samchain/econo-pairs-v1 huggingface dataset:
An underlying solvency problem will often manifest itself as a liquidity problem, and over time, a liquidity problem will often create a solvency problem. Did the Icelandic banks face a solvency problem? Not if we look at what used to be the traditional metrics before the crisis, cf. the displayed table. Kaupthing  Landsbanki  Glitnir  CAD ratio  11.2%  10.3%  11.2%  Tier 1 ratio  9.3%  8.2%  8.0%  Leverage ratio  15.1  20.0  19.3  Equity/tangible assets  5.2%  4.0%  3.6%  5y  5y  3.2y  32.3%  72.4%  20.8%  1.95  1.74  1.52  Bond maturity Deposits/funding Liquidity ratio  Compared to peers, their capital and leverage ratios were not out of line. Neither do the underlying liquidity problems glare at us through these metrics. But that might say more about the metrics than the reality. Add to this the fact that, around a month before the collapse, the FME issued statements about how well the banks performed on a range of stress tests. However, these stress tests were flawed in the sense that they did not include liquidity. Furthermore, they tested one institution at a time and did therefore not take into account the interconnectedness and contagion elements that proved so important during the collapse.

Instead, the Government, on the advice of the Central Bank, announced on 29 September that it was taking a 75% equity stake in Glitnir valued at € m. This implied a big fall from what such a stake was valued at in the market the week before. In the following week, the equity price collapsed further, ending the week 75% below its value at the end of the preceding week. This action did not boost market confidence in the Icelandic banking system. On the contrary, it intensified the run. On the following day, both the sovereign and the banks were  2  Baba, Naohiko, Frank Packer and Teppei Nagano, (2008). “The spillover of money market turbulance to FX swap and cross-currency swap markets”, BIS Quarterly Review, March 2008, 73–86; Baba, Naohiko, and Frank Packer, (2008). “Interpreting deviations from covered interest parity during the financial market turmoil of 2007–08”, BIS Working Papers, No. 267. See also Box III-1, “The recent turmoil in the Icelandic foreign exchange swap market” in the Central Bank of Iceland Monetary Bulletin 2008/1, pp. 26–29. 4  BIS Review 9/2010  downgraded by two notches, followed by widespread margin calls and closing of credit lines. The foreign deposits that had helped to alleviate the foreign liquidity squeeze experienced outflows. And the equity loss involved in the Glitnir takeover created a domino effect within the Icelandic financial system.
However, a part of the information systems examination reviews the bank’s electronic and Internet activities and plans, and all examiners ask general questions that we feel that any bank offering on-line banking services should be able to answer responsively. In addition, we have convened a special task force at the Federal Reserve Bank of New York to review security issues involving on-line and Internet banking. The goal of this task force is two-fold: (1) to gather, review, and benchmark current and future on-line security procedures and policies of State member banks in our district; and (2) to then somehow disseminate, without unduly disadvantaging any specific depository institution that provided us with its information, the best of these policies and procedures into a kind of “sound practices” security guide for banks to use for their electronic and Internet banking services. The task force should issue its first report in the summer of 1997. In a similar vein, I believe that the United States Federal bank supervisors, while mindful of the risks, have tried to be as supportive of electronic and Internet banking as possible. Each of the various bank supervisory agencies, i.e., the Board of Governors, the Office of Thrift Supervision (“OTS”), the Federal Deposit Insurance Corporation (“FDIC”), and the Office of the Comptroller of the Currency (“OCC”), has dealt in some immediate way with the issues posed by electronic and Internet banking. Both the OTS and the Board of Governors have dealt directly with Internet banking through the bank applications approval process.

In May of 1995, the OTS approved the application of a new thrift, the Security First Network Bank (“SFNB”), that sought explicitly to provide the majority of its electronic banking services over the Internet.5 In May of 1996, the Board of Governors approved the application of SFNB’s parent, a bank holding company, for SFNB to acquire a data-processing firm specializing in data processing activities that would provide nationwide banking and financial services over the Internet.6 In December of 1996, the Board of Governors approved the application of a Minnesota bank holding company and two foreign banks to join a consortium of 15 North 4  Alan Greenspan, Banking in the Global Marketplace, address before the Federation of Bankers Associations of Japan (Nov. 18, 1996). 5  See OTS Order No. 95-88 (May 8, 1995). See Cardinal Bancshares, Inc., 82 Fed. Res. Bull. 674 (1996). In this Board Order, the Board stated that “The Board believes the provision of computer banking services by SFNB to its customers in accordance with the authority granted by the OTS, and as specifically described in this proposal, is consistent with Cardinal’s existing authority under the [Bank Holding Company Act] and Regulation Y to operate a savings association.” Id. at n.1.
Mohd Razif bin Abd Kadir: Further development of the Islamic financial services industry in Malaysia Speech by Mr Mohd Razif bin Abd Kadir, Deputy Governor of the Central Bank of Malaysia, at the official launch of HSBC Amanah Takaful (Malaysia) Sdn. Bhd., Kuala Lumpur, 12 September 2006. *  *  *  Bismillahir Rahmanir Rahim It is indeed an honour to be here this morning to commemorate the launching of HSBC Amanah Takaful (Malaysia) Sdn. Bhd. This occasion chalks up another accomplishment in the takaful industry in Malaysia, as we position ourselves towards achieving a dynamic, competitive and efficient Islamic financial system that is able to contribute to the overall development of our economy, and to enhance the integration of our Islamic financial system with the global market. The launching of HSBC Amanah Takaful (Malaysia) Sdn. Bhd. marks another significant milestone in terms of our strategy towards developing a progressive takaful industry, that is able to adapt to the increasingly challenging and competitive environment as well as adjust to the forces of change that has redefined the domestic and international financial landscape. Ladies and gentlemen, Over the past two decades, the takaful industry in Malaysia has grown progressively, underpinned by the holistic and pragmatic approach in the development of the Islamic financial industry. Indeed, we have witnessed an orderly development of the takaful industry.

Miguel Fernández Ordóñez: Seeking solutions to Spain’s economic, financial and fiscal issues Address by Mr Miguel Fernández Ordóñez, Governor of the Bank of Spain, to the Annual Assembly of the Instituto de Empresa Familiar (IEF) Madrid, 23 May 2011. *  *  *  Many thanks for inviting me to talk at your Assembly. And since one of the functions of your Institute is to seek solutions to the legal and institutional environment in which the company moves, I’ve decided to focus my address today on what I think about this matter. Resolving a country’s economic problems should be no different from what any individual or company does to improve its situation. First, acknowledge that we have problems; second, identify the changes needed; and third, apply them. I’ll try to apply these guidelines to what, in my view, are our main problems: the relatively low level of educational attainment of the labour force; the need to adjust the imbalances accumulated over the course of 14 years of expansion; massive unemployment; and, for a year now, the mistrust of the markets to which we have to resort for funding. Let’s begin by looking at two examples where problems were not properly identified. The first of these was thinking that the main source of our difficulties was the international financial crisis and not the imbalances accumulated further to a long expansion based on indebtedness and the deterioration of our competitiveness.
Durmuş Y lmaz: Recent developments in international markets and their impact on the Turkish economy Keynote address by Mr Durmuş Yılmaz, Governor of the Central Bank of the Republic of Turkey, at the Euromoney Turkey Finance & Investment Forum, Istanbul, 18 June 2008. *  *  *  Dear Guests, I am delighted to be here to address such a distinguished audience in Istanbul. I hope this timely and important Forum will contribute much to debates about future growth prospects of Turkey, through exploring many prominent issues. Let me begin with recent developments in international markets and their impacts on the Turkish economy. As you may all know, both developed and emerging countries have been suffering from higher inflation and lower growth rates for a while. There are two main reasons behind this undesirable economic situation. One is the turbulence that emerged in the second half of 2007 in financial markets; and the other one is the continuously increasing global commodity prices. The second half of 2007 was not an easy period for central bankers – and 2008 is likely to be even more challenging. There is an apparent acceleration in consumer prices inflation all over the world and the annual inflation even in developed countries is at its highest level of the last 16 years. Improvement in the wealth of big developing countries such as China and India has created a demand-driven pressure on commodity prices.

The Norwegian economic system has undergone substantial changes over the past ten to twenty years. The model based on detailed control of capital, credit and interest rates and centralised coordination has been abandoned. Less emphasis is placed on having discretionary scope for manoeuvre and on using surprise decisions to influence economic developments. It is recognised that the structure of the labour market and of wage formation has a decisive impact on developments in employment. Monetary policy is delegated in Norway and in comparable countries. The monetary policy guidelines provide a foundation for building credibility and creating confidence in economic policy, thereby making it more effective. 8  BIS Review 50/2002
I see this as an important tool to help banks manage the credit risk associated with lending to SMEs. However, for it to recover it is critical that the regulatory treatment of asset-backed securities (ABS) is based on real data and not the legacy of the US sub-prime disaster. We have a very different experience with ABS here in Europe: between mid-2007 and the first quarter of 2013 the default rate on ABS in the EU was only around 1.4%, whereas it was 17.4% in the United States.6 Structural reforms While financial sector repair can help ensure that credit flows to the most productive firms, we also have to ask the question: where will those firms come from? The incentive for firms to exploit economies of scale, invest and innovate – that is, to be productive – depends critically on the business environment. We therefore need to ensure we have the economic framework conditions that encourage this. This brings me to the key topic of structural reforms. Put simply, there is no way we can achieve higher potential growth in the euro area without them. Structural reforms are essential to raise the trend components of the inputs to production (investment and labour) and the efficiency with which they are used (total factor productivity). Let me explain why. First, while investment in the euro area may pick up as the uncertainty caused by the crisis recedes, to raise trend investment there needs to be fresh opportunities for firms to develop new business models and grow.

Yet we have also seen a strong and, thus far, persistent contraction in business investment, which may weigh on future productivity growth as such investment tends to raise the technology content of capital. A prolonged period of below-trend investment could also lead to an excess of savings over investment, and therefore a fall in the natural interest rate. Developments in labour supply have also been weak. One positive factor has been the increase in the labour participation rate in the euro area by around 1 pp during the crisis, whereas in the U.S. participation has fallen by more than 3 pp. However, this has to be set against an increase in euro area long-term unemployment from 3% to 6%, which creates a risk of workers’ skills being eroded and skill mismatches emerging. This is particularly  BIS central bankers’ speeches  1  relevant because unemployment is concentrated among those with lower skills: around 20% of low skilled workers are unemployed, compared with only about 7% of high skilled workers. Total factor productivity – which principally captures long-term technological progress – has fallen only marginally during the crisis, most likely reflecting the underutilised capacity in the inputs to production. However, this is no cause for comfort as TFP was on a declining trend in the euro area well before the crisis, and has recovered less quickly than in the United States.1 These developments create two interrelated challenges for policymakers. The first is how to prevent the fall in observed growth from feeding back into potential growth.
How many times do we go to bed composing the most fantastic letters or office memos, only to wake up the next morning to realise that they were wholly over the top, too effusive or too offensive, tactless, or whatever. The trouble is that nowadays we do not have to wait to respond until we can reach the other person on the phone the next day, or mail him a letter, or hand him an office memo; by the time we awake the next morning it may already be too late to censor our folly; we may have clicked the send button the night before. Worse still, in an increasing number of instances our counterparty will actually expect a response almost immediately. The phrase, “Let’s sleep on it”, wasn’t born for nothing, but now it may not be allowed. If you are executing major financial decisions by a mouse click, the scope for subsequent embarrassment may be substantial, to say the least. What I find slightly worrying is that the economics of, or business case for, continuing financial innovation and the quest for new efficiencies may depend in large part on successful exploitation of opportunities that can be seized only if you are able and willing to respond with lightning speed. The ultimate manifestation of this is programmed trading, where the computer virtually takes the decision for you.

Such people were until then regarded by many as possessing the best qualifications to become dealers or floor traders in the City of London. 1  BIS Review 15/2000  The IT revolution has not of course been a static one. Since the introduction of the first computers into financial product development and trading, computing power has grown exponentially. New vistas and previously unimaginable complexities for trading strategies have thus continually opened up; and the ever-increasing speed of processing and communication has progressively rewritten the definition of “time critical”. The stream of innovation requires us not only to master the mathematics but also to assimilate a whole new vocabulary of jargon - designed, no doubt, to make the underlying mathematics more easily digestible. For example, I received a document from a leading international bank the other day explaining to me that the butterfly involved three tenors where the middle was the bullet and the wing was the barbell; moreover I could long a two-five-ten by being long the two and the ten, each for a PV01 of half the sum for which I should short the five; in so doing I could profit from a bow at five but would be indifferent to any directional move provided it was parallel. Meanwhile, our universities today probably devote more teaching time to gamma trades than to gamma rays; I’m not sure whether we, as citizens of the world at large, should be elated or depressed by this.
The Fed and the Bank of England have introduced a new “collateral swap facility”, under which the banks can temporarily swap their unsaleable securities against liquid government paper. The pressure on banks to refinance their balance sheets is thus reduced without additional central bank money having to be injected into the market. The Fed went even further in providing support during the sale of investment bank Bear Stearns. It took illiquid and risky securities directly onto its own balance sheet. Thus, in the third phase, some countries administered new remedies in addition to the existing ones, and even performed a few emergency operations. In the SNB’s case, the range of counterparties admitted to repo auctions has already been very broad for some time. Indeed, shortly before the turmoil began, we decided to expand the range of eligible securities for money market operations, whilst still retaining stringent quality standards. Measures such as those used in the US and UK have not proved necessary in Switzerland to date. Monetary policy steering during the crisis The measures taken by the SNB, as described above, were primarily aimed at ensuring the smooth functioning of the Swiss franc money market during the turbulence. However, it is also important to look at the actual implementation of monetary policy strategy during the crisis. Of particular interest in this regard are two aspects which have occasionally been misinterpreted by the general public.

The explanation, however, lies in historically very low interest rates abroad rather than abnormally high rates in Iceland. In many economies around the world, inflation has been below target levels and central banks have overforecast inflation in the recent past, largely irrespective of the level of interest rates and the economic cycle in individual countries. This indicates strongly that there are global factors at work, such as low commodity prices and resistance to wage increases in industrialised countries, partly in response to increased direct and indirect competition from the labour forces of other economies and uncertainty about the future in the wake of the financial crisis. The current monetary stance is not affected by the Bank’s previous overforecasting of inflation. The MPC takes account of forecasts but does not blindly set interest rates in accordance with them, and it adjusts the monetary stance in view of developments. The forecasts themselves are revised each quarter. One to two years ago, forecasts were based both on the technical assumption that the exchange rate would remain unchanged at far below the current level and on expectations of a turnaround in global commodity prices, which international forecasts had assumed would be stronger and come sooner than has actually been the case. These forecasts were accompanied by a future interest rate path that never materialised. It is therefore necessary to assess the monetary stance at any given time on its own merits. The MPC has done this and will continue to do so.
This can be achieved either through more intensive use of existing technology or through breakthroughs in new technology. But there is considerable uncertainty about the prognosis for productivity growth. On the pessimistic side of the debate is the notion of technological stasis. •  Robert Gordon has presented the most well-known articulation of this view. •  The thesis is that most of the truly important innovations (such as the steam engine, electricity, and modern sanitation) have already been fully utilised, while newer inventions (for example, digital technology) do not seem to have as much transformative impact. •  It is not that there is a dearth of innovations today – on the contrary, there are many. It is just that they have not had as much impact on productivity as earlier innovations. Techno-optimists, however, believe that we are on the cusp of a new wave of technological breakthroughs that will greatly raise the economy’s productive capacity. •  The story of genomics, robotics, artificial intelligence, and 3D printing is only starting to unfold. Moreover, the world does not comprise of the advanced economies alone. Regardless of what happens to technological advances at the frontier, emerging market economies have considerable scope to raise productivity by simply catching up to the existing state of play at the frontier.

Governor’s Speech - the Budapest Eurasia Forum 2022 “Challenges facing small, open economies in the changing global landscape” Dr. Sethaput Suthiwartnarueput, Governor, Bank of Thailand Magyar Nemzeti Bank, Budapest, 19 September 2022  Excellencies, distinguished participants,  It is a great pleasure and privilege to be here at the Budapest Eurasia Forum. While the global landscape is constantly changing, the speed and scale of the changes happening now are particularly large and rapid. Many of these changes pose particular challenges for small, open economies. I would like therefore to focus my remarks on three key challenges facing small, open economies in this changing global landscape. Part 1: The first challenge is rapid and synchronized monetary policy tightening •  We are going through one of the most rapid and concerted monetary policy tightening cycles in recent memory. About this time last year, the Fed Funds rate expected for the end of this year was under 0.5%; markets now expect it to be around 4%. Almost all central banks have raised rates as part of what one might call the “Great Policy Normalization”. This reflects the rapid return of inflation. Two years ago, of the 60 countries tracked in the BIS database, 42 had inflation below 2%. Today, that number is zero. •  Adding to the challenge, the prevailing initial conditions under which the major economies are embarking on this “Great Policy Normalization” are far from ideal.