samchain/econo-pairs-v1 huggingface dataset:
With these elements in place, comparability should be greatly enhanced. Moreover, unlike Basel I, the new Accord allows for the evolution of bank practice over time by building on the core elements of a bank’s internal methodologies - methodologies that are expected to continue to improve, particularly with supervisory and market encouragement. Basel II: Risk management improvements The second, and perhaps more significant, benefit I mentioned is the encouragement to improvements in bank risk management practices. Basel II has always had this objective in mind in addition to creating a stronger, more risk sensitive measure of bank capital. We are clearly already seeing this objective being realized. Basel II builds on risk measurement concepts that have emerged in the industry, although clearly the application of these leading practices varies within and across firms. There has been enormous progress as banks commit to programs that will bring their systems and practices into alignment with the standards articulated in Basel II. 2  BIS Review 35/2005  As I have emphasized, a major focus of our supervisory activities has been on ensuring that banks are actively engaged in advancing the linkage of quantified risk-taking to capital, as this is at the heart of both sound banking and Basel II. Let me offer some specific examples, beginning with credit risk and then turning to operational risk. An example can certainly be seen in the management of retail exposures.

The first is how to deal with the cost and the constraint of coping with capital inflows. The second is the challenge in finding a set of tools that can help assess the potential build-up of financial vulnerabilities. And the third is how best to complement monetary policy with prudential measures to help prevent potential financial instability. On the first decision, for those under a managed float regime, lowering interest rates to reduce the relative attractiveness of the country to capital inflows may be an appropriate way to ensure price stability. But concerns of fast appreciation may not subside as exchange rates tend to behave more like asset prices than relative goods prices in practice. That means the nominal effective exchange rate can appreciate for a while in the short run, even after central banks repeatedly cut interest rates. This is an element of the well-known exchange rate disconnect puzzle. The risk is that a central bank may cut interest rate by too much, and at the same time sowing the seeds for inflation and an asset price boom down the road. An obvious important technical challenge to emerging market central banks, then, is to improve its ability to forecast inflation and output and be more precise about the range of possible natural rates of interest, which vary through time. Resisting the appreciating momentum of the exchange rate through interest rates alone may not be sufficient. A widely adopted practice that is assumed to be effective in the short run is through sterilized intervention.
The globalisation of Iceland’s financial markets means that, in the short run at least, the exchange rate of the króna is determined less by economic aggregates than before. International conditions have much greater impact, such as changes in exchange rates and interest rates in other advanced industrial countries. One consequence of the unease in 2006 has been that many more people, including investors in the Icelandic market, now know about Iceland, the Icelandic economy and Icelandic banks, and watch them more often and more closely. One lesson of last year’s experience was that events in or connected with Iceland can cause contagion in other countries, so that it is important now to know what is going on there. And more people these days definitely do know more about Iceland than simply that it is the country that produced Björk and Eidur Gudjohnsen. BIS Review 60/2007  5

The broader objectives of the reforms were to reduce transaction costs, increase efficiency, ensure safety and reduce credit, liquidity and systemic risks. Payment modes are wide ranging. Cash is the common mode of payment, because it has a finality in settlement of a transaction and is readily and legally acceptable as a medium of exchange. However, the inconvenience of carrying cash and increased security threats have encouraged the move towards other payment media. Non-cash payment modes are considered to be more secured payment instruments, but paper-based instruments like cheques, drafts and travellers cheques are also not so convenient instruments. In modern times, card and electronic payments are treated as the most convenient and safer instruments, although they too are subject to certain risks, card frauds in particular and technology related issues. There are two systemically important payment systems in Sri Lanka. They are the high value and time critical payment system used by banks, primary dealers, the Central Bank and the corporates and the cheque-based retail payment system which is used by all segments of the population. Reforming these two systemically important payment systems were necessary to mitigate settlement risks, increase efficiency and enhance accessibility. The reforms were also in line with the public policy objectives which require attention of the Government and regulatory authorities. BIS Review 66/2006  1  The implementation of the Real Time Gross Settlement System (RTGS) and the Scripless Securities Settlement Systems (SSSS) with a SWIFT link was the most significant reform effected in recent times.
Some observers have argued that since banks are re-depositing with the ECB large amounts of liquidity, the injected liquidity is not circulating within the system and therefore the ECB’s actions will be ineffective in preventing deflationary pressures. Others, however, have warned that since these large amounts of excess reserves may remain in the system for a relatively long time, if they are not appropriately absorbed they will hamper the ECB’s ability to keep inflationary pressures in check. These fears are of course contradictory. In order to dispel them, let’s look more closely at the channels of transmission through which the excess liquidity circulates in the system. The first criticism – that large-scale use of the deposit facility demonstrates the ineffectiveness of ECB’s measures – reflects a fundamental misunderstanding of the functioning of the operational framework of the ECB. By an accounting identity, any amount of liquidity injected in excess of the liquidity needs of the banking system will be necessarily re-absorbed via the deposit facility. The increase in the deposit facility does not provide any information whatsoever about how banks use the funds borrowed from the central bank. BIS central bankers’ speeches  5  For instance, a bank which has borrowed from the ECB can use the funds to grant a mortgage to a client, who in turn uses that credit to pay construction workers, who in turn may buy a car, and so on. After each transaction, the buyer transfers the amount from his or her bank account to the seller’s bank account.

Launch of new non-standard measures and their impact Faced with this critical situation, the Eurosystem adopted a two-pronged strategy. First, it offered ample liquidity at very long maturity to prevent funding issues from igniting a potentially destructive deleveraging process. Second, it widened the eligible collateral to facilitate access to the liquidity and the provision of credit to SMEs. Specifically, on 8 December 2011, the ECB announced the following initiatives. First, the ECB said it would launch two longer-term refinancing operations (LTROs) with a maturity of 36 months. The LTROs were to be conducted as fixed-rate tender procedures with full allotment, with the interest rate fixed at the average rate of the main refinancing operations over the life of the respective operation. To increase the flexibility of the operations and to cater for different liquidity needs, counterparties were offered the option to repay after one year any part of the allotted amounts. Second, the ECB decided to increase collateral availability by allowing national central banks, among other things, to accept as collateral additional performing credit claims (i.e. bank loans) that satisfy specific eligibility criteria. As an example, the Banque de France has accepted real estate residential loans with a mortgage or first-rank privilege, credit claims denominated in US dollars and export credit claims guaranteed by Coface.
Sources: The National Institute of Economic Research and the Riksbank  14  BIS central bankers’ speeches  Figure 3 Price developments for houses and apartments Index: January 2005=100  Source: Valueguard  Figure 4 Lending to Swedish households Annual percentage change 14  14  12  12  10  10  8  8  6  6  4  4  2  2  0  0 06  07  08  09  10  11  12  13  14  Note. Refers to the MFIs’ lending to Swedish households including HIOs (households non-profit organisations), with a home as collateral, adjusted for reclassification and bought and sold loans. Source: Statistics Sweden  BIS central bankers’ speeches  15  Figure 5 GDP per capita and employment rate compared with pre-crisis figures Change in per cent 2007–2013 and 2008Q1–2014Q2 6 GER  6 JPN  2  GBR BEL  Employment rate  -2 ITA  NED NOR  FIN  -6  FRA EU  SUI AUT NZL SWE CAN AUS  2  USA  -6  -2  DEN POR  -10  -10  IRL -14  -14 ESP  -18  -18 GRE  -22  -22 -23  -18  -13  -8  GDP per capita  -3  2  7  Note. GDP per capita, annual data, constant 2005 USD (adjusted for purchasing power parity), 2007–2013; Employment rate, 15–64 years, 2008Q1–2014Q2. Seasonally-adjusted data.

6  All speeches are available online at www.bankofengland.co.uk/speeches  6  The Right Hard Infrastructure A second, related example is how the Bank is working to develop the financial system’s hard infrastructure to allow innovation to thrive while keeping the system safe. Specifically, the Bank is widening access to some of its systems to include PSPs in order to boost both competition and system resilience. The UK has led the world in innovation in the wider payments ecosystem. And we are committed to keeping pace with customer demands for payments that are seamless, reliable, cheap, and ubiquitous. Our challenge is how to satisfy these expectations while maintaining a resilient payment systems infrastructure. That’s important because the Bank operates the UK’s high-value payment system ’RTGS’ which each day processes £ trillion of payments on behalf of everyone from homeowners to global banks. Understandably, we have an extremely low tolerance for any threat to the integrity of the system’s “plumbing”. Currently, only 52 institutions have settlement accounts in RTGS. Indirect users of the system typically access settlement via one of four agent banks. These indirect users include 1000 non-bank PSPs at the front-end of the financial services value chain. As they grow, some PSPs want to reduce their reliance on the systems, service levels, risk appetite and frankly goodwill of the very banks with whom they are competing. The Bank has decided to widen access to RTGS to include non-bank PSPs in order to help them compete on a level playing field with banks.
Advanced data analytics and machine learning are allowing them to analyse this data to derive much richer insights into customers’ financial needs. Incorporating big data into lending decisions, for example, can in fact help SMEs access finance more easily. 18. These first two forces - mobile connectivity and big data - have enabled the rise of platform ecosystems as a major new business model in finance. Armed with the goldmine of data generated by millions of connected users, these technology platforms are able to exploit huge network effects. They operate an ecosystem of diverse services, from retail to healthcare, savings to lending. They are providing integrated, end-to-end solutions, often customised to individual preferences. And the more users that engage with the platform ecosystems, and more extensively to meet their needs, the more data is generated. The platform ecosystems are using this competitive advantage to expand into new markets. 19. The march towards digitalisation is having a profound impact on consumers, who themselves have become a force for change. Younger or ‘digital-native’ consumers have come to expect the same lower costs, greater convenience and more customisation from financial services as they already obtain from other services, from online shopping to transport to food delivery. The days when transferring a bit of money involved taking a brisk walk to the bank’s branch during lunch hour are now a quaint memory. Embracing a Digital Future with Strong Anchors 20. The changes we are already seeing in banking will very likely accelerate in the next 10 years.

The Malaysian Government has also focused its efforts towards strengthening its position as an international takaful and retakaful centre, with particular emphasis on widening and deepening the retakaful sector so as to effectively complement the growth and expansion of the takaful industry. In this regard, I wish to invite strong and qualified applicants to make Malaysia as their centre for retakaful activities. Foreign applicants with strong credentials are certainly welcome to conduct retakaful business in Malaysia. The changing global investment climate continues to pose challenges for life insurers in respect of their life fund investment. The recent sub-prime crisis in the US has induced greater fluctuations of the yield curve as well as higher volatility in the equity markets. Given the increased proliferation of innovative products with investment guarantees, insurers' remain very vulnerable to the movements of the capital markets. As for traditional noninvestment linked business, asset-liability management and duration mismatch continue to pose a challenge, and insurers must seek new long term investment avenues to minimize the risk of mismatches. The occurrence of global warming and climate change is of particular significance to the insurance industry which, has had to bear the brunt of severe losses arising from weatherrelated catastrophes. Between the 1960s and 1990s the number of natural catastrophes has doubled while insured losses increased nearly seven-fold, most of them weather-related.
This trend gained pace especially in the second half of the year. 7. Crude oil and agricultural commodity prices which are critical for emerging economies as well as Turkey, increased sharply amid the global economic recovery. The reluctance of OPEC countries to raise quotas and reduction of over production by some member countries bolstered the rise in oil prices. Moreover, recent political tensions in the Middle East and North Africa accelerated the upward trend in oil prices. Adverse weather conditions in major parts of the world in the second half of the year had affected the energy and agricultural prices from demand and supply side respectively, posing additional upward pressure on prices. 8. Besides increases in oil and agricultural commodity prices, 2010 was also marked by ongoing price increases in industrial and precious metals. The upward trend in the prices of precious metals in this period was primarily driven by the fact that investors use precious metals as a hedge against inflation and economic risks. In addition to these factors, the ample liquidity fuelled by the ongoing quantitative easing in 2010 by major central banks in addition to the increased inflationary risks raised the investment demand for commodities by underpinning price movements in the short term. 2  BIS central bankers’ speeches  9. The upward trend in commodity prices poses an upside risk on inflation in both advanced and emerging economies.

In this sense, the Authority also contributes to the soundness of the Bank’s counterparties. It is also the Authority which ensures that only sound institutions are licensed to enter the Maltese market. Furthermore, confidential supervisory information available to the Authority could be useful to the Bank as an input into its overall analysis of the financial system, enabling it to respond to liquidity and related constraints that could set off negative ripple effects. The potential for synergies between the two institutions prompted them to sign two Memoranda of Understanding in 2002 to provide for enhanced co-operation, including through the establishment of a Standing Committee. This cooperation framework has contributed to the general soundness and stability of the financial system. The profitability of our banks, for example, has remained stable with an average return on assets after tax of 0.8% in 2003, the same level as that recorded by European banks. Furthermore, bank liquidity and capitalization levels have both remained strong. Liquid asset holdings as a percentage of short-term liabilities were close to 53% at the end of 2003, compared to a minimum threshold of 30%. Meanwhile, the banks’ aggregate capital adequacy ratio, defined as the ratio of own funds to risk-weighted assets, currently stands at 23%, compared to a minimum of 8%. In the insurance sector and collective investment schemes steady growth continues to be registered. This positive performance notwithstanding, there remains scope for further improvement in the framework through which the Bank and the Authority seek to safeguard the health of the domestic financial system.
This will allow investors to avoid the foreign exchange risk temporarily, although creditor risk vis-à-vis the Treasury will still exist. It is too early to speculate on the duration of the bonds that would be offered. That would be determined by the conditions prevailing at the time. The more successful the authorities are in reversing the trend in public sector debt, the more likely investors will be to buy long-term bonds and the better protected  BIS central bankers’ speeches  3  the Treasury will be against the short-term exchange rate volatility that could accompany capital account liberalisation. Implementation of precautionary rules is also an important part of the preparation for ultimate removal of the controls. Ladies and gentlemen The capital controls are harmful. No one knows that better than those who must enforce them. They are even more harmful if they are not enforced. There are those who want precisely dated schedules for more rapid liberalisation than is currently planned, and their impatience is understandable. But a precisely dated schedule would not necessarily speed up the removal of the controls – not without correspondingly greater willingness to take on risk. I welcome the constructive criticism and exchange of opinions that come to the fore at meetings such as this one, however, and I urge others to air their views. In my opinion, the capital account liberalisation strategy is based on sensible arguments, which I have described briefly in my presentation today.

In addition, a number of investment projects are extremely foreign exchange-intensive because of imports. The króna could depreciate as a result, with heavy outflows of foreign currency, even if there were ample opportunities for investment. This is the problem the liberalisation strategy is attempting to solve. Emphasis is placed on protecting the foreign exchange reserves by converting short-term claims against domestic entities to long-term investments to the extent possible. The Central Bank acts as an intermediary, and the auction format ensures that only a small portion of the foreign exchange reserves are in play at any given time. The auction format also ensures that transfers of banking system liquidity will not be large enough to jeopardise the system’s stability. The foreign exchange reserves are protected as well by the requirement that investors bring foreign currency into the country and exchange it for krónur in the domestic market. This will offset the foreign exchange outflows that often accompany new investment. Another important aim of the strategy is to ensure short-term Treasury financing. Even though significant progress has been made in controlling the fiscal deficit after the crash and halting the accumulation of unsustainable debt, it is important not to underestimate the current dependency of Treasury financing on the capital controls. More than half – and, in some instances, as much as ¾ – of the stock of short-term Treasury bonds is held by nonresidents.
But is there a point in stress at which some combination of fund losses and margin calls leads to forced asset sales and/or failures elsewhere in the system? For me, the jury is very much out on the scale and nature of the risks from funds use of synthetic leverage. We need, as I have noted, better metrics and better lenses through which to view funds’ use of synthetic leverage or, to put it more accurately, funds’ use of derivatives. It may well be that we determine that where derivatives are being used to hedge and reduce rather than to gear up risk, what makes sense at the level of individual funds makes sense at the level of the system. There may be no need to mitigate the risks or, indeed, no risks to mitigate. I should note that macroprudential authorities have so far taken a different view of similar issues in relation to the inter-connectedness created by insurance companies’ use of derivatives to manage the risks of their liabilities. But investment funds are very different animals. However, to return to my dismal theme, our responsibility as macroprudential authorities is to make the best assessment we can – not only of the risks with which we are familiar but also of the ones that may be developing as the financial system evolves. The IOSCO work on leverage will play a major role in helping us to understand these risks.

Giving a greater degree of legal security to rental contracts, and liberalising the related terms, is absolutely necessary for reducing rental costs and for making a smoother real estate adjustment, without a collapse of the value of the wealth in which Spaniards have their assets concentrated. Re-launching privatisation, liberalisation and the boosting of competition in numerous sectors is vital because, by reducing unwarranted business margins, workers' real wages can be increased without harming competitiveness. And thus we could say for many more areas of reform. But we'd need many more speeches to talk about this. And fear not, I won't be making them today. Thank you. BIS Review 18/2009  7