samchain/econo-pairs-v1 huggingface dataset:
The NGFS have started to explore this, but more work will be needed as the impacts of climate change and the transition to net-zero start to come into sharper relief. At the Bank, the Monetary Policy Committee (MPC) recently had its first informal discussion on the macroeconomics of climate change, and climate is an increasingly important part of G7 discussions between central banks and finance ministries. But more work and discussion is needed. Specifically, there is particular value in: (1) further integrating climate and macro modelling; (2) understanding and sizing related transmission channels; (3) going beyond the aggregate impacts to understand sectoral implications; and (4) assessing how the transition might affect the demand and supply sides of the economy. What is increasingly clear is that the effects of climate  3  See A first assessment of financial risks stemming from climate change: The main results of the 2020 climate pilot exercise, ACPR, May 2021 3  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  3  change and the transition to a net-zero economy will manifest over time - so analysis needs to span the short, medium and long-term to capture fully these effects. Let me now turn to how we are embedding climate risk management in the financial firms that we regulate. We have worked to deepen our understanding of risks to the financial system and build resilience to climate change both at the macro and micro prudential level.

In addition, this year COP26 has an ambitious agenda that spans all of the areas that I have spoken about today – in particular establishing a better understanding of best practice, and fostering greater technical cooperation. The Glasgow Financial Alliance for Net Zero (GFANZ)12 initiative will do this by bringing together over 160 firms (responsible for assets in excess of $ trillion) for the first time. Such technical collaboration and cooperation is no less important among central banks and supervisors. The NGFS with the scope of its membership is key to that exchange of knowledge. The Bank has widely shared what we have learnt and we will continue to do so.13 The creation of the Central Banks’ and Supervisors’ Climate Training Alliance (CTA) will also further support technical cooperation and assistance on climate risks. Let me conclude. In spite of the Covid-19 pandemic, central banks have continued to make progress in responding to climate change, but we know there is still work to be done. The next stage of our journey will require us to deepen our analysis, evolve our approaches and further our collaboration. The coming year will be critical for all of us on this journey – in allowing us to better convert climate change risks into something that we can tackle for real. 12 13  See New Financial Alliance for Net Zero Emissions Launches, UNFCCC, April 2021 See Centre for Central Banking Studies, Bank of England 7  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  7
SPEECH DATE: 31 May 2017 SPEAKER: Deputy Governor Cecilia Skingsley VENUE: SEB, Stockholm  SVERIGES RIKSBANK SE-103 37 Stockholm (Brunkebergstorg 11) Tel +46 8 787 00 00 Fax +46 8 21 05 31 registratorn@riksbank.se www.riksbank.se  The central bank in an innovative and fast-paced world1 On 22 July 1668, a Stockholm court sentenced a bank director to death. The bank director’s name was Johan Palmstruch, and he was the founder of the first bank in Sweden, Stockholms Banco. A few years earlier, Stockholms Banco had suffered an acute liquidity shortage when a confidence crisis arose regarding the banknotes issued by the bank. When the bank was unable to pay its depositors, it was simply taken over by the then Riksdag of the Estates, and later became the precursor to Sveriges Riksbank. Palmstruch was thus condemned to death unless he reimbursed the bank's creditors, which he of course was unable to do. The Council of the Realm eventually converted the death sentence into a prison sentence. And later, after the Chancellor Magnus Gabriel De la Gardie rushed to the defence of the deposed banker, Palmstruch was finally granted a pardon. De la Gardie also happened to be one of the bank's largest borrowers. It was possibly the Chancellor's guilty conscience that made him advocate milder treatment of Palmstruch. Not long after he was released, more precisely on 8 March 1671, Palmstruch died of natural causes.

This can in turn give rise to an acute threat to financial stability and ultimately to the economy as a whole – not only in Sweden but also in our neighbouring countries, where Swedish banks have operations. Via FX swaps which have maturities of different lengths. These must be renewed gradually and their prices alter. 6  5 [14]  There is a process consisting of many stages behind the lending for Swedish mortgages and corporate loans. In this process, both the Swedish banks and their counterparties on the foreign exchange market are dependent on the funding in foreign currency functioning constantly. Different currencies in the banks’ balance sheets (a simplified example)  How can we then best manage the banks’ increased liquidity risks in foreign currency? A natural starting point is that the banks – just like other private commercial actors – should manage their liquidity risks themselves. They therefore need to insure themselves by having enough liquidity reserves and sufficiently stable funding in foreign currency. This reduces the risk that the government will have to intervene in the event of a crisis. Hopefully, it also gives the authorities a little more time to take in the whole situation and to find an appropriate solution if problems nevertheless arise. A liquidity buffer can to some extent also be regarded as a “deductible” that can at least on the margin reinforce the banks’ incentives to manage their liquidity risks.
So much so, that their journey towards an open capital market has seemed, at times, a nightmare. The core of the problems faced by a number of emerging markets has been the sharp reversal of capital flows. Between 1996 and 1998, the reversal of capital flows to the five Asian countries primarily affected (Korea, Thailand, Indonesia, Malaysia and the Philippines) was of the order of $ billion, equivalent to 12% of the pre-crisis level of GDP. These reversals imply equal and opposite swings in the current account. To turn a large current account deficit into a substantial surplus within two years almost certainly requires a recession. In 1998 real GDP fell by 6% in Korea, by 9% in Thailand, by 14% in Indonesia, by 7% in Malaysia and by 1% in the Philippines. Moreover, the reversal of capital flows to emerging markets means that the industrialised countries must in aggregate run a larger trade deficit. The distribution of that increase in the collective deficit has already led to a debate about domestic policy, making it harder to resist the ever present protectionist pressures, especially in election years. So rapid reversals of capital flows bring substantial economic costs. Capital flows also bring real economic benefits. They enable savings in one country to finance more profitable investment in another. That was a key feature of the world economy in the nineteenth century. Such flows also facilitate the transfer of knowledge and expertise.

Seeing the extensive works put on by our staff and partners and many prominent leaders and individuals in attendance this morning make me certain that we are on the path towards fulfilling our goals. Ladies and gentlemen, To attain the overall improvement in productivity, immunity, and inclusivity, the Bank of Thailand is committed to supporting adoption of financial technology by financial institutions and promoting fintech innovation while ensuring that key risks can be contained. Throughout the next two days I look forward to personally interacting with all participants, to learn and find ways we can collaborate for the benefits of the Thai and regional financial industries and our fintech ecosystems. Thank you very much for participating in our very first Bangkok FinTech Fair. I wish you all a successful and fruitful event. 7-7
Against this background, the step we are taking today, which is designed to intensify the exchange of views between the authorities and the financial services industry and to deepen the examination of common concerns, assumes even greater importance. Participation in the work of the Forum for Financial Stability should, therefore, prove to be of mutual benefit. From the point of view of the Central Bank of Malta, it should also enable us to refine our analytical work, whose conclusions have since 2009 been published in our annual Financial Stability Report and the mid-year Update. The Report contains insights into the main vulnerabilities of the domestic financial system and into any latent risks, whether in the system itself or in the external environment. It also assesses the robustness of the financial  2  BIS central bankers’ speeches  system and its resilience to particular stress events. By publishing its findings, the Bank aims to foster a constructive dialogue among all stakeholders with the ultimate objective of strengthening the financial system. The quality of the Bank’s assessments, however, depends on access to timely and reliable market intelligence. For, while the statutory data submitted regularly by reporting institutions is thoroughly analysed, this is insufficient to provide a holistic assessment of emerging risks. Financial stability is a forward looking concept. Risks, moreover, may materialise suddenly or with little warning. This is where market intelligence plays an important role.

We have jointly undertaken a series of “constrained” bottom-up stress tests across a number of banks and last year we participated in the EU-wide stress test stress test. This year the Bank is assisting the MFSA in the stress test exercise being conducted by the newly established European Banking Authority. Together, the Bank and the MFSA now need to build upon this positive track record. The recent changes in the nature and size of the domestic financial system and in the external environment with which it increasingly interacts, in fact, suggest that the time has come for the existing model of cooperation to be further refined and strengthened. The need to increase the effectiveness of the institutional arrangements for the preservation of financial stability is also related to Malta’s aspirations to consolidate its position as a successful financial centre. The financial services industry has grown considerably, particularly since EU membership in 2004. Today there are 25 licenced credit institutions, 14 of which with a majority shareholding from other EU countries. But the fastest growing sector has been the funds industry, with more than 400 funds registered, many having redomiciled from other jurisdictions. There has been a similar growth in the insurance business with 50 operators here today. In the process, Malta has become a very important centre for captive insurance in the EU. This increased visibility brings with it the responsibility to ensure that our financial system does not serve as a channel through which risks are transmitted to other countries.
The G-7 intends to continue to review the topic of HLIs, which will be of assistance as we urge countries to implement sound practices in this area. I would not want to characterize or opine upon the efforts of any one jurisdiction; many countries’ efforts, like ours, are underway only recently and need time to develop and take hold. There probably will be differences in the degree to which supervisors in different countries address the questions I have discussed today – if only because the intensity of HLI activities varies among countries. But on the whole, I believe that supervisors in major countries will follow up on the recommendations issued by the Basle Committee. BIS Review 36/1999  4  Direct Versus Indirect Methods of Addressing HLI Safety and Soundness Many governments have considered or will consider the advantages and disadvantages of imposing direct regulation on the HLI industry. The Basle Committee report discussed that issue and concluded that concentrating on the behavior of banks and other counterparties doing business with HLIs would yield effective and more immediate results. A common element of many HLIs is that they are structured in ways that minimize their exposure to supervisory oversight and costs. Thus, many have chosen to organize themselves legally in jurisdictions that offer modest supervision and low taxes. Am I pleased that so many HLIs are organized legally in what many would characterize as tax havens? No.

At the same time, the rising importance of services has impinged on the inflation process. Services prices tend to be more rigid than goods prices because they embody a larger share of labor input, and wages tend to be sticky. This may have contributed to inflation having become more persistent. At the same time, the digital revolution has driven the prices of many modern services, such as telephone calls, news, and entertainment to essentially zero. 4  The upshot is that the link between inflation and domestic measure of economic slack, as traditionally captured in the Phillips curve, has weakened and disappeared altogether in some cases. In terms of growth, slowing global trade and the rise of services implies slower and less capital intensive economic growth. For highly open economies, slowing world trade has undermined export as a growth engine. At the same time, the transition to services has also contributed to the growth headwinds given that modern services is less labor and capital intensive than manufacturing. Think of Google’s 40,000 workforce compared to General Motors’ 800,000. Or the fact that Uber is the world’s largest provider of auto transport without owning any cars. Or that AirBNB is one of the world’s biggest provider of accommodation without owning a single hotel. Given that investment is a relatively interest rate sensitive activity, to the extent that the transition to services has dampened investment, it may have also made the economy less responsive to monetary policy.
Another positive development for both the U.S. and the global economy is the sharp decline in energy prices. Let’s start with the U.S. perspective. Despite the impressive recent gains in natural gas and crude oil production, the U.S. still is a net importer of energy. As a result, falling energy prices are beneficial for our economy. In economist parlance, falling energy prices are a positive “terms of trade” shock for the U.S. Over the near-term, this will lead to a significant rise in real income growth for households and should be a strong spur to consumer spending. Since energy expenditures represent a higher proportion of outlays for lower income households, falling energy prices disproportionately raise their real incomes. Also, because such households are more liquidity constrained, with budgets that often bind paycheck to paycheck, they have a higher tendency to spend any additional real income. As a result, much of the boost to real household income from falling energy prices is likely to be spent, not saved. More broadly, the decline in energy prices also will be supportive to the global growth outlook in two other ways. First, by pulling down inflation in many countries it will spur more expansive monetary policy. We are already seeing this response in Europe and Japan. Second, the decline in energy prices is also likely to ease the global fiscal stance. Over the near-term, for oil exporting governments, falling revenue will not be fully offset by reduced expenditures.

Second, when interest rates are at the zero lower bound, the risks of tightening a bit too early are likely to be considerably greater than the risks of tightening a bit too late. A premature tightening might lead to financial conditions that are too restrictive, resulting in a weaker economy and, in turn, an aborted lift-off. This would be problematic in that it would harm the Fed’s credibility and, more importantly, would be difficult to rectify. The U.S. experience during the Great Depression and the Japanese experience over the past two decades illustrate the risks of raising interest rates too soon, especially when inflation is running below the central bank’s objective. Finally, given the still high level of long-term unemployment and the outlook for inflation, there could be a significant benefit to allowing the economy to run “slightly hot” for a while in order to get those that have been unemployed for a long time working again. I believe this can be done without jeopardizing our price stability objective. If the long-term unemployed are not employed relatively soon, their job skills will erode further, reducing their long-term prospects for employment and, therefore, the productive capacity of the U.S. economy. This would be a very unfortunate outcome for them, their families and the country. Market expectations that lift-off will occur around mid-2015 seem reasonable to me.
People with a foreign background in Sweden have found it difficult to get a foot-hold in the labour market. Employment among people with a foreign background is around 30 per cent lower on average than among native Swedes. Were the employment rate for this group to be as high as the average for Sweden's population, employment would rise by 96,000 people. Finally, the decisive factor for the labour supply is how many hours we work. The number of hours worked has fallen recently for several reasons: overtime has declined, part-time work has increased and absence to care for own children has also risen. But the single biggest reason and consequently the most serious problem in Sweden is sick leave. Both the number and length of absences due to sickness have risen sharply in recent years, thus entailing a reduction in working hours per employee. Three years ago the number of hours worked increased by 2.7 per cent. Last year the number decreased by 1.2 per cent. Larger proportion of elderly entails increased demands The age composition will place great demands on welfare services, increasing further the need for labour. In Sweden the number of people that are judged to require extensive care, i.e. those that are 85 years or older, will double up to 2035.1 This is expected to result in greater pressure on the public finances since the costs for care rise steeply in line with increasing age.

BIS Review 124/2006  3  •  Anglo-saxon countries which are very good at producing financial assets have already shown enormous imbalances, with US current account deficit and housing market bubbles as the headline examples;  •  emergence of (long lasting) asset bubbles and drop in inflation (and possibly even emergence of deflation) are market mechanisms to bridge the asset gap;  •  bursting an asset bubble makes asset shortages problem worse;  •  while financial markets development moves ahead (think about large listings in China, improving corporate governance or rapid development of credit derivatives) it is unlikely that excess demand for assets will be eliminated soon, as it seems to have a structural origin, related to demographics (aging), or to higher uncertainty for corporations operating in more competitive global economy in XXI century, which probably explains why profits to GDP ratio is at 40-years high and investments fail to recover to pre-Asia-crisis and pre-dot-com-boom levels  It does matter to what view of the world you subscribe, as it dramatically alters the subjective likelihood of competing scenarios for 2007. As PIMCO Michael Gomez puts it in September emerging markets note titled “Is it safe?” 19 : “EM has historically been vulnerable to deteriorating economic and financial conditions in the United States and other developed countries.
The Monitor provides an overview of developments in the shadow banking sector, with focus on assessing potential risks to financial stability. It is intended to foster progress of the debate on related issues and hence targets a broad readership. The overall mission is to eliminate potential blind spots on the macroprudential map and to connect all the dots. To achieve that, we need both an analytical framework underpinned by sufficiently high quality data, and a policy framework which enables us to target risks in different parts of the financial system in a consistent manner. The resilience of a specific part of the financial system needs to be linked to its potential impact in terms of the systemic risk it could generate for the financial system as a whole. We may also need to develop a wider financial stability toolkit. This would, for instance, include  |6  top-down stress tests for asset managers and central counterparties, and recovery and resolution frameworks for the insurance sector and central counterparties. The ESRB is very well placed to play one of the leading roles here, due to its mandate, the broad expertise of its membership and its inclusive working methods with a wide range of the relevant stakeholders interacting. The long and winding road from global to national regulation I have been speaking about CRR/CRD on and off here for the past few minutes, but let me just elaborate a little bit more from another angle.

Malaysia's Islamic finance journey Let me now turn to Malaysia's journey in the development in Islamic finance. Islamic finance in Malaysia first started as a strategy for greater financial inclusion, so as to have a greater outreach to the underserved segment of society to basic banking and insurance products that are compatible with Shariah principles. After three decades, the Islamic financial industry in Malaysia has evolved as an integral and competitive component of the overall financial system that operates in parallel with the conventional financial system. The Malaysian Islamic financial system is founded on three major strategies. Firstly, the Islamic financial system has been evolved as a comprehensive financial system that is diversified in terms of its institutions, markets and players. The Islamic financial system comprises the Islamic banking institutions, the takaful industry, the non-banking institutions and the Islamic money and capital markets. The supporting financial infrastructure includes the robust regulatory and supervisory framework that is reinforced by the legal and Shariah framework, the payment and settlement systems and the mechanism for the liquidity operations by the Central Bank. The assets of the Islamic banking system now comprise 16% of the market, while the takaful sector has garnered 7% market share. Significant progress been achieved in particular in the Islamic capital market where the outstanding amount of Islamic private securities amounted to USD79 billion or 54.3% of the total outstanding private securities in the market.