samchain/econo-pairs-v1 huggingface dataset:
The third way of raising potential output growth is to promote ways to boost gains in labour productivity: This can be achieved by increasing competition, encouraging enterprise and innovation, and improving the workforce’s skills. Indeed, on the basis of hours worked, productivity in the EU reached in 2001 83% of the level of that in the US, which points some room for improvement. 6  BIS Review 11/2003  That strategy should be pursued whilst increasing the overall competitiveness of our economies The Euro area displays sound macroeconomic fundamentals and satisfying price competitiveness. Sound macroeconomic fundamentals make the Euro area an attractive place to invest in : no major imbalances may be observed contrary to other major areas. Indeed, the Euro area provides for a low and stable inflation environment, roughly balanced external accounts, abundant private savings, and sound financial systems. Then, in terms of real effective exchange rate, the Euro area has constantly gained in competitiveness rd over the past few years. In the 3 quarter of 2002, even though the Euro real exchange rate deflated by unit labour costs in total economy versus the rest of industrialised countries appreciated by 5.4% year-on-year, it is still below its long term average (1987-2001) by 12.3%, according to the European Commission calculations.

News conference  Berne, 14 December 2017 Andréa M. Maechler  Introductory remarks by Andréa M. Maechler  I will begin my remarks with a review of the situation on the financial markets, before going on to discuss the progress made in reference interest rate reform. Situation on the financial markets  Let me start with developments on the financial markets. The monetary policy pursued by the large central banks was once again the focus of attention for the financial markets in the second half of the year. Given moderate inflation growth, financial market participants are expecting only a very gradual normalisation of monetary policy across the world. Against this backdrop, government bond yields have remained persistently low. Muted expectations regarding a move away from expansionary monetary policy, coupled with favourable economic data and good corporate results, have contributed to largely positive risk sentiment on the financial markets. This has been reflected, for instance, in a stock market rally, lower yield spreads on corporate bonds and reduced demand for safe-haven assets such as the Swiss franc. In this positive market environment, volatility has remained low and volatility for the US equity and bond markets, calculated using option prices, has dropped to record lows (cf. chart 1). Despite positive economic data in Europe, European stock indices have risen only moderately. The Stoxx Europe 600 has climbed some 3% since mid-year. One reason for the modest stock market performance in Europe is the strengthening of the euro, which impaired corporate earnings growth somewhat.
Also, several measures were taken to improve the overall risk management framework of the EPF with a view to enhancing accountability and the 36  transparency of investment activities. As a part of this process, new Investment Policy Statement and Investment Guidelines were introduced. The governance structure of the EPF risk management was also strengthened through the establishment of an EPF Investment Oversight Committee in addition to the EPF Investment Committee to monitor investment activities. With the assistance of the Asian Development Bank (ADB), EPF carried out a Business Review with the objective of streamlining and improving its current activities. In addition, the actions pertaining to procuring a new ICT system to automate EPF activities were continued with the assistance of Word Bank. With a view to facilitating web based services, we developed the EPF website and it is expected to be launched shortly. Real time validation of member details and the member account updating procedure were continued through online banking systems of LCBs in 2018. Going forward, EPF expects to generate the highest level of risk adjusted return through different investment strategies, while adhering to the new Investment Policy Statement and Investment Guidelines. The Fund, as a long term institutional investor, is seeking to capitalise on new market opportunities and instruments through a comprehensive investment diversification process. Foreign Exchange Management The liberalisation of foreign exchange transactions was advanced with the introduction of foreign exchange Act No. 12 of 2017 (FEA).

In any case, such reforms are a necessary foundation for dynamic and sustainable growth in the future and they must be vigorously pursued. There is no doubt that the euro area as a whole will benefit from these national reforms that represent a significant asset for us in the global economy. 2.2. The challenge for the banking system: continuing to ensure that the economy is properly financed while strengthening the financial sector  The dilemma here is easy to understand: on the one hand, it is absolutely necessary to strengthen banks’ balance sheets to enable them to better absorb shocks, protect public finances and re-establish normal market functioning. On the other, a disorderly deleveraging would create enormous problems and add credit constraints to the many headwinds currently facing our economies. The euro area is currently making sure that these two objectives – although sometimes difficult to reconcile – are achieved. Banks are meeting their new capital requirements. The capital plans submitted to the European Banking Authority (EBA) indicate an intention to exceed the benchmarks set by  2  BIS central bankers’ speeches  more than 20%. French banks already comply with the Basel 2.5 regulations. At the same time, bank lending seems to be stabilizing, although at a relatively low level. Banks are starting to assess their financial situation more positively and in many cases their willingness to grant loans is increasing. This would not have been possible without the strong support of the Eurosystem.
In the framework of the exchange rate policy that I have mentioned earlier in detail, developments in the foreign exchange market are monitored carefully by the Central Bank as they have a direct impact  BIS Review 89/2006  5  on inflation and constitute an important part of financial stability. In this scope, I would like to briefly analyze the fluctuations in financial markets. In the period between the beginning of May - when fluctuations started - and the end of June, the Turkish lira depreciated by approximately 29 percent. What triggered the rapid depreciation of the Turkish lira was the change in international liquidity conditions against developing countries. Global risk perceptions changed along with expectations that the central banks of developed countries would tend to increase interest rates, and global liquidity abandoned developing countries and shifted to developed countries. Along with all developing countries, Turkey was significantly affected by the changes in international liquidity conditions, as well. The impact observed in Turkey was stronger compared to other countries because the domestic risk perceptions about inflation, current account deficit and political issues increased in this period. As a result of these impacts, capital outflow took place over a two-month period. At this point, it should be underlined that a major part of the said outflow was met by the foreign exchange sales of residents. The process of structural change in the Turkish economy, in other words, the background of the steps taken to strengthen macroeconomic fundamentals and to normalize the economy took only five years.

Lastly, I would like to emphasize that the level of the current account deficit is not so important in terms of ensuring that it does not follow a volatile course and is not perceived as a significant risk factor. However, in an environment where turbulences are observed in the markets and uncertainty perceptions are increasing, it is reasonable to expect a surge in the perceptions of fragility in the current account deficit, as well as the popularity of these perceptions. The current account deficit is a closely followed indicator. We are also aware of the risk potential of the current account deficit and have been carefully monitoring it in coordination with other agents responsible for the economy. Dear guests, I was most honored to be here in Malatya and to have the chance to share my views on the Bank’s policies and macroeconomic developments with you today. Thank you. 10  BIS Review 89/2006
For that reason, exchange rate analysis tends to focus on real rates, which in principle are defined as the basket of goods a particular country has to provide in order to obtain a given basket from abroad. In such an expression for the real exchange rate, the numerator is usually written as the product of the nominal exchange rate and a suitable price index in foreign currency and the denominator as a suitable domestic price index. A common approach is that the real exchange rate is constant. The term equilibrium is used here to denote internal balance with full employment and external balance with stable external debt. So with a fixed real equilibrium exchange rate, the nominal exchange rate is ultimately determined by the country’s rate of inflation relative to inflation abroad. If inflation is lower in the rest of the world, the nominal exchange rate will depreciate so that the real rate remains constant. This is the doctrine of purchasing power parity. While it is the most common starting point for determining an exchange rate in the longer run, the theory is known to be rather poor at explaining nominal exchange rates in both the short and the medium term. In practice the real equilibrium exchange rate is liable to be affected by many different factors, two of which seem particularly self-evident. Terms of trade. Suppose that a country exports cars and imports wine.

European financial markets calmer thanks to monetary policy If you take a look at chart 1, you can follow the movements in both the euro/Swiss franc exchange rate and the average risk premium for the government bonds of five peripheral euro area countries (Italy, Spain, Greece, Portugal and Ireland). The risk premium is drawn on an inverted scale, in other words, a movement downwards signifies a higher risk. This chart serves as an illustrative example for two developments. On the one hand, it shows that uncertainty in the euro area has decreased greatly over the past twelve months. At the time of the last Money Market Event in Geneva, the risk premium was almost 1,200 basis points; it is now below 400. On the other hand, the chart illustrates the fact that the upward pressure on the Swiss franc has abated. Following a long period last year when the exchange rate stuck closely to the minimum exchange rate of CHF 1.20, it moved away in January and, since May, has fluctuated within a relatively narrow range of CHF 1.22–1.26 per euro. BIS central bankers’ speeches  1  Here, the situation has calmed in two respects. In order to reduce the risk of the euro area collapsing, the European Central Bank (ECB) resorted to an unconventional measure in late summer 2012, the outright monetary transactions programme. Market participants were persuaded, and since then the risk premium for peripheral economies in Europe has declined steadily. What is remarkable is how persistent this trend has been.
For our more heavily-indebted family in Stockholm, loan costs would rise by almost SEK 4,000 per month, or just over 7 per cent of their disposable income. The increased loan cost that the abolition of the tax relief entails in this example corresponds to roughly the increased loan cost that would arise if the mortgage rate instead rose by 1.7 percentage points.19 We can thus see that abolishing the tax relief would have much greater effect on households’ loan expenditure than raising the capital adequacy requirement for banks by the amount currently being discussed. If one wants to influence household indebtedness, changes in the tax relief would have greater potential to directly affect households’ incentives. Uncertain what effect the mortgage cap has There is also some support for the mortgage cap having an effect on the loan appetite from the preliminary evaluation made by Finansinspektionen after the introduction of its mortgage cap in October 2010.20 The mortgage cap is not a cap in the total sense, but it means that a person who wants to borrow a large amount must take a larger share of unsecured loans, which usually have a higher interest rate than first loans and moreover have to be amortised at a faster rate. Of course, not all households are affected by changes in the mortgage cap. Say that the mortgage cap is reduced from 85 to 75 per cent.

We now know that the truth was quite the opposite, with findings that top executives were involved in accounting malpractices over the past seven years. The reality was that while its governance structure looked good on paper, its execution had been marred by its organisational culture. According to the investigation report, top management was systematically involved in the inflation of numbers and drove the company into a place where profits were paramount. The number of similar cases reported in the media highlights how detrimental poor internal culture can be for any organisation, not only in terms of financial losses and the imposition of hefty regulatory fines, but also a potential permanent blow to the company’s reputation. Risk culture, in my view, is a key factor in determining the robustness and effectiveness of risk management in an institution. At Bank Negara, there has also been increasing focus on preserving the integrity and trust in our financial sector. Last year, the Bank published the enhanced Corporate Governance framework for financial institutions in Malaysia. The enhancements relate to expectations for the board and senior management to set the right “tone from the top” and play a more critical role in shaping the core values and culture of the institution. This includes expanded requirements on compensation practices and disclosures to strengthen market discipline, as well as putting in place a transparent whistleblowing policy that enables the escalation of concerns without the risk of reprisal.
On the other hand, the reduction of foreign currency inflows is accompanied by deterioration of the balance of payments indicators and the arising of depreciating pressures on exchange rate, underscoring the role of current account stability on macroeconomic and financial balances at home and the need for taking precautions to guarantee it. World economic environment is characterised by further deepening of economic and financial crises. Curtailing of consumption and investments, under the presence of high rates of public and private debt and underlined macroeconomic imbalances, has made the world economy experience the sharpest economic downturn in last 50 years. The developed countries, USA, Euro-zone, United Kingdom and Japan have followed easing monetary and fiscal policies, aiming to hamper the economic downturn and improve the financial and capital markets situation. Under their impact, the latest data signal relative improvement signs of some macroeconomic indicators. Tensions observed over the previous periods have relaxed and the main financial indicators have shown recovering signs during the last months. In the meantime, the world inflation rates have been falling, owing to low raw materials prices and low use of productive capacities, in the presence of a low aggregate demand and increasing unemployment. The economic activity downturn worldwide was associated with contraction of world trade, tightening of financial conditions and dropping of economic agents’ confidence The direct impact on emerging countries, such as Albania, is the fall of demand for their exports, decline of foreign direct investments and tightening of lending terms in world markets.

The minimum standards were developed to help ensure that global competition in banking markets will be driven by each bank’s strengths, rather than by differences in each country’s rules. Moreover, Pillars Two and Three were largely created to promote a more level playing field for banks. For example, incorporating supervisory review – or Pillar Two – into the international guidelines represents a seminal achievement for all of us. By developing guidelines for supervisors’ evaluation of a bank’s internal capital allocation process, the Committee believes that supervisors and banks will engage in more focused, more consistent, and less burdensome discussions of the risks that banks face and the responses they adopt. National laws and regulations provide different avenues through which supervisors may conduct such reviews, and consequently Pillar 2 affords each jurisdiction the flexibility to accommodate those differences. 4  BIS Review 46/2003  To advocate more consistent standards, the Committee created the Accord Implementation Group, or “AIG,” precisely to share experiences and encourage shared approaches. This group, which is chaired by Nick Le Pan, the Canadian Superintendent of Financial Institutions, has already been long at work comparing notes on practical matters. We expect these discussions to help supervisors apply the New Accord more consistently at home, thereby providing a more level playing field across countries as well.
Financial crises are much more likely to be associated with corrections of asset values where asset purchases have been financed with debt rather than equity. Aggregate global debt – public, private and financial – is now around 320% of global GDP, close to its record highs. Excluding financial sector debt, the debt of the real economy is around 240% of global GDP.6  But aggregates can only tell you so much. And they can hide a multitude of sins. We need to need to look not just at the level of the total, but the growth rate and sustainability. And we need to drill down into the composition to see where the risks are most prominent. Growth, level and sustainability  Research suggests that it is the growth rate of debt rather than its actual level that is the leading indicator of financial crises. Bank of England work based on 130 downturns in 26 advanced economies since the 1970s suggests that a rapid build up of debt is the best early warning indicator of a recession.7 Other academic work supports this conclusion.8  The actual level of debt matters rather in determining the depth, as opposed to the probability, of the crisis. So we need to look at the growth rate as well as the level. 6  See IIF Global Debt Monitor. Of the 317% of global debt to GDP, 60pp is household debt, 90pp is to non-financial corporates, 86 is government, and 80pp is financial corporates.

4  For example, the Capital Requirements Regulation for banks, and the Solvency 2 Delegated Act for insurers and the European Market Infrastructure Regulation for CCPs. 5 See for example, “The evolution of the financial services regulation in a post-Brexit Europe" - Speech by Robert Ophèle, Chairman of the Autorité des marches financiers – 13 November 2017 “This has led to a hypertrophy or swelling of regulations that - probably to avoid national drifts - has entered a stage of extreme luxury of details… and has led to a rigidifying of regulation of a very damaging sort.”  5  All speeches are available online at www.bankofengland.co.uk/speeches  5  Debt, its level, its growth, its composition and its sustainability lies at the centre of the financial stability mandate. Modern societies and economies are built around the claims we hold on each other. A very large proportion of those claims are expressed as financial claims to be honoured in the future. The future, of course, does not always turn out to be what we expect and the value of our claims has sometimes to be adjusted downwards. Some financial claims, like equity, adjust the value of the return relatively smoothly. Debt liabilities, however, are fixed and amplify the impact of any negative shock to the income or assets of the debtor. And if the impact cannot be accommodated, the result can be a painful write-down or deleveraging of the economy.
The relevance of legal framework is essential to providing certainty and predictability to the financial transactions and to the innovative products, thus promoting public confidence in the financial system. This is equally important for the Islamic financial services industry in which this recent decade has seen a rapid evolution in terms of the innovation and in terms of its expansion. Indeed, a robust legal framework in Islamic finance instills public confidence in the Islamic financial system, provides an enabling platform for practitioners to develop more innovative and complex financial products to meet the increasingly multifaceted consumer demands. In addition, it provides the mechanism for dispute settlement that takes into account the distinct features of Islamic financial transactions. This is where the legal services industry has a vital  BIS Review 117/2009  1  role in providing sound legal solutions in Islamic finance. It therefore provides an important "bridge" between Shariah and legal parameters, thus enabling the operationalisation of Shariah principles into legally enforceable Islamic finance practices. In addition, by ensuring that the legal parameters are in compliance with Shariah parameters and the regulations, it also becomes a risk mitigator. The legal aspects in Islamic finance represents an important "bridge" between the governing Shariah principles and the practice of Islamic finance. The application of Shariah principles in the light of the governing laws and regulations in each Islamic financial transaction are interpreted through legal advice, in legal documentation of the financial transactions, and dealing with disputes.

It is too soon to say yet, but we should be prepared to push harder for further standardization should the desired degree of standardization that we are striving for not materialize. 2  BIS central bankers’ speeches  I also worry that implementation of the Principles for Financial Market Infrastructures could falter over time. This could happen for several reasons. In particular, we should recognize that there is a tension between the profit motive of for-profit CCPs and full compliance with the PFMIs. Put simply, some CCPs will prefer to avoid the full costs of compliance. In other words, there will always be a risk of a race to the bottom, which we must continually push against. In this respect, the effort could also falter if countries were to fail to enact the relevant legislation and policies to put the PFMIs in practice. For the global system to be robust, the requirements for CCPs will need to be enforced across the different geographic regimes. I am also worried about fragmentation. In particular, I worry about the proliferation of TRs and CCPs geographically – in some cases in each of the major asset classes. In the case of CCPs, fragmentation would bring two costs. First, the netting benefits would be reduced and, second, the system would be more complex. In an ideal world, I would prefer very few, very robust CCPs, rather than a proliferation of many, less robust CCPs. But whether that is what we will get is unclear to me at this point.