samchain/econo-pairs-v1 huggingface dataset:
To ensure that the banks’ capital really can cover losses, they must already today make certain adjustments in their equity on the basis of what actually exists on the asset side. The principles governing how to do this will now be tightened up. For example, deductions will have to be made directly from the Core Tier 1 capital, unlike today when either the total Tier 1 capital or the total capital base is adjusted. Nor will the banks be able to include assets that form the capital base in other financial institutions. The idea behind such a limitation is to counteract the domino effects that can arise if a bank goes bankrupt. Other important assets on the balance sheet that will require adjustment of the capital are goodwill and deferred tax assets. Another important change is that it will not be possible to include hybrid capital to the same extent as before. Innovative hybrid instruments with a so-called step up will, for example, be completely excluded from Tier 1 capital. The reason for this is that this relates to out-and-out rule arbitrage. Under the current regulations, it is not permitted to include dated debt instruments in the capital base. To get round this, the banks have issued securities with a socalled step up, where the interest rate rises if the security is not repurchased before a certain predetermined date.

During the upturn that preceded the crisis, when risks were low, banks were able to expand their balance sheets and present good capital adequacy figures, despite the fact that they held relatively little capital. When the downturn then began and the risks increased, more capital was required to reach the stipulated minimum level of capital. With the increase in risks and the loss of confidence between the banks, the markets’ capital adequacy requirements also increased. In order to meet these requirements, banks in many countries were forced to reduce their balance sheets. This led to a fall in lending to companies and private individuals. This in turn triggered a downward spiral with a fall in demand and in investment capacity, which reinforced the downturn in global economic activity. When you list the problems in this way it becomes pretty clear that we need to revise the existing regulations. The Basel Committee has done a lot of hard work to correct these shortcomings and I welcome their proposals on a new international regulatory framework for banks. Basel III – what is new? Basel III comprises global minimum regulations and aims to strengthen the banks’ ability to manage losses and reduce the probability of new financial crises. To achieve this, the banks will be required to hold more and better-quality capital. An important task for the decisionmakers involved has thus been to increase the international capital adequacy requirements But Basel III is not just about capital.
Malaysia is the first country in the Asia Pacific region to migrate from magnetic strip cards to chip-based payment cards. This transition, which was completed in 2005 despite the initial resistance by the industry, had successfully eradicated cases of fraudulent skimming or counterfeiting of payment cards. The investment cost of RM200 million was recovered within two and a half years from fraud avoidance. I think it is important for the banking industry to take note of this fact. The various regulatory measures introduced by Bank Negara Malaysia and the continuous investment made by the industry have caused the cases of fraud incidents in e-payments to remain at a very low level over the last decade. In 2013, fraud incidents only accounted for 0.0054% of total transaction volume and 0.0011% of the transaction value of e-payment transactions. While we should be satisfied with such encouraging outcomes, there is no room for complacency as fraudsters are always on the look-out for possible weaknesses to exploit. Therefore, continuous efforts need to be taken both at the policy-making and at the industry level to continuously identify, remedy and tackle emerging security risks. 4. Consumer protection and education  The unbanked and the underbanked might find e-payments to be too sophisticated and lack the personal touch. In this respect, policymakers and market players have an important role to play in educating and creating awareness among consumers on the benefits of e-payments and the security steps that they can take to minimise fraud incidents.

To date, CCRIS has a database of 9 million users covering approximately 53% of the adult population while the Credit Bureau Malaysia has over 28,000 registered members and generated more than 1.4 million credit reports. To empower consumers to make well-informed financial decisions, Bank Negara Malaysia has also established financial advisory centres and contact points such as the Credit Counselling and Debt Management Agency and BNMLINK. Since its inception in 2006,  BIS central bankers’ speeches  1  AKPK has provided financial education to the public, benefiting more than 260,000 people nationwide. To provide financial knowledge to the young, financial education elements are now incorporated as part of the syllabus for primary schools and will be extended to secondary schools by 2017. Consumer education efforts in Malaysia are also reinforced by a holistic consumer protection framework to ensure financial institutions practise responsible financing, conduct effective product transparency and disclosure, as well as, appropriate debt collection practices. These measures have produced positive outcomes. As a result, 92% of adults (aged 15 and above) in Malaysia have access to a deposit account and basic banking services. Malaysia has also been ranked first for 6 consecutive years since 2007 for “Getting Credit” in the “Ease of Doing Business” index by the World Bank. Accelerating the migration to e-payments as a key enabler for financial inclusion The success of any financial inclusion tool or policy would depend largely on the presence of a reliable, efficient and safe payment system.
Regulatory authorities in respective countries could be of help in this respect. Also, Albanian banks may receive Albanian workers’ remittances via “banking correspondent institutions” in the resident country and microcredit and microfinance Albanian organizations which could serve as local agencies to handle this process. Third: Directing workers’ remittances toward country’s development needs. Usually, emigrants are out of the main focus of banking services, since this category of clients is considered to have unstable jobs. Nonetheless, there exists opportunities to offer financial services to emigrants too. Among others I could mention here: linking of workers’ remittances with investments for example by channelling remittances flows toward micro-credit loans or projects; also supporting of migrants’ contribution and migrants societies in the development of the country. Remittances could also help approaching rural areas population to the banks. If the recipient families also decide to keep remittances in their bank accounts this could assist economic development as more funds are available to be lent to private sector. Microcredit programs and qualitative improvements of banking infrastructure, in concert with introduction of new financial instruments that would attract more remittances, are also important. Finally, I would like to express my sincere appreciation to those involved in this conference which provides us a valuable support in our efforts to improve effectiveness of remittances utilization in our economies.

I am confident that the distinguished speakers from various institutions, who are present at this conference, would share further helpful ideas and suggestions (we already heard some very interesting ones in the previous discussions), thus ensuring the formulation of sound measures to be incorporated in our policies on remittances. And I strongly hope this exchange of experiences and expertise will continue in the future and contribute producing adequate human, infrastructure, and institutional capacities to transform remittances from potential into real driving forces for the development of our countries. Again, my highest consideration for this activity and Thank you for your attention! 5/5
Such loans would normally be short-lived, and should be made available at an above-market interest rate such that this sort of finance is seen as last not first  BIS Review 71/2001  5  resort. The second solution to the co-ordination problem is for the borrower to impose a temporary suspension of payments to create a "time out" during which the borrower can negotiate directly with the creditors, and so arrange a new profile of repayments of debt. Both approaches, if understood and implemented consistently over time, can provide an efficient solution to the co-ordination problem and eliminate the incentives for a liquidity run. But, as Ken Rogoff pointed out in 1999, the lender of last resort approach carries with it the risk of introducing significant moral hazard into the loan market. If lenders believe that sovereign borrowers are likely to be bailed out, then their incentive to assess the riskiness of their loans will diminish. Equally, borrowing countries will find it more attractive to claim that the measures necessary to continue servicing their debt are "politically impossible" if they believe that there is an international deep pocket willing to extend loans and defer the moment when the national balance constraint is binding. There are two good reasons for the IMF not being able to play the role of an international lender of last resort, at least for the foreseeable future. First, the moral hazard created by both lenders and borrowers cannot simply be assumed away.

Woodford, M. 2001. “Imperfect Common Knowledge and the Effects of Monetary Policy”, National Bureau of Economic Research working paper, no. w8673. 12  BIS central bankers’ speeches
Finally, though perhaps over a longer time frame, an expansion in net exports is desirable, in order to rebalance the composition of demand and reduce the UK current account deficit. Let me say a little about each of these in turn. Business investment fell by almost a third in the recession, reflecting the generalised collapse in demand, heightened uncertainty and restricted availability of credit. Although those headwinds have eased considerably, business investment in 2013 was still only just over 1% above its 2010 level. Now it is not too surprising that business investment has been slow to pick up. That is typically the case in business cycle recoveries, as businesses will want to use up spare capacity and to be confident that improved business conditions will persist before they undertake capital expenditures that may be costly to reverse. And the path of business investment so far looks pretty typical, once one takes account of the protracted nature of the downturn in activity. Moreover, there are signs that the desired handoff to business investment is under way. According to the latest official estimates, business investment rose 8.5% over the past year, while investment intentions surveys suggest that this revival is likely to continue through this year (Chart 3). And lending and capital market conditions have improved, especially for larger companies, though some SMEs continue to report difficulty in accessing credit on reasonable terms.

What, I think, is more useful for businesses to hang on to is our expectation that when Bank Rate does rise, it will probably do so only gradually and to a level that is likely to remain materially below its pre-crisis average of 5% for some while – I have something like a 2–3% range in mind here. That reflects three factors. First, the process of private and public balance sheet repair will continue to weigh on domestic demand for some time, while the recovery in the euro area – our main export market – is likely to remain muted. Second, global longer-term safe real interest rates fell in the years before the crisis, reflecting in particular the unusually high saving rates in China, and this is likely to persist. Third, the spreads between risky market interest rates and Bank Rate are unlikely to return to their excessively compressed pre-crisis levels. So even if we start to withdraw some of the exceptional monetary stimulus in the not too distant future, you should not expect Bank Rate to shoot straight back up to pre-crisis levels. It is now five years since we cut Bank Rate to its historic low of 0.5% and launched our asset purchase programme (QE). Those five years have been tough for both businesses and households. But they surely would have been even tougher had we not taken that action.
Indeed, it would be surprising if a new regulatory framework as complex as Solvency II had no shortcomings. In our experience there have been fewer challenges for general insurers in implementing Solvency II, largely because the net impact of the changes in the balance sheet and capital has been smaller. However, for life insurers with long-dated liabilities such as annuities – and especially in the current low interest rate environment – a significant limitation is the design of the risk margin, which is currently too sensitive to the level of risk-free rates. As the Financial Policy Committee stated in its December 2016 Financial Stability Report, addressing this excess sensitivity would have macroprudential benefits. The European Commission has committed to review the design of the risk margin in its forthcoming review of Solvency II and we regard it as a key priority. The PRA has looked at whether it would be possible to fix the problems locally through our own supervisory implementation but concluded that changes to the existing legislation would be more effective and desirable. The risk margin is calculated by multiplying a fixed cost of capital (6%) by the net present value of future capital requirements. It is intended to provide the financial resources necessary to cover the return on the capital a hypothetical acquirer would need to run off the insurance liabilities.

The steps that we have taken to improve gender diversity and the lessons we learn from the industry are supporting the Bank’s approach to increase diversity and inclusion more broadly. 10  Women in Finance, House of Commons Treasury Committee, Fifteenth Report of Session 2017 – 19. Available at: https://publications.parliament.uk/pa/cm201719/cmselect/cmtreasy/477/477.pdf. 7  All speeches are available online at www.bankofengland.co.uk/news/speeches  7  Conclusion I hope that these positive examples leave you in the right mood for the final part of today: celebrating success. Without delaying the awards any longer, let me leave you with three reflections that sum up what the Bank of England has learned from its experience of promoting diversity and inclusion. First, in a world of division, fusion will bring breakthroughs. Diversity delivers value, but it is also, quite simply the right thing to do. So select your teams wisely and recognise that while diversity is a reality, inclusion is a choice that we should all take. Second, developing the right people requires a culture of inclusion that values diverse ideas, encourages open debate, and empowers people at all levels to take initiative. These efforts must be purposeful and coordinated. Third, we’re all in this together. Share your experiences; if something has worked well in your organisation afford others the opportunity to try it in theirs. Finally, we should take opportunities to celebrate successful achievements of women in finance and of the men and women who have given their time and effort as we strive to achieve equality.
As with other dread events, precautionary responses to the Great Depression worsened its impact. It blunted entrepreneurial activity, with fewer start-ups of new businesses and lower take-up of external financing (Malmendier and Nagel (2011)). Moreover, this scarring effect on risk-taking lasted a whole generation, consistent with a slow rate of disaster time decay. These precautionary responses reduced investment and innovation by companies, adding to the depth and persistence of the recession and amplifying insecurities in a negative loop. This is what Keynes called the paradox, not of precaution, but thrift (Keynes (1936)). After the Great Depression, the next largest financial crisis of the 20th century was probably the Asian financial crisis of the late 1990s. Like its predecessors, this caused catastrophic  BIS central bankers’ speeches  3  losses of income for a great many people across Asia at around the same time. In other words, it too bears all the hallmarks of an economic dread event. As in the past, this caused a precautionary shift into safe assets, lowering the yield on US bonds by a similar amount and for a similar period as after the Great Depression (Chart 6). The increased demand for safety was concentrated among Asian countries. But the fear of a similar dread event spread to other potentially vulnerable emerging markets too. In response, they built war-chests of foreign exchange reserves: the global stock rose 6-fold between 1997 and 2012, from $ trillion to $ trillion or from 5% to 16% of world GDP (Chart 7).

Such reforms will take time. Immune system The situation in Europe illustrates how difficult it can be to curb a crisis once it has arisen. It might therefore be wise to give priority to crisis prevention. A healthy economic system is less vulnerable. Crises can be curbed – or even avoided – by boosting the resilience of the economy. Rather than treating the disease after it has taken hold, much can be accomplished by strengthening the economy’s immune system. The financial crisis revealed deficiencies and system failures worldwide. Many governments and households had taken on too much debt. US investment banks such as Lehman Brothers operated a high-risk business model with low levels of equity. European banks were too dependent on short-term funding in international markets. In a period of growth, it is easy for banks to obtain funding. But the system is fundamentally unstable. Without adequate capital requirements in the banking system, credit growth can spiral out of control. Hayek gave lectures on this topic at the London School of Economics in the early 1930s. 4 The LSE is still home to many economists who argue against the risks of debt-financed growth. 5 Solid banks are built in good times. Solid banks bolster the resilience of the economy and make crises easier to manage. Since the financial crisis, the G20 countries have implemented substantial changes in the global regulatory framework for banks.
Although the Western Mail and the South Wales Echo stopped running such competitions in 1992 – at the same moment that the  BIS Review 63/2007  1  inflation target was being introduced – I am sure many of you will remember that in those competitions the key piece of information, the location of the ball or, in our case, the outlook for inflation, is missing. You are shown the position of the players from which you have to deduce the position of the ball. That is no easy matter. To pinpoint the ball you need to ask: why is that player jumping? Or why is that player looking there? Only when you have identified the factors to which the players are responding can you try to spot the ball itself. And obviously in our case there is rather more than guesswork involved. In essence, each month the Monetary Policy Committee is trying to identify the changes in the driving forces to which the economic data are responding. Those changes are described, somewhat obscurely by economists, as “shocks”. That is not to say they are necessarily sudden, violent upheavals. “Shocks” are forces that stop the economy running with clockwork regularity. They are the answer to the question “why?” The Monetary Policy Committee is constantly engaged in an exercise of “spot the shock”. Without understanding why the economy is moving in the way that it is, we cannot gauge correctly where it might be going and hence set the right course for interest rates.

For instance, foreign direct investment does not usually jeopardise economic stability, while short-term movements and carry trade are riskier. It can be argued that Iceland had gone too far in financial integration in the years before the financial crisis. In part because of this, the Central Bank recommended, in its 2012 report entitled Prudential Rules Following Capital Controls, that before the capital controls are lifted, restrictions should be placed on financial firms’ foreign exchange risk and their ability to expand their foreign currency balance sheets with the associated maturity mismatches. Restrictions would also be placed on foreign-denominated borrowing by households, firms, and municipalities without income in the borrowed currencies. These ideas are being developed and honed, and some of them could be implemented with the entry into force of new liquidity and foreign exchange balance rules that the Central Bank intends to issue this year. It has been said that a reassessment of the monetary policy framework must take place before the capital controls can be lifted in full. This is perhaps not as critical as it might seem, however, as countries with unrestricted capital flows have various kinds of monetary policy framework. Nonetheless, it is necessary to review our monetary policy, and the Bank has published reports on this topic in the recent term, one entitled Monetary Policy After Capital Controls and the other entitled Iceland’s Currency and Exchange Rate Policy Options.