samchain/econo-pairs-v1 huggingface dataset:
In the UK, moves have recently been made to improve the competitiveness of SME finance; I believe that the new Basel framework could in turn be a positive contribution to banking stability but we stand ready to monitor developments. Although this conference is essentially about the issue of banking capital, I would like to end by emphasising that capital is only one component of banking stability; many other factors also come into play. In the field of prudential regulation, I would like to highlight two: valuation and provisioning frameworks, and liquidity management and regulation. There will be little point to all the Committee's work on risk sensitive capital measures if this is not underpinned by adequate loan valuation and provisioning practices - preferably ones which incorporate a forward-looking view of risk and deterioration in loans. A lot of valuable work has been done on loan provisioning by the Basel Committee and other bodies, and I welcome the debate that is currently being sponsored by the IASC on valuation frameworks. 4  BIS Review 29/2001  Secondly, adequate liquidity is a vital counterpoint to capital for banks; the regulation of capital adequacy and liquidity are interrelated. Rationally, solvency ought to be a guarantee against funding problems, with customers happy to roll over deposits where they are confident that a bank is soundly capitalised. But reason does not always prevail, in part because solvency is sometimes hard to ascertain, more often because, swept along by animal spirits, markets can behave emotionally and perversely.

Muhammad bin Ibrahim: Demystifying cyber risks – evolving regulatory expectations Keynote address by Mr Muhammad bin Ibrahim, Deputy Governor of the Central Bank of Malaysia (Bank Negara Malaysia), at the SEACEN Cyber Security Summit 2014 “Demystifying Cyber Risks: Evolving Regulatory Expectations”, Kuala Lumpur, 25 August 2014. *  *  *  It is my pleasure to welcome you to Sasana Kijang for the SEACEN Cyber Security Summit 2014. The theme “Demystifying Cyber Risks: Evolving Regulatory Expectations” is apt given that the subject is not well understood by most and developments in this area tend to change at an exponential rate. I would therefore like to commend the SEACEN Centre for taking an important step to strengthen awareness and promote collaboration among supervisors on cyber security issues. Cyber security risk gives rise to new challenges Cyber security risks are inherently complex. These threats are real and can have severe implications on financial institutions should the threat not properly managed. In 2013, more than 100 million customers had their credit card and personal information stolen as a result of a data breach at a major retail outlet in the US. The estimated cost of this incidence was close to $ million. For a single cyber attack, this is a staggering amount. Increased cyber security risk is a direct consequence of the more digital world we live in, where computing devices, online networks and technology infrastructure are becoming more integral to our daily lives.
The Maastricht Treaty impressively illustrates this changed approach with respect to the European area. This new political focus was also a reaction to the disillusionment with regard to the central banks’ ability to generate permanent growth effects. There was fairly widespread agreement that price stability should be the prime monetary policy objective. Second, it was of decisive importance that the currencies of the two leading countries, the US and Germany, achieved a high degree of price stability. Numerous countries gained credibility by pegging their exchange rates to the US dollar and the DM, thus seizing the opportunity to successfully import the stability policies of the Federal Reserve and the Deutsche Bundesbank. Third, the deregulation and globalisation of financial flows have increasingly disciplined the national authorities. These days, an excessively relaxed monetary policy is sanctioned much more severely and much more quickly than in the past by growing inflationary expectations, rising long-term interest rates and a persistent devaluation pressure. Correspondingly smaller are the incentives to run the higher risk of a long-term inflationary problem for reasons of short-term opportunism. On looking ahead, most of these factors promise to remain relevant. Such confidence, however, should not detract from the dangers and risks involved. Fiscal discipline is facing a difficult test phase in a number of countries. It is foreseeable that the combination of demographic trends and non-funded statutory pension claims will lead to intensive discussions on distribution in many places which, in turn, might easily trigger a rise in public indebtedness.

According to a number of estimates, including our own, SVB's short-term liquidity ratio (LCR), had it been applicable, would have been below the 100% requirement, which would have been an early  Page 5 of 9 warning signal – for memory’s sake, all liquid assets are booked at fair market value in this ratio. The priority is therefore not to keep reworking the Basel requirements - and thus delaying their implementation - but to implement them everywhere and quickly. In short, more Basel III now, rather than a hypothetical and delayed Basel IV. However, there are two i ssues to consider: the increased speed of deposit withdrawals - connected with digitalisation and social networks - raises new challenges. None of the ideas put forward on this subject are clear-cut, but none should be taboo. Moreover, the lack of liquidity and transparency in the singleissuer CDS market must no longer give rise to systemic risks: as a first step, we must ensure a better understanding of the transactions, the participants and the correlation risk with other financial instruments. Let me now turn to supervision. Why did Credit Suisse fail despite meeting the requirements of Basel III? The answer is clear: good regulation is necessary; but it is never enough. A Highway Code - regulations -, even the best one in the world, will only be effectively enforced if the traffic police - supervisors - are efficient. The risks generated by specific business models should normally have led to stricter requirements.
We need strong commitment to combat climate change and take immediate actions to take charge of future economic growth. For corporations and businesses, over and above concerns on regulation and legal risks, is the need to commit to invest in doing the right thing for “people, profit and planet”. Corporations and businesses that align their policy and advocacy agenda to climate action have an important role in averting a path towards climate catastrophe. As we forge the path towards a climate conscious future, and for the whole system to change at the needed pace and scale, policy makers need to step up as well. For emerging economies such as Malaysia, there is a careful policy balance between transitioning to a low-carbon economy while addressing needs of society and businesses. This is meant to minimise unintended consequences of channelling financing towards non-green and non-sustainable practices and to minimise transition risk. As the central bank, Bank Negara Malaysia is cognisant of this in crafting our strategies to respond to climate risk. Our commitment stems from the direct relevance that climate change has to our mandates in preserving monetary stability and financial stability. Approximately 11.7% of Malaysian financial institutions assets are potentially exposed to climate change. Our aim is to ensure that financial institutions are adequately measuring, mitigating and building buffers against climate risk. Our target is for climate risk to be featured more visibly in the risk management practices of financial institutions by 2022.

Now I am pleased to inform that the JC3 is one of the collaborators with CGM, together with the Institute of Corporate Directors Malaysia (ICDM) and Islamic Markets in organising today’s forum. The Bank envisions that financial industry players and others from the private sector will play more proactive roles in increasing funding pathways for green and sustainability related projects. By stepping up such efforts, there would be more innovative financial instruments or alternative financing, sustainable or green bonds or sukuk that would support the Government’s climate change agenda. Ladies and gentlemen, The severity and abruptness of the current health crisis do not make climate crisis any less pressing. The resilience of our future economy and financial system will depend on the actions we take now in building climate and societal resilience. This is a sobering reality, one we must take full accountability of, and pledge strong commitment to. This pandemic has not only provided valuable lessons to us on the grave consequences of being ill-prepared when facing a crisis. It is also a strong reminder that sustainability must play a crucial role in our economic recovery and reset. As a central banker, it is not often that I talk about global health – but the current pandemic has challenged me to be more conversant of such issues. The same applies to the topic of climate change which was not in the central banks’ dictionary until recently.
This underlines the significance of taking resolute action particularly when more long-term inflation expectations begin to deviate fairly substantially from the target level. There are also good reasons why the target is 2 per cent and not lower. Perhaps the most important is that there should be sufficient scope to cut the policy rate in the future if inflation becomes low or economic activity wanes. A lower inflation target would mean reaching the policy rate's lower bound more often and for longer. This is why there is currently an international discussion on whether the central banks’ inflation targets should be raised. 6 A somewhat paradoxical observation here is that many of those in the Swedish debate who are critical of negative policy rates are also critical of higher inflation targets, and often even advocate lower inflation targets. But with an unchanged or lower inflation target, it becomes even more important that the policy rate can be cut below zero. A further reason that I believe should not be underestimated is that wage formation can deteriorate when average inflation is too low. The reason is that in practice it has proved difficult to lower nominal wages. If inflation is low and nominal wages cannot 6 See, for example, Blanchard et al. (2010), Ball (2014) and Rosengren (2015). 5 [20]  be lowered, it becomes difficult to adjust real wages between individuals at a company and between different sectors. This can ultimately bring about both higher unemployment and poorer productivity growth in the economy.

In this respect, budgetary policy should not change its current stance, which is proving so beneficial for the strength of the economy by preserving a sufficiently wide budget surplus, so that there is headroom to deploy, if needed, its stabilising potential in less favourable circumstances than those prevailing at present. For this purpose, spending deviations should be avoided, since they would absorb prematurely a part of that headroom at a possibly inappropriate time. We will have occasion to look more specifically at this topic in the framework of the budget discussion process. An equally important task is that of continuing to implement resolutely and ambitiously the structural reform agenda, both in making the goods and factor markets more flexible and in pushing ahead with the capitalisation, productivity and competitiveness of the economy. These reforms are essential in the current circumstances because they are needed to enable resources, such as labour, to be reallocated without friction between sectors and to improve the conditions under which Spanish production competes in the international markets. Thank you. 6  BIS Review 134/2007
Andrew Bailey: Regulating international banks Speech by Mr Andrew Bailey, Deputy Governor of Prudential Regulation and Chief Executive Officer of the Prudential Regulation Authority at the Bank of England, at the British Bankers Association Annual International Banking Conference, London, 17 October 2013. *  *  *  Today is the BBA’s annual international banking conference, and I therefore want to stick to that theme and explain the PRA’s thinking on issues concerning the pressures on international banking business and the establishment and supervision of foreign bank branches in London. Let me start with the luxury of a wider reflection. Before I joined the Bank of England over 28 years ago, I was an economic historian, with a specialism in nineteenth century economic history. All a bit esoteric you might say. Well, it is the case that the late nineteenth century world economy was more open – and, to use a phrase I don’t much like, “more globalised” – than at any time in at least the first fifty years of the twentieth century. Moreover, the rate of openness in the world economy probably only truly approached late nineteenth century levels in the last twenty or thirty years. The backlash to greater openness that came in the first half of the twentieth century is quite often attributed to the actual or perceived distributional effects of greater cross-border trade, flows of capital and flows of people. The world economy in many ways went backwards in the first half of the last century.

It limits the range of activities that branches can undertake, but not I think in ways that undermine the ability of such branches to undertake safer forms of wholesale banking, which is the preference of most banks in that position. We  BIS central bankers’ speeches  3  have a clear policy framework for taking these decisions and our approach to all branches will be consistent with our objectives of safety and soundness. Our stance is sensibly cautious, but not I think restrictive. And, let me reiterate that it is a general policy, not a China policy, and it is consistent with promoting the benefits of an open world economy. 4  BIS central bankers’ speeches
François Villeroy de Galhau: Recovery and resolution of CCPs Opening speech by Mr François Villeroy de Galhau, Governor of the Bank of France, at the Policy conference “Recovery and resolution of CCPs”, Paris, 24 June 2016. *  *  *  I will not comment now on the results of the British referendum. Be only assured that we are mobilised and determined. France has already quite a long history with CCPs. La Caisse de liquidation, based in Le Havre, was the first to provide, in 1882, an insurance against counterparty risk on commodities markets. This history explains why we have a longstanding role as CCP overseer; it gives us also a special interest and commitment to contribute to this policy issue, on which I would like to share a few thoughts. Considering the growing importance for financial markets and financial stability of CCPs, it is our collective responsibility shared among the financial industry and regulators- to maintain a robust network of CCPs. As we strongly believe in the key role of CCPs we must ensure that they never become the next “too big to fail” institutions. The growing importance of CCPs is linked to regulatory changes, but not only. It is also linked to financial disintermediation and changes in the behaviour of market participants, which in both cases are most welcome evolutions. Regulatory changes and the Pittsburgh agenda have been obviously major factors contributing to the systemic importance of CCPs. However, the clearing obligation for OTC derivatives is not the end of the story.

Ignoring developments in money and credit would, however, be a mistake when there are shocks to the supply of money. What can generate such shocks to the supply of money? Modern models of monetary policy tend to be silent on this point. Economic theorists continue to struggle to develop microeconomic underpinnings of the roles of money, both as a medium of exchange and a store of value. This explains why money is often hidden. By construction, models often ignore the role played by banks that extend credit to borrowers and, in the process, create liabilities that serve as money. In those models nominal interest rates are set according to a “reaction function” that always returns inflation to the target. The implicit assumption is that the supply of money passively and instantly adjusts to that warranted by the demand for money. In reality, of course, our ignorance about the economy is such that we can never be sure that the level of Bank Rate at any point in time is consistent with bringing inflation back to the target over the medium term. And developments in the banking sector can lead to an expansion of the supply of broad money and credit even while Bank Rate remains constant. It is quite possible, in the real world, for there to be unwarranted money supply shocks – whether stimulus or restraint. The MPC must always be looking for warning signals of this.
And, given the depressed level of household and business confidence and the fragility evident in financial markets, I also conclude that there remain significant downside risks. It is worth elaborating on these points. First, what are the temporary factors that slowed growth in early 2011? Of the items noted by the FOMC, two bear special mention:   Energy and commodity prices rose sharply over the six-month period ending in May 2011. This sapped households’ real purchasing power here and abroad, so they responded by both consuming less and cutting savings.   April’s tragic earthquake in Japan disrupted many global supply chains. Many goods assembled here contain Japanese-made parts. When Japan was unable to produce parts, U.S. production and sales slowed. I am certain that parts shortages affected many sectors here and abroad. These temporary factors are now waning. Nonetheless, four factors are preventing a more vigorous recovery:   First, problems in the housing market are a serious impediment to a stronger economic recovery. Residential construction – which typically boosts economic activity during a recovery – is at a standstill. Moreover, many homeowners are now  2  BIS central bankers’ speeches  consuming less because the decline in house prices reduced their wealth and they are concerned that the decline in home values and wealth may not be over. Mortgage rates are at record lows and house prices no longer appear overvalued on affordability measures.

Moreover, the ratio of total credit to nonhydrocarbon GDP remained stable, whereas credit to the private sector/nonhydrocarbon GDP increased somewhat in 2013 to reach 23.45% (21.35% in 2011). In 2013, while pursuing their provisioning efforts, banks consolidated their financial soundness indicators. Solvency ratios remain high, much higher than required under the prevailing regulation and in line with the recommended level under Basel III. The banking sector soundness is anchored to high capital adequacy ratios and high profitability and liquidity. The solvency ratios are in line with those of comparable emerging market economies. In 2013, an assessment of the banking sector carried out by the International Monetary Fund and the World Bank has helped define further directions in deepening banking sector reforms and strengthening banking system stability in Algeria. Effective implementation has started in the first quarter of 2014 with the enactment by the Council on Money and Credit of three regulations related to the solvency ratios, large exposures and participations, and loans classification and provisioning. The minimum Tier 1 capital ratio has now been set at 9.5%, higher than recommended by the Basel Committee, and the regulatory capital ratio has been set at 12%. Moreover, as regards the strengthening of the capacity in assessing the banking sector risk, Bank of Algeria will rely, as of the beginning of 2015, on the effective use of the new stress test model, and on the generalization of the bank rating system.
Ravi Menon: Chongqing-Singapore co-operation in green finance Keynote address by Mr Ravi Menon, Managing Director of the Monetary Authority of Singapore, at the Singapore-China (Chongqing) Financial Summit, Singapore, 20 April 2023. *** Party Secretary Yuan, Minister Teo, Governor Huang, Mayor Hu, colleagues from China and ASEAN, ladies and gentlemen, good afternoon. Welcome to the fifth Financial Summit of the Singapore-China (Chongqing) Connectivity Initiative, or CCI. I thank the Chongqing Municipal People's Government for hosting this event, with such impressive efficiency and warm hospitality. On a personal note, I am very happy to be back in Chongqing after more than three years. The city is even more vibrant and beautiful than when I last saw it. Our gathering today comes at a challenging juncture for the global economy. According to the latest IMF World Economic Outlook, global economic activity is experiencing a broad-based slowdown, with core inflation persistently higher than seen in several decades. The global financial system is undergoing a tenuous adjustment to the new era of higher interest rates, as shown by recent stresses in the banking sector. These macro-financial developments make for a fragile global economy. If recent banking stresses lead to an aggressive pullback of credit, it will further drag down an already slowing global economy. The risk is of a potentially destabilising dynamic, where slower growth weakens credit quality and asset prices, thereby further exacerbating financial system vulnerabilities. Central banks need to stay focused on bringing down inflation.

However, the fact that we presently cannot see any general overvaluation in the housing market does not rule out the possibility that some households may have based their decisions on overly optimistic estimates. For example, they may have interpreted the currently very low interest rates as a more or less permanent state, rather than as an exception. These households could of course run into problems when interest rates normalise. One question that might at least be worth reflecting on in this context is whether such over-optimism among some households could be an undesirable “side-effect” – albeit a temporary one – of the successful low-inflation policies in many countries. What has happened in the past ten years is that interest rates have come down fairly dramatically at the same time as the real economic performance in many areas has been remarkably good compared with previous periods. It presumably cannot be ruled out that this situation has lulled some households into a false sense of security, causing them to make overly optimistic investment decisions that subsequently prove to be less well-founded. To the extent such over-optimism exists, though, it should, as I mentioned, be a temporary phenomenon that disappears as households gain more experience of how the economy functions under a low-inflation regime. That households – and lenders – must endeavour to base their decisions on realistic estimates is something that we have recommended many times recently, but it is worth repeating.