samchain/econo-pairs-v1 huggingface dataset:
Islamic banking in particular, which is a form of financial intermediation that is directly linked to trade and investment flows, has significant potential to facilitate this process. Islamic finance requires all financial transactions to be supported by an underlying economic activity. There is now a renewed focus in the global community on generating real economic activity, generating jobs and generating overall financial stability. Following the developments that have led to the current global financial crisis, there is a greater recognition for the need to reduce the decoupling of the expansion of financial transactions and the growth of the real economy. This is in fact a fundamental requirement in Islamic finance thereby resulting in a close link between financial and real flows. BIS Review 26/2009  1  In Malaysia, the Islamic banking sector continues to progress, recording double digit growth over the recent 8 years with an average annual growth rate of 20% in terms of assets. As at the end of 2008, Islamic banking has increased its share of assets in the banking sector to 17.4%. The assets share of the takaful industry grew at 23% per annum in the recent five years, with family and general takaful capturing 11% and 7% respectively, of the overall insurance sector. The MIFC initiative has focused on promoting Malaysia as an international Islamic financial hub, in particular in sukuk origination, foreign currency business, takaful, research and talent development.

The GFC has also taught us that even the largest banks in the world are not immune to failure in risk control and management and, when they failed, there would be devastating effects on systemic stability and on the society at large. 4. Fellow INEDs, while you may have come from a rather diverse background, I believe most of you know each other quite well already. This is because all of you have worked for decades in your respective fields, crossing the paths of a wide spectrum of industries, and have achieved proud accomplishments in different shapes and forms. It is your unique experience and expertise, your reputation and your willingness to serve the banking sector that have brought you together as INEDs today at this Conference. 5. As INEDs, you play a crucial and irreplaceable role in the governance of the banks in Hong Kong, serving not only the shareholders but also the public at large, given the special and important role of banks in the society. I think you will agree with me that in the interest of good governance, a board of directors has to provide the needed steer, guidance and checks and balance to the bank. Clearly this can only be achieved if the INEDs can function effectively and efficiently. Without functioning INEDs, the board is just another gathering of the senior bank management. We may as well abolish the board of directors as it would serve no real or useful purposes. 6.
Our money” was aimed at familiarising all the European citizens with their new banknotes and coins (and their security features) and, by doing so, it helped them identify the obviously fake banknotes. All institutions concerned, both national and European, are co-operating closely to prevent and fight counterfeiting. Right now, counterfeit banknotes are scarce and conspicuous. The credibility of the Eurosystem and of the single monetary policy, and the successful changeover to the euro represent major achievements. They certainly contribute to the efficient functioning of EMU and to European economic and financial integration, as I will explain it right now. ***  EMU: a balanced concept fostering economic and financial integration EMU is an economically sound and well-grounded concept. A few years ago, it was necessary to convince a great number of sceptics that the euro would really be launched. The opinion that the single currency would never exist has of course been disproved by the facts. Nevertheless, objections are still being raised from time to time, on the alleged grounds that the euro area economy comprehends inconsistencies that could endanger and challenge the viability of EMU, all the more so since the European Union is about to welcome new members. Some observers thus claim that the lack of co-ordination between European economic policies, in the absence of a political federation, is likely to deprive the area of an appropriate policy-mix.

ERM II membership also offers a meaningful, flexible but credible framework for :  •  -  increasing convergence with the euro area,  -  tackling the challenges faced by accession countries on the road towards the adoption of the euro,  -  contributing to macroeconomic and exchange rate stability,  -  helping determine the appropriate level for the eventual irrevocable fixation of parities. This is to be accomplished in the best interest of the candidate countries themselves. Thirdly, a sound and efficient banking and financial system is key. Significant progress has been made over the past few years in rehabilitating the banking sector and encouraging structural reforms and foreign ownership. Progress in corporate governance, the enhancement of the legal and supervisory frameworks that support the banking sector are also crucial. They are conducive to achieving the macroeconomic objectives of the accession countries. ***  To conclude, let me stress two words: rapidity and stability. Rapidity is a key word. We have not much time to meditate, decide, implement. The structural reforms, that we are badly in need of, must be implemented as rapidly as possible if Europe is to be up to its historical challenges. The Chinese say “It is later than you think” has never been so true. In any case, history itself does not wait for us.
If one instead has a target path for the price level, if prices are below the path this must be counteracted by more rapid inflation during a period of time to enable a return to the path prices were following before the deviation. If the intention is that prices should increase by 2 per cent, but over a period of time they have increased by less than this, the rate of price increase must be higher than 2 per cent for a period in order to return to the original price level path. The advantages and disadvantages of a price level target have been debated considerably in research and are also discussed in the evaluation. One example of an advantage of having a price level target is that it provides more guidance than an inflation target with regard to the price level far into the future. As I understand it, the authors do not appear to be advocating a pure price level target, rather some form of hybrid. In concrete terms, this means, if I interpret rightly, that the Riksbank should retain its inflation target but still to some extent compensate for the deviations from target that have arisen by deliberately allowing inflation to go above the target for a time. Here I can imagine a number of practical objections.

For instance, it is very pleasing that the evaluation gives such high marks to the efforts we have made to improve the analytical base for our forecasts and for monetary policy. Our ambition has been to use the latest and best scientific methods in our analyses and we have therefore continuously updated our working methods. It is therefore particularly satisfactory that the authors observe in their conclusion that "the Riksbank compares favourably with the best central banks in the world". However, we must not rest on our laurels. Conducting monetary policy is associated with great uncertainty, not least because developments in the economy often follow different paths than anticipated. We must therefore always take heed of constructive criticism, continue to hone our analyses and test new approaches with an open mind. However, after this evaluation I feel fortified in my opinion that we are on the right track. Recommendations in the evaluation As I do not have much time at my disposal, I shall concentrate my comments on the recommendations in the report as to how monetary policy and its framework could be improved. Three of the recommendations are aimed at the Riksdag and the Government and concern the forms for the monetary policy debate and the appointment of the members of the Executive Board. As these recommendations are not directed at the Riksbank, I will refrain from commenting on them. With regard to the recommendations aimed at the Riksbank, I shall first comment on some suggestions on which I agree with the authors.
If we were to be in exactly the same position as in April, but with the difference that we had already decided to phase out the CPIX – would we have made different forecasts for the repo rate and for the CPI? No, we would not. Our target has not changed. We considered the  BIS Review 73/2008  5  rate at which the CPI approached the target according to our April forecast to be reasonable on the basis of our task. It is also important to put the phasing out of the CPIX in a broader context. The Riksbank conducts a policy of flexible inflation targeting. This means, for instance, that we can let it take a couple of years before the CPI reaches 2 per cent in our forecast if we consider this to be justified by, for instance, temporary shocks. The long-term difference between the CPI and the CPIX is calculated, as I have mentioned earlier, at roughly 0.3 percentage points. The flexibility of our monetary policy means that this type of deviation does not need to have any immediate consequences. But it is of course important that deviations from the inflation target are not too large and that it is clear that the CPI will reach 2 per cent. Otherwise we jeopardise the credibility of the inflation target. The current situation involves factors that have much greater significance for which future interest rate developments we believe to be reasonable than the difference between the CPI and the CPIX.

At the same time, the interest rate on a 5-year mortgage fell from just over 11 to around 5 per cent. This led to interest expenditure for home-owners declining substantially and pushing down CPI inflation. With the aid of the CPIX measure the Riksbank could show that the low inflation was largely the result of its own earlier interest rate cuts. Demanding that the interest rate should be cut further because inflation was so low, as some people did, was thus unreasonable. It would mean that monetary policy was “chasing its own tail”, as it was expressed then. Strict two-year rule and the CPIX The CPIX measure was particularly important during the period when the Riksbank communicated its policy with the aid of a simple policy rule. This rule meant that if the forecast for inflation deviated from the target one to two years ahead, given an unchanged repo rate, the interest rate would be changed. From the point of view of communication the rule worked well for a long time. But the focus on the inflation forecast exactly two years ahead which this in practice led to was not without problems. The CPI forecast often deviated from the inflation target two years ahead, not least because of the direct effects on household interest expenditure of our own policy. But as the effects were expected to subside just beyond the two-year horizon, there was no reason to change the interest rate.
At the same time, expansion is accompanied with changes in the market ability to better accommodate market participants needs for funding, diversification and risk appetite. Undoubtedly, institutional participants in the financial markets find themselves with a larger number of possibilities for business developments and financial specialization. In addition, general public interest in using financial market products and services has increased dramatically based on the benefit they perceive from improved efficiency in everyday life activities. These developments highlight the importance of financial markets for our economic well-being, from a qualitative perspective. Let’s also recall that economic improvements trigger and support changes in social and cultural aspects of our life, bringing our nations closer to international values and principles, and to each other. As expected, because of the historical background, our countries have differed in the speed and in the depth, with which they have moved along the transition phase in the last decade. While we had many similarities in adopting the first basic and urgent reforms including price liberalization, enterprise restructuring and privatization in some economic areas, we were more distinctive in completing other reforms that would allow for institutional building capacities, which on the other hand, would make these changes root deeper in our societies. Today, our countries enjoy stable macroeconomic environments. We are experiencing low inflation levels, stable exchange rates, a more prudent and responsible fiscal policy associated with limited and manageable budget deficits. National Central Banks have established their independence and are perceived in public as respectable and reliable authorities.

This argument reverses the conventional reasoning: Monetary policy would then no longer affect inflation by influencing demand and inflation expectations, but by affecting interest expenditure – the higher the interest rate and interest costs, the higher the inflation rate. I find this way of reasoning unconvincing. It would mean that central banks would in future have to act in a completely new way, which is not supported in either economic theory or practical experience. It can also be noted that this argument was not put forward during the period when inflation was low – that is, that the Riksbank would then have needed to raise the interest rate in order to raise household interest costs and ultimately inflation. Temporary break from the low-inflation environment rather than lasting change? Before continuing, I would like to stress that, although much has happened in a short space of time, this does not change the conclusion in my speech a year ago – that fiscal policy and monetary policy need to interact in a better way than has been the case in recent decades. My reasoning then was based on the fact that the policy rate had for a long time been at, or very close to, its effective lower bound – a bound below which it is not possible to reduce the rate further or where the negative side-effects of doing so risk being very large.
SPEECH DATE:  30 September 2021  SPEAKER:  Martin Flodén  VENUE:  Kommuninvest (digitally)  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  SWESTR – a fully transaction-based reference rate* I would like to begin by thanking Kommuninvest for the opportunity to participate in its Finance Forum. As usual, the Finance Forum offers a highly appreciated meeting place where representatives of both authorities and the private sector can have open and fruitful discussions on current financial market issues. Thank you to Kommuninvest for that! As mentioned in Maria Viimne’s presentation, I am going to talk today about the Riksbank's new reference rate SWESTR. I will explain why the Riksbank considers that financial market participants in Sweden should now begin the transition from STIBOR, the traditional reference rate in Swedish kronor, to the Riksbank's transaction-based reference rate SWESTR. I will also describe how the Riksbank intends to be active in and support this process. However, in order to provide some context, I will first briefly explain the importance of reference rates in the financial market. I will also provide some background to the interbank rates, such as STIBOR and LIBOR, which have been dominant in the markets to date, and describe the problems with these reference rates. Reference rates fulfil a useful function in society Reference rates can be perceived as a rather technical issue and they are rarely at the centre of the daily economic debate.

In summary: SWESTR should replace STIBOR – the Riksbank will play an active part in this work So to summarise, my message here today is this: The reference rates that have been dominant for several decades have clear flaws, and this is true both internationally and in our own Swedish financial market. Due to the Riksbank starting to provide SWESTR for the Swedish market, there is now a robust and reliable alternative to STIBOR. So there are good reasons to start the transition from STIBOR at its shortest maturity (STIBOR T/N) to SWESTR as soon as possible, in line with international developments. It is not work done from one day to the next, but it is a job worth doing. In the longer run, it should also be possible for SWESTR to replace STIBOR at longer maturities. The Riksbank will support this transition in various ways. Our goal is that the dominant reference rate in the Swedish financial market shall be of the highest international standard and that requires both support from us as authorities and a high level of ambition among the various market participants. Thank you for listening. I look forward to your questions and comments. 1  Tomorrow-next refers to a deposit from the next business day to the following business day. The Riksbank collects data both on short-term money market transactions in Swedish kronor and on other transactions that may form the basis of STIBOR. Transactions under ten million kronor do not have to be reported.
These weaknesses as well as related policy recommendations from a wide range of fora and organisations have attracted considerable attention over the past months. In my final remarks today, I would like to focus on an area with major repercussions for the smooth functioning of markets, namely: transparency . There is common agreement on the view that a sound transparency framework based on improved disclosure, high-quality accounting standards and solid valuation practices is pivotal for ensuring market confidence and enhancing market discipline. In this respect, the financial market turmoil brought to the forefront a number of shortcomings: disclosure of information on risk exposures to and valuations of structured products and off-balance sheet vehicles proved to be opaque and very diverse in terms of scope and detail, complicating comparison across financial institutions. Furthermore, at the instrument level, the information provided to the market by institutions involved in the securitisation process has been limited, especially in relation to the quality of underlying asset pools. This lack of transparency both on exposures to instruments and at the level of the instrument itself contributed to the loss of market confidence and, as I mentioned earlier, led to disruption in various segments of the financial markets. The complexity and opacity in instruments supported also to an overreliance on ratings and rating agencies.

European securitisation issuance (EUR billion)  Source: European Securitisation Forum  9  See “Report of the Financial Stability Forum on Enhancing Market and Institutional Resilience”, FSF, April 2008. 8  BIS Review 68/2008  Chart 2. Funded issuance by collateral (EUR billion; by month)  Source: JP Morgan  Chart 3. European ABS spreads (relative to 3-month Euribor)  Source: JP Morgan  BIS Review 68/2008  9  Chart 4. Evolution of collateral held with the Eurosystem by asset type  Source: ECB  Chart 5. European securitised products: Publicly placed or privately retained? (EUR billion)  Source: Citi. European Secutitised Products. Strategy Analysis. Securitised Products. Europe 7 March 2008. Secondary Source: Bloomberg, International Insider, Informa GM, IFR, Citi. Note: Publicly-placed issuance includes only deals that have been publicly marketed. Private/Retained issuance includes deals that have been privately-placed or retained by the originator. The Private/Retained issuance figures include all such deals to Citi’s knowledge, but may not include such deals where there is no public information available. For some deals priced since August 2007 it has not been clear whether the deal has been fully placed. 10  BIS Review 68/2008
And, I believe the experiment was as instructive for the participants – who were made aware of the supervisory authority’s expectations – as it was for the ACPR itself, which witnessed the emergence of extremely promising methods and avenues for a future “trustworthy AI". In order to conclude my speech, I would like to come back to the value of the French financial centre’s “team spirit", with one assurance and one invitation: 3/4  BIS central bankers' speeches  1° the assurance is that the openness of the Banque de France and the ACPR to the  innovative ecosystem will continue to guide our action and our strategy in the years to come. Launching experiments on new practices? creating a digital platform for experimentation common to the Banque de France and fintechs? All your suggestions to move forward together in this direction are welcome... 2° the invitation is for private players to think collectively if they want to consolidate the ecosystem in which they are developing. I would like to mention a few areas that seem to me to warrant such a collective investment: data sharing, in accordance with the principles of the GDPR, of course;interoperability issues, for example in the thriving world of blockchains and decentralised finance; the development of standards, or even certification techniques, in the field of security, AI use and, last but not least, the preparation for the energy transition and the development of green finance.

These are all good reasons to continue our dialogue in the coming months and to meet with you, for example next year, to take stock of all these issues! Thank you for your attention. 4/4  BIS central bankers' speeches