortality from the City of London were published by John Graunt in 1662.
An important aspect in dealing with financial scams is in raising public awareness, including of scam tactics used by criminals and the steps that the public can take to avoid becoming victims of financial scams. In this regard, BNM, the financial industry and law enforcement agencies will continue efforts to enhance the effectiveness of awareness programmes and improve on the dissemination of information to the public. Various educational and awareness initiatives have been implemented across multiple channels and platforms, including online webinars, as well as the sharing of reminders and advisories on how the public can protect themselves against financial scams. We encourage the public to visit and follow the Amaran Scam Facebook page at https://facebook.com/amaranpenipuan. That said, the effort to combat financial crimes requires the support of all parties. Each of us as consumers are responsible and have a role in protecting ourselves from scams. Online banking users must protect their personal and banking information, and to never disclose such information to any individual or to key it into suspicious websites. Users should also be vigilant and ensure that their devices, such as mobile phones, run up-to-date software and operating systems. They should ensure that their devices are secure, free from suspicious apps which might carry malware and spyware. This means being careful with what you install on devices used for online banking transactions.

In this context, despite many burning issues, we have managed to keep the focus on more structural issues such as digitalization by working on the first national fintech strategy, and on green finance by becoming a member of the international Network for Greening the Financial System and conducting the first survey on the current status of the green finance. All these should ensure sustainable and inclusive recovery, while confirming our strong commitment to adopting the EU standards and best practices that should enable faster convergence. Thank you! 2/2  BIS - Central bankers' speeches
The figures on output also show that London has been growing relative to the rest of the country (Chart 2), and that has reflected the growth of financial and business services compared with other tradable sectors throughout the UK (Chart 3 and Chart 4). And despite the fall in oil production in the North Sea, we have seen a rise in the real exchange rate by over 15% when comparing the period 1987-1997 to 1997-2007, although of course the financial sector would not have been the only factor behind that rise. More immediately, the GDP figures in May showed that financial intermediation grew by 6% in the sixth months to 2007 Q1 – an annual rate of over 13%. That is not the same as the City of course; but there is every reason to think the City has been growing at least as fast as the rest. However, while the success of the City is currently one factor in these trends, it is not the whole story. For a start there is a lot more to London than finance. There are other successful industries and, on the other hand, London is home not just to the wealthiest boroughs but also to some of the poorest and most deprived areas in the country. As a result it has one of the highest regional rates of unemployment overall. Secondly employment and profits in the City have been highly cyclical.

(2008). 12  The relevant literature tries to integrate standard or workhorse models of financial frictions (such as the Bernanke-Gertler (1989) model of the financial accelerator and the Kiyotaki-Moore (1997) model of credit cycles) into a New Keynesian “sticky” price model. Examples of this literature include Bernanke, Gertler and Gilchrist (1999), Curdia and Woodford (2009) and Gertler and Kiyotaki (2010). The only way the addition of a financial sector “matters” in these models is if we contemplate exogenous shocks to the financial friction itself. That is not very instructive. Several interesting papers presented at a Federal Reserve conference in Washington in March 2012 analysed a wide variety of potential “financial frictions” that might create externalities that would justify a policy intervention. My concern is that there seems no limit to the ingenuity of economists to identify such market failures, but no one of these frictions seems large enough to play a part in a macroeconomic model of financial stability. So it is not surprising that it has proved hard to find examples of frictions that generate quantitatively interesting trade-offs between price and financial stability – the finding in these models is that overwhelmingly the most important objective remains stabilisation of inflation. 13  Focussing on small deviations around the linearization of the steady-state of a dynamic stochastic general equilibrium model helped to divert attention away from the gradual build up of big risks.
Effective fiscal measures are necessary in order to prevent monetary policy from bearing the brunt of these pressures, since this would have an excessive impact on the traded goods sector. The firmer the fiscal stance is at the peak of construction activity, the smaller is the increase in the real exchange rate that will inevitably will accompany it, with a correspondingly beneficial effect on current export and most competing industries. Ladies and Gentlemen The global economy is shrouded in uncertainty. A low rate of growth has been attained in most industrialised countries since 2001 and the recovery is slower than had been hoped. The war in Iraq heightens this uncertainty. Favourable economic conditions among main trading partner countries is important for Iceland’s terms of trade. A special cause for concern is therefore the deteriorating outlook in the euro region, which is important for Iceland’s foreign trade. The situation in Iceland is quite different. A prolonged growth phase was followed by one year, 2002, of a minor contraction, but at present we foresee a new period of growth when our task will be to maintain economic balance. Expectations of greater prosperity are already clearly visible. I would like to conclude by thanking the Office of the Prime Minister and other government authorities for their pleasant cooperation. I also thank the financial institutions for their good collaboration. Last but not least, I would like to thank the employees of the Central Bank for their fine work, without which the Bank could not have achieved such impressive results.

during the current year and 19 b.kr. next year, over and above the amounts assumed when the Central Bank’s latest macro economic forecast was published last month. On the basis of these new assumptions, preliminary studies suggest that economic growth could easily end up in the range 2-2½% this year and well over 3% next year. The annual growth rate is as much as 1% above what was previously forecast. The employment outlook has also improved considerably. Given that the negative output gap was never very wide, and that seasonally adjusted unemployment measured 3.2% in February and has changed little since September, it is clear that inflationary pressures are likely to develop much sooner than was previously thought. Inflation this year is likely to be close to the Central Bank’s 2½% target, but other things being equal it could rise next year. While it is foreseeable that these major construction projects could coincide to some extent in 2004 and 2005, most of the weight will be felt in 2005 and 2006. Thus economic policy implementation will face a greater challenge than was thought when only the Reydarfjördur aluminium smelter and related hydropower development were foreseen. The new outlook calls for economic policy responses on both the monetary and fiscal side. While the scale of the response will be determined by exchange rate developments, it is clear that preventing overheating and inflation will be a major challenge in the period ahead.
It is laudable that within such a short period of its promulgation, 25 of the 27 member jurisdictions of the Basel Committee have issued the final set of Basel III regulations. But the implementation has been uneven. The Basel Committee conducted studies on the consistency of risk-weighted assets measured in the banking book under the internal model approach. It found considerable variation across banks in average risk-weighted assets for credit risk. A material part of this variation was due to different bank and supervisory practices. Such differences in measurement could result in capital ratios varying, in extreme cases, by as much as two percentage points in either direction. To enhance consistency in implementation, the Basel Committee is considering three steps: •  first, improve public disclosure and regulatory data collection to help the market and regulators to better understand how risk-weighted assets are derived;  •  second, narrow the range of acceptable modelling choices for banks; and  •  third, provide additional supervisory guidance for model approvals. Inconsistent application of rules across entities carrying out similar activities leads to the issue of shadow banking. The higher capital and liquidity requirements required under Basel III may create the incentive for activities to be conducted outside the regulated banking sector. The FSB estimates that shadow banking constitutes about 25% of the total financial system, and with regulation of banks still tightening, analysts expect the shadow banking sector will continue to grow.

•  First, it raises the quantity of capital that banks must hold. By providing a buffer for banks to absorb losses, capital helps to minimise spillovers to the rest of the system. •  Second, Basel III raises the quality of capital that banks must hold. The crisis has shown that common equity is the most effective capital instrument to absorb losses and write-downs. •  Third, Basel III brings back to banks’ balance sheets many off-balance sheet exposures and applies appropriate capital charges on them. Many banks that had to be rescued in 2008 had capital adequacy ratios well in excess of the minimum requirements then. They got into trouble because they had many risky off-balance sheet exposures they did not hold capital against. Singapore has fully implemented the Basel III capital requirements, two years ahead of the timeline prescribed by the Basel Committee. And by 2015, Singapore-incorporated banks will meet capital requirements which are 2% points higher than the Basel III minimums – in effect a surcharge to reflect their systemic importance in our economy and financial system. There is no global capital standard for the insurance industry. This is a lacuna that needs to be plugged. But the International Association of Insurance Supervisors (“IAIS”) has taken the lead to formulate standards for a risk-based solvency regime for insurers. The EU has built on this to develop detailed capital standards known as Solvency II. Many jurisdictions are reviewing their rules with the intent to align with IAIS standards.
6  All speeches are available online at www.bankofengland.co.uk/news/speeches  6  The state of play in sterling so far I’ve highlighted the problems with continuing to rely on Libor, but the positive side of this is the progress that continues to be made in creating deep and liquid markets in robust alternatives. In sterling, the chosen alternative is SONIA, produced by the Bank of England. The market for SONIA linked derivatives is well established. The share of swaps traded using SONIA is broadly equivalent to that linked to Libor, with continued growth at longer maturities. Volumes in Libor linked options are decreasing and there are promising signs of a SONIA options market developing; we have also seen growth in SONIA futures during the first half of 2020. There is now a fully functioning SONIA linked bond market with 40 Floating Rate Notes issued, totalling over £ so far this year. In total, there has now been issuance of over £ of bonds referencing compounded SONIA. There has also been in excess of £ of publicly distributed SONIA linked securitisations since April 2019. We have seen businesses such as Shell, South West Water, Associated British Ports, National Express Group and Riverside Group all move borrowing on to near risk-free rates. March saw the first multi-currency revolving credit facility linked to both SONIA and SOFR. The industry is making progress on the conventions underlying these products and infrastructure vendors are ensuring their products can support SONIA linked products.

There should be a policy and procedure in place to manage the risks. Internal control: The financial institutions should set up preventive, detective and corrective control mechanisms that may be built in the operating procedure or programmed in the system involving new product and service delivery. Contingency plan: The financial institutions should formulate the contingency plan to carry on the business under unexpected events. Staff development: The financial institutions should establish a staff development plan to enhance personnel capabilities to conduct new product and service operations. Last topic of presentation is new challenges for BOT supervision and ways to overcome. 5. New challenges for BOT's IT supervision and ways to overcome  (1)  While the financial industry is moving fast with innovations and new developments, supervision needs to ensure the stability of the financial system. Supervisors need to encourage financial institutions to operate their businesses in a safe and sound manner as new delivery channels or services could exacerbate some of the same risks inherent in traditional banking. However, the prudential regulatory framework has to be congruent to the evolution of the e-banking business. Therefore, we need to strike a balance between the need to maintain the stability of the financial system and to foster developments, competition, and a level playing field. There are ways to overcome this challenge. BIS Review 35/2005  7  -  Regulators need to keep up with the development of the market while being proactive in formulating the regulatory framework.
An expansionary economic policy, aimed at boosting demand above the economy’s long-term production potential, would actually be liable to worsen the labour market situation in the longer run. Inflation would move up and the economy would function less well. Neither is it the case that higher inflation would generate permanently higher employment and lastingly lower unemployment. Let me give you an example. Suppose inflation is 2 per cent initially and monetary policy is given an expansionary turn that disregards the sustainable level of output. If wage agreements have been concluded for a considerable period, an upward shift in inflation to, say, 5 per cent could in the best case contribute to a short-run increase in employment because firms’ real wage costs are reduced. In time, however, 5 per cent inflation will be perceived as normal and wage demands will be pitched accordingly. With higher nominal wage increases, real wage costs will rise again and unemployment will tend to return to its initial level. A renewed attempt to stimulate employment and reduce unemployment would then entail a further acceleration of inflation from 5 to, say, 8 per cent and the procedure would be repeated. Ultimately, all that is achieved is higher average inflation and an economy than functions less efficiently; unemployment stays at its initial level. 2  See e.g. Fall, J. (1996), "Government finance in a structural perspective", Sveriges Riksbank Quarterly Review 1996:4.

Diagram 4  Cumulative change in employment 1960-96 T housands 100 10 00  Public employment  800 80 0  600 60 0  Total employment  400 40 0  200 20 0  0  Private employment  -200  -4 00 60  65  70  75  80  85  90  95  Source: Statistics S weden  The great challenge Sweden faces in the future development of employment is evident from Diagram 4, which shows that for a long time there has been no net increase in private sector jobs. This is the trend that must be broken. While there has certainly been some increase in employment in boom years, in the subsequent downturns virtually as many jobs have BIS Review 38/1997  -9-  disappeared. The overall increase in employment has come from an expansion of public sector jobs; one million jobs were created in this sector between 1960 and 1990. Now that, for various reasons, the political system has been obliged to arrest the public sector’s expansion, employment has also fallen.
An example of this is Germany’s decision to transfer its banking supervision into its central bank. The relationship between the Central Bank and the Financial Supervisory Authority (FME) is among the issues that must be examined thoroughly in Iceland in the coming period. The arguments in favour of closer collaboration between the Central Bank and the FME touch on the previously mentioned shortcomings in the regulatory and supervisory framework. In order for a central bank to perform its role as lender of last resort, it must at all times have information that allows it to assess whether a financial institution in distress is faced illiquidity or insolvency. It must also have thorough knowledge of the available collateral. Moreover, it is important that the central bank have an overview of large exposures in the system as a whole and that it be able to assess the risk of contagion between financial institutions. This requires that the central bank have access to information similar to that possessed by financial supervisors. In the event that it is decided to let capital adequacy ratios vary with reference to credit and asset price cycles, it will be necessary to join the tools of financial supervisors with the macroeconomic overview of central banks. Furthermore, it is widely held that in small countries, where the external sector plays a key role, there is a stronger argument in favour of close co-operation or merger between these institutions than there is in larger economies.

It will be women and men working together leveraging on each others comparative strengths, experience and knowledge that will allow us to make the difference that best suits our circumstances and that is able to bring us to the best level of performance and progress. 4  BIS central bankers’ speeches