samchain/econo-pairs-v1 huggingface dataset:
We deem that the implemented policies and the undertaken measures have served to promoting monetary and financial stability, by contributing to safeguarding the economic and financial balances, necessary for sustainable economic growth. *** Following, I will briefly summarise the work of the Bank of Albania regarding the promotion and development of the payment system. 4. Functioning of safe and efficient payment systems In the framework of strengthening the payment systems and payment instruments oversight, the Bank of Albania has worked to align the regulatory base to the international standards that guarantee the security and promote the efficiency of payment systems. A huge amount of work has been done to compile the draft-law on Payment Services, which approximates the EU’s Payment Services Directive. The implementation of this directive is expected to considerably contribute to improving the security and efficiency of payment services through promoting competitiveness, strengthening transparency and clearly defining the rights and obligations of these services’ providers and consumers. Also, it addresses the risks arising from technological novelties (Fin-Tech) in payment services. Currently, the Bank of Albania is in the consulting and finalising process of the draft-law. The approval of this draft-law is an important step towards the implementation of the European Commission recommendations for the free movement of capital and for the adherence to the Single Euro Payment Area (SEPA). The Bank of Albania also has the role of payment systems’ reformer.

3/ How can we give further impetus to Europe? Getting back to the European level, I would like to point out that many improvements have also been made in the field of crisis prevention and management. Prevention is based on much more 2/3  BIS central bankers' speeches  efficient financial regulation and on a European governance framework that is better organised now with well-designed monitoring mechanisms on fiscal performance as well as on macroeconomic imbalances and structural reforms. Banking Union contributes to strengthening financial stability in the euro area and the EU as a whole and to ensuring that the banking sector is safe and reliable. The global European picture is of substantially enhanced resilience since the crisis. The Common Equity Tier 1 ratios of significant banking groups in the euro area have risen from 7% in 2008 to 14% today. Crisis management – including for Greece – has also evolved considerably with the creation of the ESM. So you can be fully confident about the resilience of the euro and of the euro area. It is not only an economic asset, it is also a political one, supported by each of the 19 governments and – which is still more important – by 68% of euro area citizens (and even by 70% of French citizens and 73% of German citizens). Moreover, monetary policy played its full part to maintain euro area cohesion. Europe has clearly succeeded with monetary union, but monetary policy should not remain the only game in town.
Among the G7 economies, external balance sheet ratios are broadly flat at around twice nominal GDP. This flatness is driven in large part by assumption, as it is assumed the highest-income countries maintain a flat ratio of external assets to GDP. This is almost certainly too extreme an assumption. Although smaller than in the past, there remain strong home biases in the investment portfolios of developed countries’ institutional investors (Obstfeld and Rogoff (2000) and IMF (2010)). As liberalisation progresses, these biases would be expected to unwind, boosting gross external assets in relation to GDP in developed countries. For that reason, the calibration here can be thought of as a limiting case of the likely adjustments in the pattern of global capital flows. Subject to that important caveat, the growth in the non-G7 economies’ contribution to global capital markets is still striking. Among the BRICs, external balance sheets as a fraction of GDP exceed G7 levels by around 2035. By 2050, they are around 2.5 times nominal GDP. These patterns are even more striking when expressed as a share of global external assets. By 2050, over half of all G20 external assets are associated with the BRICs, up from around 9% currently (Chart 18). Among the non-G7, non-BRIC G20 countries, their share trebles from 5% to around 15%. Within this, some countries’ share of global assets sky-rocket. China’s share of global finance rises to around 30% by 2050, roughly that of the entire G7. India rises to almost 20%, from less than 0.5% currently (Chart 19).

In China, the constancy in high household saving rates masks two striking, but broadly offsetting, factors: a 10 percentage point fall in household’s income share; and a 10 percentage point rise in household’s saving propensity (Ma and Yi (2010)). Much of the rise in saving propensities appears to be precautionary. Facing “three mountains” in the future – education, pensions and health care – Chinese consumers have taken the high (saving) road. In the US, the fall in the household financial balance correlates strongly with the path of household net worth (McKelvey (2010), Chart 13). This correlation emerged strongly during the 1980s, with the simultaneous rise in net wealth and fall in saving. This correlation has remained strong as net worth has reversed recently due to falling house and equity prices. What lies behind these movements? Lax monetary policy has been suggested by some (Taylor (2007)). Financial liberalisation is a second plausible candidate. This had the effect of loosening constraints on the supply of housing credit and thereby boosting housing demand and prices in the US. It also enabled households to mobilise and withdraw the accrued equity in their property to finance spending. Estimates of housing equity withdrawal for spending rose from under 2% of personal disposable income in 2000 to around 4% at the peak in 2005 (Greenspan and Kennedy (2007), Chart 14). Micro-level data support this story.
However, pre-existing sources of risk and vulnerability remain and some have grown: •  The recent market jitters have confirmed concerns regarding previously identified risks and vulnerabilities and have revealed the relevance of some new risk exposures;  •  Vulnerabilities could be quickly unearthed if market liquidity were to abruptly and sharply decline, possibly triggered by a wane in risk appetite caused by a change in risk perceptions;  •  Re-leveraging in the corporate sector and the process of credit risk transfer from the banking system to other financial institutions and market participants which is associated with a greater emphasis on the “originate and distribute” business model by banks, could constitute vulnerabilities in a less benign market environment. •  In addition, global imbalances remain a medium-term, low-probability but potentially high impact risk for financial stability. Therefore, despite the strong performance of the financial sector and the benign macroeconomic outlook, there is no room for complacency, given the potential risks and the identified vulnerabilities. This conclusion also reflects the fact that the materialisation of risks and the triggers that could expose vulnerabilities can not be predicted with any degree of certainty. The main message for the financial institutions is to prepare to mitigate potential disturbances through appropriate risk management arrangements including through stress-testing and vigilant monitoring of the financial soundness of their counterparties.

Almost half the increase is attributable to a lower interest rate level. Debt burdens are still high, but the stabilisation of employment at a relatively low level has contributed to reducing uncertainty. The interest rate level remains low. In addition, house prices have increased. The saving ratio is therefore expected to fall, and growth in private consumption is projected at 5 per cent in 2010. Reports from Norges Bank’s regional network in February suggested that output growth will remain relatively weak in the coming quarters, but with wide variations across industries. Suppliers to the offshore sector expect activity to continue to shrink. The building and construction industry also expects a further fall in output, while reports from household suppliers and exporters suggest and increase in output ahead. There are still few regional network enterprises reporting that capacity constraints will make it difficult to accommodate higher demand. Since autumn 2009, it seems that capacity utilisation has increase somewhat in coastal regions from the southwest to the north. Many of the industries that are faring well are located in these regions, such as fish farming, fisheries, parts of the metal industry and suppliers of operating services to the oil sector. Employment stopped falling in the fourth quarter of 2009. Total mainland employment had then declined by about 30 000 since autumn 2008. The fall in employment has been smaller than the decline in output might imply. Productivity has fallen markedly. During the downturn, the number of hours worked has decreased somewhat more than the number employed.
Admittedly, in all these areas progress is still possible and desirable, but what has been achieved so far now enables you to address a number of institutional issues for the solution of which Western experience is fast becoming increasingly and directly relevant. But before considering some of these issues, allow me to make some remarks about the macroeconomic situation of the Hungarian economy and about the new framework within which the National Bank of Hungary will be operating. Both these areas are of key importance for the management of your banks. At the same time, both have a bearing on Hungary’s declared intention to join the European Union (and within this, probably at a later stage, also EMU). Last but not least, both are important areas in themselves, irrespective of considerations relating to European integration. THE MACROECONOMIC SITUATION That there has been a significant improvement since mid-1995 in Hungary’s macroeconomic situation is beyond doubt. Here are a few facts and comments on some of the features of this improvement. 1. The current account deficit reached $ billion in 1993 and almost $ billion in 1994, i.e. more than 10% of GDP - an obviously unsustainable situation by any standards, but even more so for a country with a high debt ratio.

According to various estimates, about 5% people at working age have already left Poland. For Estonia, this figure stands at as much as 10%. In the global economy of the 21st century, technological progress and lower transportation costs have allowed for the business processes or their parts to be easily moved between countries (a phenomenon frequently described as business process offshoring). The relative role of crucial factors behind long-term development prospects is thus changing. In the 21st century, the key factor conducive to economic growth will be knowledge – broadly understood as a country’s intellectual capital – and this country’s ability to drive innovation. If businesses in a given country fail to change their product and service profiles to achieve greater value added, they will find themselves pushed out of the market by companies from countries with low manufacturing costs. This applies to a number of markets, products and services only recently considered as subject to the international competition, one glaring example being the off-shoring of services offered by radiologists from the US to India 6 . China has already become the world’s leading exporter of computers and their components or telecommunications equipment 7 . I believe that it is just a matter of less than twenty years for China to achieve a similar position in the automotive industry, mainly because Chinese companies have mastered network-based cooperation.
It is possible to go one step further and argue that higher bank capital ratios could potentially lower banks’ cost of capital. The size of the premium demanded by holders of equity is a long-standing puzzle in finance – the equity premium puzzle. 29 Robert Barro has suggested this puzzle can be explained by fears of extreme tail events. 30 And what historically has been the single biggest cause of those tail events? Banking crises. Boosting banks’ capital would lessen the incidence of crises. If this lowered the equity premium, as Barro suggests, the cost of capital in the economy could actually fall. The costs of prohibition Turning to the other side of the equation, what does existing evidence tell us about the costs to banks of restrictions, whether on the scale or scope of their activities? In Weitzman’s framework, how significant are the private costs of restrictions? Fortunately, there is a reasonably rich empirical literature on economies of scale and scope in banking. 26  Kay (op.cit.). 27  Kotlikoff (2010). 28  Modigliani and Miller (1958). See also Miles (2009). 29  Mehra and Prescott (1985). 30  Barro (2006). 10  BIS Review 40/2010  (a)  Economies of scale  On economies of scale, the literature tends either to look at the cross-sectional efficiency of banks of different sizes, or the time-series efficiency of banks either side of a merger. As it turns out, both roads reach the same destination.

Its aims were shaped by an extreme tail event (the Great Depression) and were explicitly minimax (to avoid a repetition). It sought to achieve this by acting directly on the structure of the financial system, quarantining commercial bank and brokering activities through red-line regulation. In other words, Glass-Steagall satisfied all three robustness criteria. And so it proved, lasting well over half a century without a significant systemic event in the US. The contrast with Basel II is striking. This was anything but simple, comprising many thousands of pages and taking 15 years to deliver. It was calibrated largely to data drawn from the Great Moderation, a period characterised by an absence of tail events – more minimin than minimax. Basel II was underpinned by a complex menu of capital risk weights. This was fine-line, not red-line, regulation. In short, Basel II satisfied few of the robustness criteria. And so it proved, overwhelmed by the recent crisis scarcely after it had been introduced. (c)  Incentives  Tail risk within some systems is determined by God – in economist-speak, it is exogenous. Natural disasters, like earthquakes and floods, are examples of such tail risk. Although exogenous, even these events have been shown to occur more frequently than a normal distribution would imply. 24 God’s distribution has fat tails. Tail risk within financial systems is not determined by God but by man; it is not exogenous but endogenous. This has important implications for regulatory control. Finance theory tells us that risk brings return.
Rather, if press reports are to be believed, these cases are to varying degrees about theft, fraud, greed, and corruption. Less covered in the press is trade-based money laundering—that is, using legitimate trade to 2/6  BIS central bankers' speeches  hide illicit sources of funds. The United States is particularly vulnerable to trade-based money laundering because more than half of the world’s trade is denominated in U.S. dollars.9 The Department of Homeland Security and the Drug Enforcement Administration have warned for years that a large amount of illicit narcotic payments occur through low-tech solutions like overor under-invoicing of goods, false documentation, or phantom shipping.10 These methods give illegitimate transfers the appearance of ordinary transactions. FinCEN has warned against the use of “funnel accounts” to facilitate trade-based money laundering of narcotics proceeds, and has provided the industry with a list of red flags associated with such activity. 11 Trade-based money laundering can also be used to evade sanctions regimes, sometimes through money service businesses or general trading companies.12 The extent of financial crime from a global perspective is simply staggering. According to the United Nations Office on Drugs and Crime, the amount of money laundered globally in one year could be as much as $ trillion.13 That’s five percent of global aggregate gross domestic product. If the scale of global financial crime is too large to contemplate, let’s focus instead on segments that are local.

Norman T L Chan: Removal of RMB conversion limit for Hong Kong residents Speech by Mr Norman T L Chan, Chief Executive of the Hong Kong Monetary Authority, Hong Kong, 12 November 2014. *  *  *  I am glad to announce that the RMB conversion limit for Hong Kong residents of RMB20,000 per day will no longer be applicable with effect from 17 November 2014. Under the new arrangement, banks will square their positions arising from RMB conversions conducted with Hong Kong residents in the offshore market instead of the onshore market. As a result, the prevailing conversion and other relevant restrictions for onshore conversion will hence be no longer applicable. The HKMA has just issued a circular to banks setting out the detailed arrangements. The HKMA has had many rounds of discussions with the banking industry and Mainland authorities on relaxing the restrictions on RMB currency conversions by Hong Kong residents. We consider that the best option is for RMB conversions by Hong Kong residents to be done in the offshore market instead of the onshore market. With the size of the offshore RMB liquidity pool in Hong Kong exceeding RMB 1 trillion, and considering the scale and depth of the RMB foreign exchange market, we do not foresee any problem for banks to square their positions for Hong Kong residents’ RMB conversions in the offshore market.
17  More information on the Discount Window Facility (DWF) can be found in the Bank’s Market Notice, released on 19 March 2009. www.bankofengland.co.uk/markets/money/discount/index.htm  18  In the auctions there would be separate stop-out rates for lending against liquid and less liquid collateral and the proportion of the Bank's long-term lending allocated to the different types of collateral would be related to the spread between the stop-out rates. A high proportion would be allocated to lending against less liquid collateral only if, given the bids received, there was an appropriately large spread between the stop-out rates. BIS Review 67/2009  7  Knowledge of the framework’s pricing structure can be factored into banks’ liquidity management and contingency planning. Mitigants for the “stigma problem” But during the turmoil of the past eighteen or so months, around the world banks have at times been reluctant to pay such “penalty” rates of interest for fear of signalling, if somehow their use leaks or is revealed by a “witch hunt”, that they have an idiosyncratic problem even when they don’t. During 2007 this became known as the “stigma problem”, 19 and it caused standing lending facilities, a key piece of central bank machinery for providing overnight liquidity to the payments system, to more or less atrophy in some centres during the first phase of the crisis. That state of affairs was not sustainable, and it prompted a number of central banks to innovate.

Whereas a trawl of the web reveals over 200,000 articles referring to LOLR, there are around 1,500 mentions of MMLR, most of them published over the past year or so. 24 And like all new territory, it needs to be thought through. One recent contribution 25 suggested that if the purpose of LOLR in a bank-based system is “to stabilise the balance sheets of banks”, in a market-based system it should be “to stabilise the limit-order book, by placing orders to buy”. By analogy with the more familiar “LOLR” function, the following thoughts suggest themselves for debate in our community. First, as with LOLR, central banks cannot engage in MMLR operations if to do so would interfere with monetary policy. Securities are purchased in exchange for cash, entailing an injection of reserves into the banking system. That has to be consistent with the target for the central bank’s net supply of reserves. Second, a MMLR should aim to charge a penalty (eg buy at a discount) to the fundamental value of an asset. Put another way, any bid-ask spread should be unattractive relative to peacetime conditions in private markets. Third, any purchase (auction) mechanism should be designed to reveal information about the state of the market and the fairness of prices paid. Fourth, while the MMLR cannot avoid the risk inherent in outright purchases, it absolutely must not over reach its capital resources. Fifth, the MMLR should aim to be catalytic, helping ideally to kick-start the market rather than replace it.
In the euro area, the impact of these developments has been amplified further by Stage Three of Economic and Monetary Union, in particular as a result of the introduction of the euro, the single monetary policy and the integration of the euro area financial markets. I shall now briefly discuss how these underlying factors are expected to affect the banking sector. First of all, technology has already been shaping the structure of the financial system. It has reshaped the relative costs of different banking and financial services and facilitated the provision of new types 1  2  ECB Monthly Bulletin, “The euro area one year after the introduction of the euro: key characteristics and changes in the financial structure”, January 2000; ECB Occasional Paper Series No 1, “The impact of the euro on money and bond markets, July 2000”. European Central Bank, “Possible effects of EMU on the EU banking systems in the medium to long term”, February 1999; ECB Monthly Bulletin, “Banking in the euro area: structural features and trends”, April 1999. 1  BIS Review 83/2000  of services. The costs of collecting, processing and using information have decreased dramatically. This has, for example, led to greater efficiency in the provision of financial information and better techniques for assessing and pricing risks, in turn reducing the cost of external finance. On balance, it has tended to favour markets more than banks as it has allowed the former to rely more heavily on public rather than private information.

23 years of experience in regulating and developing the Islamic financial system. ii. strong Islamic financial institutions comprising 12 Islamic banks. Of this, 3 are foreign Islamic financial institutions and 7 are Islamic subsidiaries of banking groups. There are also several Islamic windows of conventional banking institutions which are also lead arrangers of Islamic financial instruments. In the takaful industry, there are 9 takaful operators. iii. a strong Islamic capital market with 89 Islamic unit trust funds, 85 percent of Bursa Malaysia's counters are Shariah approved counters and 46 percent of the corporate bond market are Islamic bonds or sukuks. iv. a well established and comprehensive regulatory and Shariah governance framework in accordance with best practices, together with a tax neutrality policy. v.  a comprehensive legal and Shariah infrastructure. vi. well endowed with the critical mass and a wide array of Islamic products and services. vii. Talent development infrastructure. viii. a vibrant and active secondary market trading of the Islamic money and capital markets equipped with the state-of-the-art technology. We are now at the cross-road in the development of Islamic finance. We realise that we are strong at the domestic level, and we now need to strategise to elevate the industry to the next phase of development. During the keynote address yesterday, Governor has launched Malaysia International Islamic Financial Centre (MIFC) for the offering of Islamic financial products and services in international currencies from anywhere in Malaysia.