samchain/econo-pairs-v1 huggingface dataset:
Indeed, having central banks mainly one instrument, the interest rate or the money supply, but not both, financial stability was mostly ignored. This is not the case of emerging market economies, where after many financial crises, the role of financial stability was always central in policymaking. Indeed, the most relevant aspect of financial stability was in the international financial transactions area. For this purpose, central banks, most usually, manage exchange rate policies, hold international reserves and dictate norms to avoid currency mismatches and external payment crises. In Chile, the Central Bank’s objectives are price and financial stability. The Constitutional Law explicitly establishes that “the Bank shall have as its purposes to look after the stability of the currency and the normal functioning of internal and external payments.” Indeed, the resilience of financial systems in emerging markets during the global financial crisis owes much to the fact that financial stability was already an important piece of the policy framework. Three issues I would like to discuss regarding financial stability and monetary policy:   First, was the crisis caused by monetary policy?   Second, what are the instruments for financial stability?   And third, what are the interactions between financial stability and monetary policy? Regarding the cause of the crisis, I do not think monetary policy, conducted, for example, on the basis of a Taylor rule was the main culprit. Very low interest rates in advanced economies induced high risk-taking as financial institutions were searching for yields.

Figure 12  Real commercial loans and non-mining Imacec (annual change, percent)  20  Commercial loans  15  20 15  10  10  5  5  0  0  -5  -5 Non-mining Imacec  -10  -10  -15  -15  -20  -20  97  01  05  09  Source: Central Bank of Chile. 18  13  17  Figure 13  Commercial loans during recession episodes (1) (2)  (difference with respect to annual change in period 0, percent)  8  8  Covid-19  6  6  4  4  2  2  0  0  -2 -4 -6 -8  -2  Global financial crisis  -4 -6  Asian crisis  0  1  2  3  4  -8  5  (1) Horizontal axis shows months. Period 1 is first month with negative Imacec. (2) Real data based on CPI splicing with 2018 anual base. Source: Central Bank of Chile using data from the Financial Markets Commission and the National Statistics Institute (INE).
I would therefore like to comment briefly on our assessment for the next three years, based on the analyses in the most recent Inflation Report published in June (Inflation Report 2/05) and updates at the most recent monetary policy meetings. The economic situation The Norwegian economy is in an upturn and is now expanding at a brisk pace. Inflation remains low, but has edged up since last year. The risk of a fall in the level of prices and markedly lower inflation expectations has diminished. At the same time, there appears to be little risk that inflation will rapidly move up to a level that is too high. The interest rate reductions through 2003 and into 2004 have resulted in low real interest rates. For a period, the real interest rate has been considerably lower than normal. The low level of interest rates is supporting the high activity level in the Norwegian economy. The economic upturn is broad-based. At the beginning of the recovery, activity was primarily fuelled by private consumption, traditional exports and petroleum investment. In addition, growth in mainland fixed investment has gradually gained considerable momentum. Monetary policy easing and low inflation have resulted in strong growth in household real disposable income. Private consumption and housing investment have risen sharply. House prices have continued to rise. Debt growth remains high. The economic upturn has continued this year. High petroleum investment, the international upturn and higher commodity prices have boosted output and earnings in the manufacturing sector.

To do so, you have undoubtedly used your strengths, which I believe most notably include your close relationship with your customers, your extensive knowledge of the local economic situation and your down-to-earth management (far removed from speculative business models and focused on harnessing your knowledge of those customers and their needs). Furthermore, on a day like today, I feel that it is fair to highlight as one of your strengths your ability to support one another when necessary. You know better than I do that mutual support is one of the basic principles of the cooperative movement, and over these 50 years you have demonstrated that solidarity is an essential means for overcoming problems and difficult situations. Indeed, if we look back in time we see that today’s society – and economy – are very different from those of 50 years ago. So another key to your success lies in your ability to adapt to that changing reality. The crisis triggered by COVID-19 is clearly a dramatic test of how changeable things can be. It is obvious that, for once, the origin of the crisis is not financial and is not linked to macroeconomic imbalances. Nevertheless, although this crisis is unrelated to previous ones, there is something that still holds true in this type of situation: the strengths that we have built up when the crisis hits will be the strengths that enable us to weather the storm.
Fostering strategic alliances with the right entities will not only accelerate innovation and development but will also bring about considerable values in the formulation and implementation of new approaches, new technologies and specialisation in new product. These in turn, will pave the way for takaful operator to be competitive and in a position to be industry leaders at the national and global front. Let me share with you Malaysia's recent initiatives on this front. In January this year, Bank Negara Malaysia has agreed to award four new licences for takaful operators, bringing the total number of takaful operators to nine (9). The new takaful licences are offered to joint ventures or consortiums of sound financial institutions with experience in Islamic banking, takaful or insurance business. Such joint ventures or consortiums that include foreign partners would enable the new  BIS Review 13/2006  5  takaful operators to leverage on the expertise, experience and infrastructure of their partner financial institutions. These are strong institutions from the Middle East, the United Kingdom and Japan that agreed to combine efforts and share expertise and resources with Malaysian institutions in these new ventures. In line with the liberalisation in the Islamic banking industry, foreign equity interest of up to 49% is allowed in the takaful entity to secure commitment of strong shareholders, and foster meaningful strategic alliances.

Zamani Abdul Ghani: Building a progressive takaful sector in the overall Islamic financial system Keynote Address by Mr Zamani Abdul Ghani, Deputy Governor of the Central Bank of Malaysia, at the 2nd Seminar on Regulation of Takaful, Langkawi, 23 February 2006. *  *  *  Bismillahirrahmanirrahim. His Excellency Dr. Bassel Hindawi Vice Chairman, Director General of the Commission Insurance Commission of Jordan Mr. Anwar Khalifa Ebrahim Al-Sadah Deputy Governor, Bahrain Monetary Agency Professor Rifaat Ahmed Abdel Karim Secretary-General, Islamic Financial Services Board Distinguished guests and participants, Assalamualaikum warahmatullahi wabarakatuh and good morning. 2. It gives me great pleasure to be here this morning to welcome you to Malaysia and to this beautiful island of Langkawi. I am also pleased to be invited by the Islamic Financial Services Board (IFSB) to address this major event that brings together those among us who share deep interest in the development of global takaful and Islamic finance. Alhamdulillah, we have among us today distinguished market players, regulators, scholars, consultants as well as participants from almost twenty (20) countries around the world. I also wish to congratulate the IFSB for its efforts in organizing, for the second consecutive year, this international seminar focusing on the regulation of takaful. Let me at the outset reiterate the importance of this Seminar as a source of collaboration for ideas, sharing of knowledge and exchange of experiences for the continuous developments and improvements of the Islamic finance industry.
The nature and speed of change pose some opportunities for smaller firms that are not weighed down by massive infrastructure and can be nimble in decision making; but there are also a number of threats from the bewildering investment choices, the costs of investment and the ongoing need to adapt. Mutuals face particularly difficult decisions as you are essentially investing your members’ (past, current and future) money and will be highly aware of the potential damage caused by delays and cost overruns; and balancing the need to invest to meet the needs of today’s and tomorrow’s customers with the the risks to the firm’s future if investment doesn’t pay off. It is also important to note that maintaining technology can come with high fixed costs alongside the people associated with supporting that technology. Gaining relevant technical expertise at Board and senior management is one option that some firms determined to make the most of the right technological advances take. Pooling expertise or outsoucing – subject to tight and expert oversight – are other options. Organisational transformation projects are always difficult to achieve in a fast-paced environment. Firms, faced with declining demand for their current services and lacking the resources to invest in new services, may take the path to merge. For Friendly Societies, this could be achieved through a Part Eight transfer. The PRA currently has an open consultation on Insurance business transfers, CP16/211, which welcomes comments and feedback until 28 October.

My colleague Gareth Truran provided an update on the review of Solvency II last month titled ‘Solvency II Review: Unlocking the Potential’6. As he noted, the intention is to retain the structure and approach of Solvency II, which owes much to the preceding UK regime, but to tailor it better to the form of the UK insurance sector and the products that it offers. The review is nonetheless wide ranging, so I will just pick out a few areas of particular relevance to some or all of this audience. First, we agree with the industry that the risk margin is currently too volatile and too high in the current interest rate environment. Second, we are keen that the matching adjustment is put on a sounder footing to support the investment objective and protect policyholders. Third, we’re looking at a range of changes to simplify and streamline aspects of the regime, including reporting, and thereby reduce the burden on firms, whilst ensuring that the PRA continues to receive the level and type of information necessary to supervise firms effectively. An increase in the thresholds at which firms become subject to Solvency II is being considered alongside mobilisation of new insurers, and a review of the standard formula will take place at a subsequent stage. We are keen to engage with the AFM and its members on all of these topics. We are committed to continuing this where necessary and working with industry throughout policy development.
And last but not least, the European Payments Initiative (EPI). Some major decisions on the effective launch of EPI are due to be taken in the next few weeks. But I would just like to remind you here that the Banque de France fully supports this initiative, as do the other Eurosystem national central banks and the European Commission, and currently seven EU Member States, including France, that publicly announced their support for the initiative in a statement published on 9 November. 2.The introduction of a CBDC raises complex issues that need to be resolved without penalising banks in order to produce the desired effects. The second reason why we should take a cautious but confident approach to the role of banks in a world of stablecoins and CBDCs relates tothe challenges that need to be met to ensure the digital euro contributes positively to the European financial system and payments landscape. a- Avoiding disruptive effects for financial intermediaries This implies making complex economic, financial, technical and organisational choices, to avoid generating disruptive effects for financial intermediaries that would conflict with our mandate to safeguard monetary and financial stability. 3/5  BIS central bankers' speeches  These disruptive effects could materialise in two ways:  First, if the introduction of a CBDC were to lead, in normal periods and in periods of stress, to the conversion of a large share of bank deposits into assets held in CBDC.A reduction of this size in deposits would have serious consequences.

The May meeting is part of the Committee’s ongoing commitment to ensure that the Core Principles remain current and relevant to bank supervisors worldwide. Let me move on to the Basel Committee’s initiative to revise the 1988 Accord. As you know, capital has played, and continues to play, an important role in the supervisory tool kit. Adequate capital helps ensure that shareholders monitor the risk of financial institutions, and that management puts in place and maintains appropriate oversight mechanisms to help prevent problems from surfacing in the first place. Should an institution experience difficulties, capital serves as a buffer to absorb losses and reduce the risk of spillover from a problem institution to other financial institutions. The primary tool of capital regulation currently is the set of minimum ratios that were devised in 1988 by the Basel Committee on Banking Supervision. They were set forth in an agreement known as the Basel Accord, and were adopted, among other reasons, to address the slide in international capital levels that was occurring over the previous decade. The Accord was clearly a milestone achievement for the first time, supervisors in G10 countries were able to use a common yardstick for assessing banks’ capital adequacy. But the Accord has a number of serious shortcomings. For example, it does not adequately differentiate among degrees of credit risk and, as a result, banks have had incentives to take on higher  7  BIS Review 27/2000  risk exposures within broad risk categories.
Starting with the institutional limitations, the key innovation of the SSM is that it creates genuinely European supervision, by which I mean supervision on both core and peripheral banks. From November next year, every bank in Europe will be part of the same system. This puts supervisors in a better position to prevent boom-bust cycles caused by excessive cross-border lending – and if they fail to do so, there will be collective responsibility for that failure. In line with the subsidiarity principle, European supervision will involve centralised and decentralised elements. For the big significant banks (around 130), the ECB will be the direct responsible supervisor, but supervision will take place at both the European and national levels. We will integrate these levels by setting up Joint Supervisory Teams (JST) for each significant bank. Let me use the example of Santander to illustrate how this will work. For the parts of the banking group resident within the SSM, there will be a core supervisory team comprising of staff from both the ECB and the national competent authorities (NCAs) in the countries where Santander is active – that is 9 within the euro area. Within this team there will be a national coordinator for each country, drawn from the respective NCA, and an overall coordinator, who will be an ECB staff member. The national coordinators will manage the permanent experts working at the national level, while the ECB coordinator will ensure quality and take responsibility for output sent to the Supervisory Board.

Exchanges with colleagues from market operations, payment systems and economic analysis will help the supervisors to develop a different viewpoint on current market developments, the importance of a specific institution for payments and the economic environment. One area in which cooperation will be particularly intensive is macro-prudential supervision. Our aim here is to bring together insights from both the macro-prudential and the micro-prudential areas, and to address undesirable developments in a targeted way. Conclusion Ladies and gentlemen, the European supervisory landscape is facing a major change. With the SSM, we have created a strong, new supervisor at the European level. The SSM will be able, and have the responsibility, not to do everything differently, but to do some things better. With the conclusion of the comprehensive assessment, and the publication of the results in the second half of October, and the start of our supervisory activity on 4 November, we have a few stressful months ahead of us. But we must also remember to occasionally pause for a moment and to reflect beyond the immediate tasks at hand. The SSM may have been created as a consequence of, and as a solution to, certain problems in Europe. But it is  BIS central bankers’ speeches  3  destined to be able to achieve much more and – at least that is my hope – to have an effect over and beyond Europe. Thank you for your attention. I am now at your disposal for questions. 4  BIS central bankers’ speeches
On the contrary, lasting inflation would be the worst enemy of growth. II. Financing conditions are therefore normalising, without weighing  excessively on the situation of businesses The tightening of monetary policy has led to more restrictive financing conditions, after several exceptionally accommodative years. But the rise in  Page 3 sur 5 interest rates is being passed on to the real economy in a gradual and orderly manner, particularly in France. Regarding businesses and SMEs, outstanding bank loans to businesses remained strong at +6.8% in January, of which +5% for SMEs and VSEs. Bank credit is partially replacing market financing due to a more contained increase in its cost. As regards businesses, we should remain vigilant but not alarmist as we sometimes hear. Admittedly, their cash position has deteriorated, falling from an initially high level, as confirmed by our last monthly survey – in industry more than in services - but we are not witnessing a major return of the "spectre of defaults”. At the end of January, the number of defaults had risen to just under 43,000 over the past 12 months.1 This level is above the artificially low level recorded during the Covid years with their exceptional support measures, but still well below the average of roughly 59,000 recorded over the 2010-19 period. We should gradually move towards this figure, and we are monitoring the situation of SMEs and VSEs in some of the more fragile sectors very closely.

Yet, inflation remains the main concern for our fellow citizens - and in particular the most vulnerable among them - and for us. Admittedly, it has started to stabilise, or even to fall back to 8.6% in the euro area at the end of January in the context of a slowdown in energy prices. However, the first figures for February published yesterday for Spain and France call for vigilance, and for perseverance in our monetary action: inflation persists, for France at 7.2% according to the European Harmonised Index of Consumer Prices, at 6.2% according to the national price index. According to our forecasts, it should reach its peak in the first half of 2023 and could have halved by the end of the year. But that is still too high, and core inflation, i.e. excluding energy and food, is still rising and amounts to 4.5% for France according to our estimates. The nature of inflation has indeed changed beyond the initial energy crisis: it is not only  Page 2 sur 5 higher but also more widespread, not just imported but also domestic, not just linked to a transitory supply shock but also potentially persistent. In light of this, no one can deny that monetary policy can and must respond. Here, I would like to emphasise not only our forecast, but also our commitment to bring inflation down to 2% by the end of 2024-25.
Such a short-term supply cost could come about if higher spreads affect the relative price of different factors of production, for example by increasing the cost of capital and depressing investment. 16  We rely on five-year averages given we look at the sum of coefficients of five lags of ∆Cred* Following Ajello et al (2016), private sector agents’ expectations of period 2, denoted by 𝐸1𝑃𝑆 , depart from full-information rational expectations, which would lead them to cut back spending when credit was growing quickly and a crisis became more likely. Their expectations instead treat the crisis probability as fixed and negligibly small. See Ajello et al (2016) for more details. 17  10  All speeches are available online at www.bankofengland.co.uk/publications/Pages/speeches/default.aspx  10  Credit spreads are affected by the setting of the CCyB (𝑘1 ): when banks are required to use a greater proportion of more expensive equity, this raises their weighted average cost of funding, leading them to increase the spread between lending rates and the policy rate. The benefit of using the CCyB is that it reduces the probability of a banking sector crisis (𝛾1𝐵 )  18  via two channels: first, activating the CCyB can ‘lean’  against a build-up in banking sector credit growth (𝐵1𝐵 ), since (𝜙𝑠𝐵 < 0 and ℎ𝐵 > 0); and second, for a given level of credit growth, a higher CCyB directly reduces the probability of a crisis due to the resilience benefits of higher bank equity capital (ℎ𝑘 < 0).

Within the framework of the Treaty establishing the European Community (EC Treaty), the Governing Council shall be held accountable for the maintenance of price stability in accordance with its published definition. The Governing Council is neither responsible for the content of these projections, nor should its performance be judged against them. While macroeconomic projections are a useful instrument for undertaking the forward-looking assessment on which monetary policy decisions are based, the limitations I have outlined imply that such projections cannot be the only tool used by the Governing Council. The Governing Council should no more assume responsibility for the staff macroeconomic projections than it does for the content of other analyses that constitute inputs into its policy decisions, such as the monetary analysis under the first pillar or the evaluation of developments in individual indicator variables or financial prices and yields. Assuming responsibility for one input into its decisions would detract from the Governing Council’s true responsibilities, first for monetary policy decisions and ultimately for the maintenance of price stability. Given the Governing Council’s overriding commitment to the maintenance of price stability, the only forecast for which it could take responsibility would be one that was consistent with price stability. BIS Review 109/2000  4  Such a forecast - which, by its nature, would not change over time - would not, in itself, be very informative about the Governing Council’s assessment of the prevailing economic situation.