samchain/econo-pairs-v1 huggingface dataset:
But Caruana said that requiring banks to run their capital through a stress test to assess what impact worsening economic conditions will have on their loan portfolios, and requiring bank supervisors to evaluate those models independently, increases the safety of the bank. “This is one of the measures that will help the banks to be less pro-cyclical because they will have taken into account the whole (business) cycle,” he said. The Basel Committee on Banking Supervision, which groups supervisors from major industrial economies, released the new rules earlier this year. The rules, dubbed Basel II because they replace a 1988 accord, were open for comment until July. Critics have said the Basel II accord, by requiring banks to increase capital reserves as loans get riskier, will withdraw credit from the economy exactly when it is most needed, creating a credit crunch and making business downturns more severe. While Caruana said that badly capitalised banks that have not assessed their risk properly certainly will face problems, he does not view it as endemic. Rather the banking system overall will be better capitalised so less vulnerable to shocks. This in turn will reduce the need for central bankers to keep interest rates low for protracted time periods to help offset credit crunches, as the Federal Reserve did in the early 1990s U.S. banking crisis. “The fact that the banks are well capitalised and sensitive to risk, it will make monetary policy if anything easier,” said Caruana, who took over the Basel Committee in May.

Still, we are working with the same timetable.” A storm of criticism from banks, academics and politicians in recent months has strengthened expectations that the final draft will not be completed until some time in early 2004, instead of end-2003 as planned. Critics blast the rules as fearsomely complex, too prescriptive and incurring costs far greater than the potential benefits. Some areas require more work, such as risks posed by highly diversified banks and on credit derivatives. Regulators were prepared to adapt the accord as they gained a better understanding of new risk modelling techniques, said Caruana. “Certainly there will be issues that will be important that we cannot manage now,” he said. “We have recognised that the Basel II process is an evolutionary approach.”  2  BIS Review 39/2003  The Basel II accord, so named because it will replace the 1988 Basel Accord, would update existing rules on how much capital large international banks must hold to remain sound and reflect changes in financial services over the last 15 years. Due for implementation in 2006, it would set standards for how bank capital is supervised and what type of financial disclosure institutions must make. Experts say that a delay in publishing the final draft of even several months could throw the target implementation date back by a full year if it means domestic rule-making and legislative deadlines in Europe cannot be met.
8  BIS central bankers’ speeches  been called.17 This type of “disappointment” regarding the shortcomings of monetary policy may also be due to the optimism regarding the abilities of monetary policy that I earlier implied may have followed in the wake of the Great Moderation. But inflation targeting may need to be modified But even if inflation targeting has not become obsolete and does not need replacing with something new, there may be cause to consider whether it should perhaps be modified, and likewise the tasks of the central banks in general. Many people think that this is the case.18 One relationship that became obvious in connection with the crisis was, as I have already noted, that financial stability was not something that automatically followed on from a policy aimed at keeping inflation low and stable. It also became clear that the central banks could find themselves in situations where the traditional instrument, the policy rate, could no longer be used, but where they must use new and so far untried methods to provide further stimulation. The conclusion that many people have drawn from this is that the central banks’ tasks should be modified and extended. In addition to the traditional monetary policy, they should more clearly have the task of trying to prevent financial imbalances from arising to avoid the sort of development we have seen in recent years.

Lim Hng Kiang: Challenges, opportunities and getting it right Speech by Mr Lim Hng Kiang, Minister for Trade and Industry and Deputy Chairman of the Monetary Authority of Singapore, at the Singapore Institute of Directors, Directors’ conference 2010, Singapore, 15 November 2010. *  *  *  Mr John Lim, Chairman of the Singapore Institute of Directors Distinguished Guests Ladies and Gentlemen Introduction 1. It is my pleasure to join you this morning for the inaugural Directors’ Conference organised by the SID. 2. I would like to compliment SID for its initiative and efforts in bringing together directors and experts from diverse backgrounds for this conference. 3. As you know, the SID was established in the aftermath of the Asian Financial Crisis in 1997 to raise standards of corporate governance. In the aftermath of yet another financial crisis, it is timely for us to review and consider how Singapore can continue to improve its corporate governance standards. 4. The recently released Asian Corporate Governance Association-CLSA survey on corporate governance ranked Singapore as having the best corporate governance practices in Asia. Despite ranking first in the survey, the report highlighted that there is still much to be done. Getting it right from Singapore’s perspective 5. The theme of today’s event is “Challenges, Opportunities and Getting It Right”. Getting the corporate governance framework and practices right in Singapore is not a luxury but a necessity for our competitiveness. While Singapore has recovered strongly from the global financial crisis, the outlook remains uncertain.
A further risk is that the krona’s depreciation may persist even if activity becomes stronger. That could generate inflationary impulses. All in all, however, the Executive Board of the Riksbank considers that the spectrum of risks is asymmetric, so that inflation somewhat below the main forecast is more probable than a higher rate. With the risks taken into account, inflation in the coming years is forecast to be around two tenths of a percentage point below the targeted level of 2 per cent. At the same time, the margins are so small that we have decided not to adjust the repo rate at this time. In this context it is worth recalling that in the initial position the repo rate is already lower than the instrumental rates in many other  BIS Review 26/2001  3  industrialised countries, at the same time as the krona is very weak. That makes it advisable to wait somewhat longer to see in which direction developments appear to be moving. Next monetary policy meeting on 26 April In conclusion it can be noted that the picture of both real economic tendencies and price movements that is described in the main scenario seems to be relatively favourable. After a rapid expansion for a number of years, an adjustment is now foreseen that involves a levelling off with low and stable inflation. But while it may seem that we consider everything is fine in the Swedish economy, it must be said that prospects for the U.S. economy are difficult to assess.

A monetary policy that is guided by an inflation target is basically concerned with adapting the development of demand to the economy’s long-term growth. That is not easy, I can assure you, and our chances should not be exaggerated. Towards the end of last year, however, activity in the Swedish economy did begin to slow to a growth rate that can result in a stable long term development. The last time we met, early in October, we discussed the situation in these terms and I concluded that if the strong economic upswing were to continue, it would be necessary to raise the repo rate. Other central banks around the world had been facing a similar situation for some time. The U.S. Federal Reserve, for example, had raised its instrumental rate successively during 1999 and 2000 to 6.5 per cent. Last year the European Central Bank raised its rate to 4.75 per cent and the Bank of England’s rate was increased to 6.0 per cent. I recall that last year many observers counted on relatively large interest rate hikes in Sweden as well. They thought they saw signs that the Swedish economy was on the way to becoming overheated and argued rather vigorously that the Riksbank therefore ought to act quickly — starting in the autumn of 1999 and continuing with further steps up to last summer — in order to avert the threat they saw looming on the horizon.
Besides these more fundamental explanations with links to the theory of purchasing power parity, there are numerous notions connected more or less closely with the flows in currency markets. The nominal exchange rate is the price of a currency; like prices of other goods, this price is naturally affected from time to time by more or less temporary fluctuations in demand and supply. It is explanations of this type that market players are most prone to put forward for short-run exchange-rate fluctuations. The most general flow-related explanation is probably the short-term interest rate differential. Textbooks teach that international currency flows and nominal exchange rates are susceptible to differences in current and expected monetary policy. Today, when monetary policy throughout the industrialised world is focused on price stability, so that interest rate differentials between countries are tending to decrease, the explanatory power of this variable is presumably weaker. Another factor that has been of major importance for nominal exchange rates from time to time is the state of the government finances. High and growing government debt leads to expectations of a suspension of payments or a monetary policy realignment in a more inflationary direction. That in turn results in a depreciation of the exchange rate. The picture in Sweden Since 1975 the Swedish krona has weakened in nominal terms by as much as 90 per cent. But at least half of this depreciation can be explained by Sweden’s higher inflation. And in this respect there has been a decisive change.

Libra must also be a pro-competitive, open platform that new users can join on equal terms. In addition, authorities will need to consider carefully the implications of Libra for monetary and financial stability. Our citizens deserve no less. Leveraging our position at the heart of the international financial system and one of the world’s largest fintech hubs, the Bank of England will help lead the way on these issues at the G7, G20, the FSB, BIS and IMF. Whatever the fate of Libra, its creation underscores the imperative of transforming payments. The Bank’s strategy to open access to a wide range of payment solutions combined with appropriate regulatory oversight of them maximises the likelihood that the payments revolution will meet the demands of the new economy and the needs of all our citizens. Supporting more lending to SMEs through an open platform Big data is opening up new opportunities for more competitive, platform-based finance of SMEs. Artificial Intelligence (AI) and machine learning (ML) techniques are already mining fields of data generated by online activity. This has the potential to yield enormous benefits for households and businesses by opening up new lines of credit, providing greater choice, better-targeted products and keener pricing. Putting data to work is critical to closing one of the biggest funding gaps in the country.
It is no exaggeration to say that this is the beating heart of central banking, it’s where it all comes together. The Bank of England’s mission is to promote the good of the people of this country by maintaining monetary and financial stability, and a key way in which we fulfil this is to ensure people have confidence in the money they use, whether to store wealth or to make payments, and that it is an effective unit of account. At the heart of this is confidence in the value of money, meaning confidence in its monetary value not being eroded by inflation, in other words monetary stability, and confidence in the system and institutions in which it is held and transmitted in transactions, in other words financial stability. A useful practical definition of this meaning of stability comes from a saying by Alan Greenspan, namely that monetary stability is when people’s decisions on spending and investment are not influenced by their concerns and expectations about the value of the money they are using. It is possible to extend that saying to cover aspects of financial stability too, for instance in terms of being concerned about the safety and soundness of individual banks. There are two forms of money in use in the UK – and there is nothing unusual about the UK in this respect. Central bank money is a liability of the Bank of England.

The pre-crisis decade was generally one of steady growth and inflation close to the target, and thus few signs of overheating in the real economy. Domestic demand nevertheless consistently outstripped the supply of output, generating a small but persistent current account deficit, averaging around 2% of GDP. MPC members noted on several occasions that this would have to be corrected at some stage, and would most probably need to be accompanied by a lower sterling real effective exchange rate. 1 Such a rebalancing process appeared to have been set in train by the deterioration in the outlook and the rise in uncertainty associated with the financial crisis. Household spending collapsed, as the saving ratio rose from around 1-2% to around 7%, with much of the rise accounted for by the behaviour of highly indebted households (Chart 1); businesses' capital spending also fell sharply, though that is something we would like to have seen more of, rather than less. At the same time, sterling fell by a quarter. That should have given us a head start in crowding in net exports to replace the lost domestic demand. The performance of net exports has, however, been distinctly underwhelming, adding just 1½ percentage points to total growth since the start of the recession. That is not simply a reflection of the weakness in our export markets, as the weakness at home has depressed imports correspondingly. Once one controls for the changes in activity at home and abroad, net exports still look weak.
In total, 1300 tons were sold. The decision to reduce our gold holdings by half was taken for two reasons that were highlighted by experts as early as 1997: First the SNB arguably had more gold than it needed. Switzerland's official gold holdings per capita were five times higher than those of the next G10 country. Second, the SNB had - on a mark-to-market basis - excess capital reserves that were no longer required for monetary purposes. As a result, the decision was taken to sell 1300 tons of gold. In May 2000, as soon as the legal framework had been amended to allow market sales, the SNB started it gold sales operations. We adopted a very transparent strategy and tried, within the constraints of the Washington Agreement, to maximize the proceeds of the gold sales in Swiss francs. The average selling price of USD 350/oz was 17 dollars higher than the average London fixing of the selling period. Of course, with today's prices around 600 USD/oz, you might think that we revisit our sales program with mixed feelings. As a matter of fact, price forecasts, which are inevitably subject to great uncertainty, did not feature prominently in the SNB’s decision to sell gold. The timing of the gold sales was largely influenced by factors that the SNB did not fully control. Once we were allowed to sell, we started our program within the window of opportunity that had been negotiated with other central banks under the first Washington agreement.

Figure 14: Selected Sub-items of Consumer Loans (Annual Percentage Change)  570  450  Housing  400  470  Automobiles (right axis)  350  370  300 250  270 200 150  170  100 70 50 01/08  10/07  07/07  04/07  01/07  10/06  07/06  04/06  01/06  10/05  -30 07/05  0  Table 3: Consumer Loans and Claims From Credit Cards (Quarterly Real Percentage Change)  2006-II  2006-III  2006-IV  2007-I  2007-II  2007-III  2007-IV  Consumer Loans  20,0  1,5  3,6  2,6  9,0  10,0  6,6  Housing  22,8  0,9  2,2  2,7  7,5  10,2  5,4  Automobile  5,1  -6,4  -5,0  -8,9  -3,4  -2,0  -1,4  Other  24,3  6,0  8,9  6,6  14,5  12,8  9,9  Credit Cards  6,8  2,1  2,1  -1,6  7,7  2,4  3,2  Source: CBRT. External demand conditions are also expected to contribute to disinflation in 2008. Recent data on global economic activity suggest that world economic growth is likely to moderate in the forthcoming period, increasing the downside risks on external demand. Accordingly, our medium term outlook is constructed under a baseline scenario of gradual slowdown in external demand.
Indeed, if prices are slow to adjust fully, there might even be a positive output gap, on this basis, for a time. The degree to which this is important hinges on how flexible firms’ prices are. The Bank’s recent survey on firms’ pricing practices indicated that, while price changes have become more frequent for many firms over the past decade, for some sectors and smaller firms a substantial minority will take more than six months to adjust prices, and therefore output, after a cost shock. 11 This suggests that the downward effect on supply might have been quite strong recently, following the oil price increases and fall in the exchange rate. It is very unlikely that this would be sufficient to alter the conclusion that presently the output gap is significantly negative, but it might affect interpretation of the effect of the output gap over the recent past, and judgements about how quickly the gap could be closed. And at the present conjuncture other considerations are also relevant. The key shock firms are facing is to the availability and cost of credit. Unlike a one-off shock to commodity prices, this will not have affected all firms at the same time, as the impact will be felt when a firm seeks to expand, or to replace investment. So the impact on supply capacity may build up over a longer period.

In normal times, when risk factors are contained and can be diversified away, the interest rate channel, working through inter-temporal arbitrage, is the prime conduit of monetary policy (see slide 2). It sets the floor for term borrowing costs. Parsing longer-term yields into two components – the average level of the short-term policy interest rate expected over the term to maturity of the asset, and the risk premia – expectations of monetary policy pin down the first component. The mechanism through which this occurs is the inter-temporal financial arbitrage I just described. Term and liquidity premia are the additional returns that investors demand as a compensation for their reluctance to bear interest rate risk over long-duration assets, and for their decision to forgo liquidity services – I am abstracting here from credit risk, to which I will return later. When markets are properly functioning, non-depository institutions – dealers, hedge funds, investment banks – provide immediacy by offering lenders and borrowers their capacity to take positions on both sides of the market. Their ready availability to take positions as lenders and borrowers supports market liquidity, namely the ease with which a lender can liquidate a position before maturity. When market liquidity is secure, lenders are willing to engage in finance, trades in long-duration assets are active and the liquidity premia are contained. And, most importantly, they are steady. With a steady premium, the expectations  2  There are two reasons for idiosyncratic fluctuations of reserve demand by individual banks.
Recall that, after the signs delivered by the Federal Reserve last May, the withdrawal of the monetary stimulus was expected to begin in September. This drove up long-term interest rates by more than 100 basis points in the U.S., the currencies depreciated against the dollar and volatility increased, with particularly harsh effects on emerging economies. Later on, as such withdrawal did not occur in September, interest rates receded some and calm returned to the markets. Although this resulted in some improvement of the external lending standards to emerging economies, our baseline scenario considers the possibility of recurrent episodes of volatility during the transition towards more normal financial conditions. For one thing, the temporary nature of the U.S. fiscal agreements could bring new tensions in early 2014, although this seems less likely. At any rate, external lending conditions are less favorable than they were early in the year. Compared with September, long-term interest rates dropped as the Federal Reserve kept the asset purchase plan unchanged, and at the same time international stock markets improved. Several emerging market currencies depreciated against the dollar – the Chilean peso included – which was trading at more than $ per dollar in November and has recently surpassed $ The real exchange rate, as I said, has risen to near its 15 to 20 years’ average. In terms of the outlook for global growth, developed economies are still in a process of gradual recovery.

Ladies and Gentlemen, Given the strong progress to date and the positive economic environment, I am confident that the Malaysian takaful operators will continue to make significant strides in becoming world-class players. In the process, this will strengthen the positioning of Malaysia as an international Islamic financial centre. On this note, I wish to congratulate Prudential Corporation Holdings Limited and Bank Simpanan Nasional on the occasion of the official launch of Prudential BSN Takaful Berhad. I wish Prudential BSN Takaful Berhad every success in achieving its objectives. Akhir kata, dengan lafaz Bismillahir Rahmanir Rahim, saya dengan sukacitanya merasmikan pelancaran Prudential BSN Takaful Berhad. Terima kasih. 2  BIS Review 73/2006