samchain/econo-pairs-v1 huggingface dataset:
While such a divergence of opinions in Islamic financial transactions is not a new phenomenon, it has presented a new set of challenges in today's increasingly more globalized market. To forge closer linkages between the global Islamic financial markets would require a common understanding and acceptance on the applicable rules and standards. Indeed, cross border transactions would require the jurisdictions involved to mutually recognise the validity of respective rules, practices and underlying Shariah interpretations. This is key for the orderly development and for advancing the pace of progress of the international Islamic financial industry. For this, it is important to have a concerted effort in providing greater clarity on the mutually acceptable strategy for the development of global Islamic finance. In the current globalised environment, the role of scholars needs to transcend beyond pure advisory or Shariah rulemaking, to a more strategic role in charting industry development. This could be in part be achieved by having global Shariah standards for the Islamic financial industry. A mutually agreeable position could be achieved with the application of mutually recognized principles and processes to deduce the Shariah rulings and views. 1  1  There are lessons to be drawn from the previous success stories in the history of Islamic jurisprudence whereby the strong sense of mutual respect prevailed among Muslim jurists with multiplicity of Shariah opinions. The jurists from different mazhab had high regard for differing views expressed by other jurists, even in ibadah matters.

Wider exchange rate band The attempt to shift from the mini band to the wider band lasted for 48 hours. We knew that it had limited chances of success. Within four days we had lost almost $ 6 billion in international reserves. And the free floating exchange rate regime, supported by a solid fiscal stance, has become our new objective. The idea of widening the band under the model designed and issued as of January 13th was good, but unfortunately it came too late. Centralisation of Foreign Exchange Transactions Suggestions about centralising exchange market operations shock me. Because centralising exchange market transactions in the central bank amounts to having no foreign exchange regime, it leads the country to the moratorium, with the re-negotiation of debts. Credit lines to Brazil would be cut. It means violating the rules of the game. It would be a completely arbitrary act which would have terrible consequences. Economic Growth The first semester of this year will be hard. But I believe that from next year we will achieve high rates of growth - maybe spectacular rates of growth. Interest rates Interest rates will be kept high at first, but not for a long time. Dollarisation I do not see any case for dollarisation in Brazil. It is a little bit strange for a country to be without its own currency. There will come the day when the adoption of a single currency within the MERCOSUR will be taken into account by its member countries.
And out of this, loans taken by foreign-based banks operating in Romania from their parent undertakings abroad account for the largest share. We have started to address this issue by taking measures aimed at discouraging foreign currency-denominated loans. If that risk materialised and parent banks diminished their flows to Romania, the effect would be rather beneficial as it would remove the base for an unsustainable expansion of foreign currency-denominated credit which has been a headache for so many years. Therefore, I do not consider these arguments that solid to place Romania in a group of countries with high likelihood of witnessing hard landing. Do you think, therefore, that high economic growth in Romania will go on? I believe that Romania will see further economic growth in the coming years. A growth much closer to the potential which our experts had estimated at around 6 percent annually. It is true that, with weakening economic activity worldwide, especially in the EU which is our main trade partner, economic growth might be a bit slower than 6 percent. No doubt that economic growth will be affected by several factors next year, placing it over or below 6 percent: the oil price, the farming year, heightened efforts to develop the infrastructure and also to create conditions to boost labour productivity, the level of foreign investments, and so on. In any case, a 6 percent annual economic growth in the present context is a remarkable achievement.

Rodrigo Vergara: Macroeconomic and financial stability – challenges for monetary policy Opening remarks by Mr Rodrigo Vergara, Governor of the Central Bank of Chile, at the XVI Annual Conference on “Central banking, analysis and economic policies” of the Central Bank of Chile, Santiago de Chile, 15 November 2012. *  *  *  I thank Sofia Bauducco, Gonzalo Castex, Maria Consuelo Edwards, Luis Oscar Herrera, Kevin Cowan, and Claudio Raddatz for helpful comments. Good morning. Welcome to the Central Bank of Chile’s sixteenth annual conference on Central Banking, Analysis and Economic Policies. This year’s version is about “Macroeconomic and Financial Stability: Challenges for monetary policy.” We are expecting two exciting days of learning and discussion on topics at the forefront of academic and policy research on macroeconomic and financial stability. The interaction between academics and policy makers fostered by this conference provides an important opportunity to learn from each other and share views and experiences that will help us improve our policy decisions and hopefully go home with new ideas for research. Today and tomorrow we will reflect on the role of central banks in preventing and reacting to financial exuberance and financial crises. The discussion will focus on two important policy questions: first, did the conduct of conventional monetary policy before the crisis contribute to shaping it? And second, how should monetary policy react to a crisis? In particular, we will discuss the efficacy of conventional monetary and macro-prudential policy action in ameliorating the effects of financial crises.
François Villeroy de Galhau: Pushing back the limits of insurability Closing remarks by Mr François Villeroy de Galhau, Governor of the Bank of France and Chairman of the Autorité de contrôle prudentiel et de resolution (ACPR), at the 10th international conference on insurance, Paris, 26 October 2018. * * * Ladies and Gentlemen, I am delighted to be with you today to give the closing remarks at this tenth international conference on insurance, organised under the aegis of President Bernard Spitz. We don’t say it often enough: the financial sector is one of the French economy’s key strengths. Another point that bears repeating is that, within this financial sector, insurers play a critical role in financing our economy. This will be the first point that I touch on. I will go on to look at regulatory developments, hailing the progress made in the last year and picking out some European challenges that we must face together. I will close by speaking about “the limits of insurability”: your theme today is as old as your profession, which dates back to the bottomry arrangements used to protect shipping ventures in ancient times and the first recorded insurance policy written in Genoa in 1347. But the question has taken on a renewed urgency today with the emergence of new risks, particularly those relating to climate change. **  I. Insurers play a critical role in financing the economy. The ACPR recently published its annual statistical report, which showed that the French insurance sector is in good shape.

Looking at the distribution of federal funds rates this year, Figure 11 shows that the rates paid by domestic banks has increased relative to the rates paid by foreign banks. Last year, these two types of firms paid fairly similar rates. My read is that the foreign banks are generally borrowing in the federal funds market primarily to earn a spread between the IOR rate and the rate they pay to borrow funds, while some of the domestic banks, while also sensitive to the rate they pay, are borrowing in these markets to improve their LCRs. It seems like this more motivated borrowing activity helped bid up rates a bit. Figure 12 shows that, since June, we have seen small and brief divergences between rates in the federal funds and Eurodollar markets, which reflects transitory pricing of a premium on LCR-friendly borrowings around a period of heavy payment flows due to a federal tax payment due date. 29 This small effect is a minor illustration of the transitory money market “turbulence” I mentioned earlier. However, since these effects have been small and short-lived, I don’t see them as signaling that we are at or close to reserve scarcity. Taking a step back, it is hard to be definitive on the recent drivers of moves in short-term money markets. The markets have economically complex structures, and in particular, a high degree of concentration within some money market segments.
Derivatives are very rare, and this is another area which needs development to reduce the various risks associated with the market, but of course, one should only do it under well known rules, and personally I think only to a limited extent, not to the extent that the beneficiaries are mainly the intermediaries as might be the case in a really large, sophisticated market. As to the scale of the market, I have been visiting MSCI and other important players in the world. It really is quite easy to improve our market performance. Presently, Thai market requirements are designed only to fit the Thai requirements. Requirements that are often self-destructive and unreal leading us into the bubble of 1997. The market in the Stock Exchange has not been much changed from the bubble days. It’s still doing the same thing, just without the bubble. Realistically, our rules will have to be changed so that it will comply with and take advantage of rather than be penalised by international norms. In government, the Board of Investment (BOI) is probably a crucial instrument. It’s doing a good job giving privileges on an individual project basis. That has its own limitations and faults. It might well soon be the time to make operating in Thailand generally viable. The original BOI philosophy, in that these are projects you wouldn’t get if you didn’t give tax privileges and therefore have no tax loss costs, is becoming more and more untenable.

The macroeconomic projections accompanying the Budget for 2013 include the stabilising of our unemployment rate at around 25% of the labour force, a rate double the average for the European Union countries. This rate of unemployment is, quite simply, dramatic. Hence the enormous importance of economic recovery and of greater labour market flexibility: these two variables complement one another, and without both operating simultaneously, net job creation will not be possible. Fiscal consolidation I shall now move on to public finances and to the nature of the fiscal drive needed. In 2007 Spain posted a budget surplus of close to 2% of GDP and a public debt/GDP ratio of 37%, then one of the lowest among the euro area members. However, this apparently healthy state of affairs concealed a precarious situation owing to the presence of high tax revenue that had a significant temporary component tied to the major expansion of the construction and real estate sector, and to unsustainable spending dynamics. Indeed, the end of this expansion uncovered the risks latent in that situation. Almost half of the deterioration of more than 13 pp of GDP over only two years from 2007 to 2009 – a turnaround in public finances unprecedented in Spanish economic history – was due to the fall in revenue, largely associated with the disappearance of the aforementioned extraordinary revenue.
That marks a 50% reduction from the 2011 peak. Against this backdrop, banks should persist in their management efforts to enhance the quality of their balance sheets, which is a fundamental factor for the recovery of profitability in the medium term. The other lever in banks’ hands is to improve their efficiency, through a more appropriate management of their costs that does not limit their capacity to adapt to an increasingly more technified environment. In this respect, we should note that, in business in Spain, the 4/10  efficiency ratio at the individual level, without taking into account severance payments, has increased (worsened) by somewhat over 9 pp since 2014, to 58.8%. As to the composition of operating expenses, the weight of personnel costs has diminished, and that of IT and communications, outsourced services and amortisation has increased, reflecting to some extent the ongoing digitalisation and technological change at banks. It should be borne in mind that operating expenses are one of the most significant levers over which banks have direct control to increase the profitability of their business. In any event, it should also be stressed that Spanish banks’ efficiency ratio at the consolidated level, calculated as the ratio of operating expenses to gross income, is one of the lowest (best) in Europe. The actual and projected reduction in the euro area economy’s rate of nominal growth and, as a consequence, the fact that interest rates are going to be at lower or even negative levels for longer, may ultimately affect financial institutions’ profitability.

In relation to this macroprudential policy, the Banco de España is responsible for setting quarterly the so-called Countercyclical Capital Buffer (CCyB). The CCyB is a macroprudential instrument that leads to credit institutions building up a capital buffer during expansionary periods so that this buffer may be released during a subsequent contractionary phase. In this way, the CCyB strengthens the banking system’s solvency 1  See the opening address at the Second Financial Stability Conference (Banco de España/CEMFI) delivered by by the Governor of the Banco de España, “A framework for the CCyB”, June 2019. *  8/10  during growth phases, which is when risks usually build up, and helps mitigate the decline in the flow of new lending to the economy when these risks materialise. Consequently, the CCyB contributes to smoothing credit cycle fluctuations, and to increasing credit institutions’ capacity to withstand potential future losses. During 2019 Q3 and Q4, the Banco de España has kept the CCyB percentage at 0%. This decision is underpinned by a technical analysis of quantitative indicators mixed with qualitative information. The set of quantitative indicators shaping decisions on the CCyB include indicators that seek to capture developments in the credit cycle of the non-financial private sector and its excessive growth, the potential overvaluation of house prices, the effort entailed for households and firms in paying interest and repaying the principal of loans (debt service), the external deficit and the macroeconomic environment.
In practice, these financing concepts can cover several aspects. Banks invest in a business venture with an entrepreneur and receive profit/loss sharing (e.g. in a corporate banking transaction). Depositors invest in a Bank and earn profit/loss sharing (e.g. when consumers want to open a mudharabah account). Banks invest in a business venture with an Entrepreneur and then finance the product of the business venture to consumers (e.g. Bank enters into partnership with Entrepreneur to build houses and sells the house to consumer thru a financing package). The structure seem quite established and generally accepted. Yet since 2006, despite equity-based transaction has become more popular, it only constituted only 2% of total financing. BIS Review 49/2010  3  In fact, in our effort to motivate the industry to engage in more equity-based financing, a specific guideline dealing with mudharabah and musyarakah was issued on 21 September 2007. From our observation, we need a lot of room for improvement in this particular area. Sales based contract remains significant portion of financing – around 50%, 30% being Ijarah. A large proportion of Islamic finance domestically is therefore debt or asset based financing. Why the industry did not focus more on equity based financing? Should Islamic banks which are relatively small in size take this major shift in direction? A new direction not just for Islamic banks, but a new direction in the way Islamic finance should develop forward. Is there an impediment? If so – what is the impediment and is it something that we can solve?

The various Islamic finance centers operating around the globe must operate as one! We should allow a diversified number of players to operate in our market. Recognising the benefits of foreign competition and presence, we have announced a further opening of the Malaysian financial system to new players. Islamic banking market share in terms of asset vis-à-vis total banking asset as at the end of 2009 is 19.6% (2000: 6.9%) including DFIs. This data is very close to our target of 20% by the end of 2010. Domestic Islamic banks accounted for about 85% of market share in Islamic banking sector. Annual growth rate of Islamic banking assets was 20.8% per annum for the years 2000 to 2009. For takaful, the market share, although still small, it has shown significant progress of 7.9% and 11.09% in terms of asset & contribution respectively. Annual growth rate of takaful assets was 24.2% per annum (2000–2009). Total financial assets had also increase significantly. The Islamic sukuk is larger than the conventional PDS. What are the factors that contributed to the development of Islamic finance in Malaysia? One of the factors is a comprehensive legal, tax, accounting, regulatory and supervisory framework and this are well articulated and generally known. Let me attempt a few additional factors that might not be that well appreciated. It is the willingness of the players and the  2  BIS Review 49/2010  developers of Islamic finance to explore new initiatives.
MAS has always required banks to meet high prudential standards, exceeding international norms in several areas. This ensured adequate safeguards were in place and, in turn, helped to maintain market confidence during the downturn. In its annual assessment on Singapore last year, the IMF stated that “Singapore’s strong supervision and risk management systems had been crucial in safeguarding financial stability in the global downturn.”1 Although banks in Singapore were relatively unscathed during the crisis, we cannot be complacent. Over the past 40 years, Singapore has evolved into an international financial centre, anchored by strong local and foreign banks. We are a small and open economy, intricately connected to the global financial system. Such openness and connectivity has strengthened the diversity of our financial system, but has also made us vulnerable to contagion risks from the external environment. Locally-incorporated banks and most foreign branches here did not have significant exposures to the complex financial assets that caused severe losses in the U.S. and Europe. Despite this, they were not immune to the ripple effects of the global spike in risk aversion. Our approach to regulation is to allow the financial sector to grow, innovate, and support the needs of the economy, without compromising the safety and soundness of the financial system as a whole. With this context, let me now turn to the reforms. 1  International Monetary Fund, Executive Board Assessment, 23 July 2010.

Research done by the Basel Committee shows that banks that failed or required government capital injections during the crisis had significantly lower levels of common equity than those banks that did not. MAS will enhance the quality of regulatory capital in our banks in the following ways: (i)  There will be an explicit Common Equity Tier 1 capital adequacy requirement, to be set at 6.5%. This will be fully phased in by 1 Jan 2015. (ii)  The Tier 1 capital adequacy requirement will be increased from 6% to 8%, to be phased in over the same period. The Total capital adequacy requirement will remain unchanged at 10%. (iii)  In addition to these minimum requirements, there will be a capital conservation buffer3, set at 2.5%, to be met with Common Equity Tier 1. This will be phased in between 1 Jan 2016 and 1 Jan 2019. (iv)  The new eligibility criteria for regulatory capital will also be phased in between 1 Jan 2014 and 1 Jan 2018. With these changes, locally-incorporated banks will be required to meet capital requirements that are higher than the minimum levels in Basel III. The requirements will apply at both the bank-group and bank-solo levels. Taking into account the capital conservation buffer, locally-  3  The capital conservation buffer is a Basel III requirement for banks to maintain a capital buffer that can be used to absorb losses during periods of stress.
This has enabled us to take advantage of the developments in financial theory, with increasingly advanced models for calculating prices. Technological advances contributed to some extent to the extensive deregulation of the financial markets. In a world where technology made it possible to circumvent many of the existing regulations, it became necessary to remove them. The game rules were thus changed. A company needing to borrow capital does not need to rely purely on the usual form of bank lending, but can choose other types of instrument and other financial agents. Freedom of choice has increased. The stable macroeconomic trend – with low and stable inflation – in recent decades has probably also provided a good basis for developments. Financial innovations could perhaps not have occurred at the same rate in an uncertain economic environment. What does this mean for participants in these markets? Taken together, these factors have led to an increase in competition, and the emergence of new instruments and participants. This has affected the financial landscape in many areas and changed the role of traditional credit institutions such as banks and mortgage institutions. The markets have taken on an increasingly large role and both complement and compete with the traditional bank market. One example of the markets’ increased role is that many households no longer save their money in banks to the same extent; they save directly in the financial markets via mutual funds and also insurance and pension fund companies.

Yet while, as I have already said, much progress has been made in improving the resolution toolkit, the Banco de España needs to continue to be equipped with instruments to enable the performance of its supervisory tasks to be quick and simple rather than complicated and slow. For this purpose it would be desirable to transfer a significant part of the powers of the Ministry of Economic Affairs and Competitiveness in relation to sanctioning, licensing, etc., to the Banco de España, in line with what the IMF has been suggesting for some time. Also, the FROB needs to be authorised to assume the powers of the shareholders in general meeting in relation to banks taken under official administration and legal requirements that delay asset and liability transfers need to be eliminated. As for the Banco de España, it should equip itself with supervisory instruments to ensure that problems can be promptly corrected and it should distance itself from a legalistic system that envisages official administration only as the very last resort, when all legal requirements have been violated. Also, although the Banco de España’s professional and collegiate decision-making structure – one of its valuable traditions – must be maintained, it needs to be documented further and made more systematic, and the information that has begun to be supplied on the Banco de España’s website needs to be expanded.