samchain/econo-pairs-v1 huggingface dataset:
LIBOR Won’t Last Forever Some say only two things in life are guaranteed: death and taxes. But I say there are actually three: death, taxes, and the end of LIBOR. Everyone in the financial services industry needs to be aware that the date when the existence of LIBOR can no longer be guaranteed is fast approaching. I titled remarks I gave on this subject earlier in the year “901 Days” to remind everyone just how little time both the public sector and market participants have to prepare for a world without LIBOR.3 We are now 831 days away from that world, and while some institutions are making good progress, others are sticking their metaphorical heads in the sand, hoping the issue will go away. Even more concerning are those wearing rose-tinted glasses, getting nostalgic about LIBOR and hoping for an extension to the deadline or a reincarnation of the rate. I cannot emphasize enough 2/5  BIS central bankers' speeches  that the clock is ticking and everyone needs to get their firms ready for January 1, 2022. A look at the numbers, and recent history, reveals the need for urgency. There are $ trillion of financial contracts referencing U.S. dollar LIBOR.4 But the volume of actual transactions that term LIBOR is based on is very small. When individual banks make LIBOR submissions they are largely based on judgment, not real transactions. This makes the rate vulnerable to manipulation, and banks are increasingly reluctant to provide submissions, adding yet further risk around using the rate.

This past Friday we announced a plan of continued daily overnight repo operations through October 10, accompanied by three twoweek term repo operations that span the month end.1 The goal of these actions is the same as for recent open market operations: foster conditions in money markets to keep the federal funds rate within the target range. This episode reminds us all of the importance of having well- functioning markets and the vital role that the Federal Reserve plays in supplying liquidity to the system when markets are under stress. We were prepared for such an event, acted quickly and appropriately, and our actions were successful. Friday’s announcement on open market operations to address potential quarter-end funding pressures on interest rates followed this same approach: quickly diagnose the problem, develop the right action plan, and execute that plan. At the same time, it is equally important that we examine these recent market dynamics and their implications for the liquidity needs in relation to the overall amount of reserves held at the Federal Reserve. We will continue to monitor and analyze developments closely. As Federal Reserve Chair Powell stated in his most recent press conference, the FOMC will assess the implications for the appropriate level of reserves and time to resume organic growth of the Federal Reserve’s balance sheet consistent with the successful execution of the FOMC’s ample reserves framework.2 That’s enough on recent events for now. I’ll turn to another very important issue, reference rate reform.
In a typical program, the buyer committed to buy 50 tonnes of gold spread evenly over several months and to pay the daily average AM and PM London Fixing plus a premium. In order to increase this premium, the SNB accepted to fix a cap to the maximum selling price. In other words, the programs were based on the idea of selling gold on a spot basis and writing out-of-the-money call options. In an effort to obtain competitive premiums, each program was allotted in an auction between three major dealers. Considering the high variance of the bids we received, this auction procedure proved suitable. The realized premium varied between USD 1.4 and USD 3.5 per ounce. These modest premiums reflected the SNB’s prudence in choosing the caps. At the time of the relevant auctions, these were far above the market price. This explains why, despite an overall bullish market, the strike levels were only attained on two occasions, namely in February 2003. While the possibility of hedging the gold price risk was limited by the Washington agreement, the SNB was allowed to hedge the USD/CHF risk associated with the expected proceeds of the gold sales. Originally, the Governing Board decided to hedge 20% of the expected proceeds in USD. In December 2000, it increased this hedging proportion to 35% and maintained it throughout the entire sales program. Overall, the gold sales proceeds amounted to CHF 21.1bn, or CHF 16,241 per Kg.

If they are used widely, they could lead to currency substitution and the potential loss of money sovereignty in these countries. With respect to Central Bank Digital Currencies (CBDCs), MAS makes a careful distinction between wholesale CBDCs and retail CBDCs. Both are digital currencies issued by the central bank. For wholesale CBDCs, MAS sees a variety of potential use cases. They can be used in the interbank system on a decentralised ledger to facilitate cross-border payments and transactions. MAS has conducted successful experiments with the industry and other central banks on wholesale CBDCs. This is an interesting development to watch. Most of the impactful use cases are going to be in wholesale CBDCs for, for example, cross-border payments, and cross-border trade finance. For retail CBDCs, MAS is keeping an open mind. We want to make sure we have the technology, governance, and policy structures to launch a retail CBDC, if necessary. But there does not seem to be a compelling case for it yet, given that today’s digital payment system is already effective and efficient in transferring money. The regulatory approach that MAS has taken towards crypto assets or tokens distinguishes the different types of such tokens. If a crypto token is being offered as a security with an expectation of a return, it is regulated under the Securities and Futures Act. If a digital token is being offered as a payment instrument, it is regulated under the Payment Services Act where the focus is on anti-money laundering and technology risk management, and increasingly, customer protection.
Fatos Ibrahimi: The reduction of cash in the context of reducing the informal economy Speech by Mr Fatos Ibrahimi, First Deputy Governor of the Bank of Albania, at the Conference “Reducing the informal economy – a challenge of the Albanian Government”, Tirana, 16 October 2006. *  *  *  Since the inception of the programme undertaken by the Bank of Albania, in cooperation with the Ministry of Economy and the Ministry of Finance, on reducing cash, it came clear that the issue of cash in economy cannot be treated as separate from the issue of the informal economy. The companies, which try not to expose their activities to the third parties, will avoid banks and will find alternative sources of financing and payment, mainly in cash. Therefore, the Government initiative on reducing the informal economy is to be welcomed when bearing in mind the great impact it will have on reducing the cash economy. It needs to be said that the process of formalizing the economy has not been considered as an excuse for not undertaking a number of measures and initiatives, which may accelerate the progress of cash reduction. Among the actions undertaken in this context, I would mention:  1. The channelling of the state administration payrolls through the bank accounts  At this moment, the entire public administration payrolls are channelled through the accounts with the commercial banks.

----------  Referring to the significant decrease of currency outside banks to total money – from 31 per cent in 2002 to 24 per cent over the present year – as an important indicator of the cash economy, it can be said that the abovementioned measures have provided their effect. However, the reduction of the informal economy remains a decisive factor in order to reach to the levels of cash in more developed economies, which is below 10 per cent. In this context, the establishment of the Credit Information Bureau, initiated some time ago by the Bank of Albania and expected to finalize over the coming year, is believed to make an overwhelming contribution to reducing the business informality in the interbank level. 4  BIS Review 101/2006
In 2005 they began to rise again and in Stockholm they have risen by 60 per cent up to the present time. At the end of the 1990s the price increases appear to have been largely driven by an increase in demand for office premises, by vacancies being cut down and by rents increasing. The situation during the upswing in recent years, from 2005, has been different. Rents have not followed the price upswing to the same extent as before, and prices appear to have been largely driven by a decline in investors’ demands for return. Investors have been requiring less compensation for the risk they take when investing in property. This means that investors appear to have had high expectations of future income, that is, rents (see figure 4). As in the housing market, the price increase on office premises slowed down somewhat in 2007 and this trend has continued during the first quarter of 2008. The same tendency can be found in several European countries. The financial turmoil has pushed up the price of risk in general, and this has also applied to the property market. In the United Kingdom the required rate of return increased quickly and property prices have fallen. There are some indications that Swedish investors in property have begun to raise the price of risk. So far this appears to mainly apply to property in poorer locations and smaller towns.

There may still be loan losses that may damage trust and confidence in the market when they come to light. This applies to both the United States and Europe. Figure 1. House prices Annual percentage change  35  35  25  25  15  15  5  5  -5  -5  -15  -15 95  96  97  98  99  00  Danmark  4  01  02  Irland  03  04  Spanien  05  06  07  08  USA  BIS Review 60/2008  Figure 2. Property price index (FPI) and CPI in Sweden Index 1995=100  280 260 240 220 200 180 160 140 120 100  280 260 240 220 200 180 160 140 120 100 dec- dec- dec- dec- dec- dec- dec- dec- dec- dec- dec- dec- dec- dec94 95 96 97 98 99 00 01 02 03 04 05 06 07 FPI  KPI  Figure 3. Household debt and interest ratios Per cent  200  20 Skuldkvot (höger skala) Räntekvot (vänster skala)  16  160  12  120  8  80  4  40  0  0 1982  BIS Review 60/2008  1986  1990  1994  1998  2002  2006  2010  5  Figure 4.
These insights from the crisis lie behind the regulatory work that is now underway in Sweden and abroad today. There is broad agreement that risk-taking in the banking sector must be limited and that its costs must be taken into account by the banks and their investors to a greater extent. Important steps have been taken in this direction in the global agreement on future standards for regulations in the banking sectors referred to as the Basel III Accord. The worlds’ banks will be safer when this is implemented, which will benefit everyone. Basel III increases the safety margins in the system The Basel III regulations represent the introduction of much-needed standards that will require the banks to hold more and better capital. The minimum requirement for CET 1 capital, that is share capital and retained earnings, will be raised to 4.5 per cent of the riskweighted assets. In addition to the minimum requirements there will be a capital-conservation buffer, a countercyclical capital buffer and a buffer for systemically-important banks, which all sharpen the requirements for the level of CET 1 capital. In total, the Basel III Accord will represent a capital-adequacy requirement of 7 to 12 per cent of CET 1 capital depending on how important the bank is in a global systemic perspective and where the country's economy is in the credit cycle. This is a much higher level than previously. The countercyclical capital buffer is particularly interesting.

There were in fact transitional regulations that initially meant that the banks were not able to calculate so liberally, but these were the regulations that would apply in the longer term and thus those that the banks and investors, and often the authorities, primarily focused on. Given that the banks, in Sweden and in other countries, only needed a small amount of capital, and given that it was often assumed that they were backed by government guarantees, it was highly profitable for them to take substantial risks. The banks themselves carried only a small part of these risks, while it turned out that the banks’ customers and the taxpayers had to carry the major part. In several countries – Spain, Ireland and Denmark for example, in addition to the United States – we have seen how substantial falls in the prices of the banks' assets, mainly in the form of mortgages, have led to major economic problems. The point is that the risk capital that the banks and their shareholders provide is limited to the value of the share capital. But society’s risks are greater than this. A mainstream assessment in economic research is that a national crisis in the financial system costs the economy around 60 per cent of GDP. In Sweden, this would be equivalent to over SEK 2 000 billion, or  BIS central bankers’ speeches  1  more than SEK 200 000 per Swede.
The Asset Management unit then implements this strategy, monitored by the Risk Management unit. Risk Management is also tasked with reporting regularly to the Governing Board and the Bank  2  BIS central bankers’ speeches  Council, which oversees the entire process. This multiplicity of players involved in foreign exchange reserve management, as well as the division of responsibilities, enable conflicts of interest to be reduced as far as possible, and allow effective control of the actual management of reserves. How do these guidelines translate into foreign exchange reserve allocation in practice? Last week, we published the data on the allocation of our foreign exchange reserves for the third quarter of 2012. I would like to take you through those data, and highlight the main areas which may have given rise to discussion. This is the breakdown of foreign exchange reserves by currency (cf. slide 3). As you can see, the euro is our principal investment currency, and its share in our investments has remained largely unchanged for the past number of years. If we take quarterly data as a basis, we can see that this share has fluctuated between 45% and 65%. These fluctuations come about because of the time it takes us to reallocate our portfolio following large inflows of new foreign exchange reserves. These amounts are then gradually diversified across other currencies in order to restore the original allocation.

Zeti Akhtar Aziz: Enhancing SMEs’ awareness on access to financing Keynote address by Dr Zeti Akhtar Aziz, Governor of the Central Bank of Malaysia, at the Banking Industry Seminar “Enhancing SMEs' Awareness on Access to Financing”, Kuala Lumpur, 9 July 2008. *  *  *  Introduction It is my pleasure to be here this morning to speak at this seminar, to enhance greater SME awareness on access to financing organised by the Association of Banks in Malaysia. The development of a strong and dynamic SME sector is a priority on the national agenda. It is part of the efforts towards creating sustainable and balanced economic growth. The reasons for this are clear. SMEs account for 99% of the total business establishments in Malaysia and for 56% of total employment and contribute about 32% to gross domestic product and 19% of total exports of the nation. Over the recent five years, SMEs have also increased their contribution to growth. In several developed countries, SMEs contribute at least half of the gross domestic product. Taking SMEs in these economies as a benchmark, there is clearly significant potential for SMEs in Malaysia to increase their contribution to the economy. My remarks today will focus on three areas. Firstly, the implications of global economic and financial developments on the Malaysian economy, and in particular on businesses and SMEs. Secondly, on the strategy adopted by the Government and Bank Negara Malaysia to develop the potential of the SME sector as a source of economic growth.
In the period from July to September 2000, the three-month average of M3 growth stood at 5.4%, above the reference value of 4½%. However, some indicators suggest that over recent months a moderation in monetary growth has been occurring. Let me now turn, within the second pillar, to the prospects for economic growth in the euro area, as these represent a key factor affecting the outlook for price stability in the medium term. The latest estimate by Eurostat for the second quarter of 2000 indicated a real increase in GDP of 0.8%. The pace of new job creation has remained high and the unemployment rate currently stands at 9.0%, a level not seen since mid-1992. Some monthly indicators suggest that some moderation in real GDP growth might have occurred in the second half of this year, mainly as a result of the negative impact of the recent increases in oil prices on domestic income. However, by contrast with previous periods of strong oil price rises, the euro area economy is now less dependent on oil. This should help to prevent any sustained negative effect on confidence. There are therefore good reasons to remain confident with regard to growth prospects. On the external side, euro area export growth should benefit further from the expansion of the global economy. Considering these factors together, the growth dynamic in the euro area can be expected to be maintained in the coming years.

Second, and more importantly, a “basic” service will be defined which, for payment orders submitted in the correct format, should provide a guaranteed service level with attractive conditions in terms of price and execution time. The Eurosystem welcomes the idea of a basic service offer, but the progress report went one step further by inviting banks to set up a “standard” cross-border payment service with a common name, to be provided by most banks in the euro area. Such a standard service would contribute even more to greater price transparency and, consequently, enhanced competition. The progress report also recognises that the achievement of the objectives depends not only on banks but also on companies and customers, who should include adequate information in invoices and payment orders so as to facilitate straight-through processing. The Eurosystem is therefore urging the 5  BIS Review 109/2000  banking industry to launch an information campaign and expects specific proposals by the end of 2000. The organisation of such an information campaign would be greatly facilitated if a standard service with a common name existed. The Eurosystem will continue to closely monitor the progress made by the banking industry with regard to the outstanding issues, as well as developments in customer prices, in order to ensure that the preparations currently under way do ultimately translate into adequate services for European citizens. All options, including the operational involvement of the Eurosystem, will be retained, in case the situation has not improved significantly by 2002. BIS Review 109/2000  6
The decisions, which usually pass through internal professional filtrations,  BIS central bankers’ speeches  1  and are made by the Governor and the NBRM Council, are within exclusive responsibility of those two bodies, and since the Governor is also a President (with the new law, a Chairperson) of the Council, I also consider these decisions, particularly if there were bad ones, as my personal responsibility. I actually want to say that the statutory independence of the NBRM over the last seven years was completely preserved. This should remain in the future. The central bank independence is crucial to the macroeconomic stability and very important to the financial system stability. With such position, I consider that we successfully pursued all assignments entrusted by the law: (1) We preserved low and stable inflation as a primary objective of the central bank. The seven-year average (2004–2011, April) equals 2.2%. I know what some may think of the so called “tolerant” or “useful” level of inflation. I leave it to them to “reconcile” their “tolerant” level of inflation and de facto fixed rate. In case they again oppose to the existing regime of exchange rate, to have even higher inflation, we will be decent enough to seek for an elementary analysis of its usefulness, i.e. of the advantages of such alternative. (2) We maintained a stable exchange rate level, without registering misalignment between its level and the economic fundaments.

Artificial intelligence and machine learning enable the industry to make much better use of available data than possible previously, by efficiently developing a deep understanding of the unique needs of their customers and risk profiles. Central banks and supervisors must transform alongside the financial sector, in order to maintain effectiveness in fulfilling our mission. 4 . Our central banking and supervisory mission remains unchanged. But given the rapid transformation and the changing landscape, the way we achieve our mission and objectives needs to evolve quickly. Overall, our approach must be to ensure that our toolkits and methods remain relevant and fit for purpose. To do so, we need to be informed by a deep understanding not only of the new players and their products and services, but also of the new technologies – how they work, why they are being adopted, how they better serve customers’ needs, how they are re-shaping financial services and the broader financial sector, and the opportunities and challenges they present. 5 . The technologies that are transforming the financial sector can also be used to 1/5  BIS central bankers' speeches  transform central banking and supervision. Take artificial intelligence, for example. This has been used by banks for credit scoring, and by insurers for underwriting and fraud detection. Supervisors, including MAS, have taken steps to ensure that artificial intelligence (AI) is used by financial institutions in a fair and responsible manner. Predictive analytics can also empower supervisors to be more effective.