samchain/econo-pairs-v1 huggingface dataset:
It is critical that banks readily exploit the current relatively favourable conditions to meet capital adequacy objectives and improve their funding profile. Similarly, to promote sustainable growth and to support confidence and competitiveness, governments need to continue their efforts towards restoring sound fiscal positions and improving competitiveness. Many governments have already made significant steps and the efforts must continue unabated. Finally, a fourth concern relates to the risk of persistent market fragmentation. The ECB has used conventional and non-conventional measures to restore the transmission channels of monetary policy and make sure that the impulse stemming from it is transmitted more uniformly across the 17 economies of the euro area. The large size of the Eurosystem’s refinancing operations and the resulting expansion in its balance sheet are a reflection of the impairments which still hamper the proper functioning of capital markets in the euro area. Today, it is of utmost importance to address these impairments, otherwise we will loose the benefits of the freedom of capital movements which was why monetary union was needed in  BIS central bankers’ speeches  7  the first place. There will be no lasting recovery of growth if European households and corporations cannot tap a common pool of savings. To operate smoothly, be more resilient to crises and better support long-term growth, Economic and Monetary Union has to become a true financial union. I will list here some of the key features of the much-needed “Financial Compact”.

Yields of shorter-term notes and bills have declined, with two-year government bond yields of Italy, Ireland and Portugal declining by over 400 bps since 8 December 2011. Longer-term government yields have declined as well, although not to the same extent as shorter-term yields (Slide 7). The positive secondary market developments were accompanied by favourable primary market activity with sustained demand in auctions of T-bills and shorter bonds in several euro area countries. All in all, there is now strong preliminary evidence that the three-year LTROs have helped the banks to reduce liquidity risk and therefore allowed them to smooth the deleveraging process over a longer period of time and maintain exposures to SMEs – at least in some cases. Anecdotal evidence also points to the return of some institutional money market investors, with quite a number of banks reporting that funds (also unsecured) are becoming available again at somewhat longer maturities. While banks seem to have used the funds obtained from the first three-year LTRO mainly for refinancing purposes, when looking forward to the next six months, they now seem to expect a stronger use of these funds for granting loans. Whether these expectations will materialise remains an open question and the Governing Council will closely monitor these developments. Challenges ahead A side effect of the three-year LTROs is that the banking system in the euro area is now in a situation of abundant excess liquidity.
Dear Guests, Today the transaction volume in derivatives markets is very much above the transaction volume in spot markets, where the trading and exchange of goods traded is realized on the same day. In 2004, the volume of daily derivatives transactions in the global foreign exchange market, excluding over-thecounter markets, was US dollar 1.2 trillion, which equals 65 percent of the total market turnover3. Dear Participants, Today we are about to bring in, and more importantly, institutionalize risk management principles and to initiate the development process of derivatives markets. This process is of great importance with respect to the overall economic activities. It should be borne in mind that this process will sometimes be arduous and time-consuming and it will also be a self-fulfilling process. Even if it takes a long time, sooner or later the derivatives markets will be established in our country. I am pleased to say that I am very happy to witness the efforts to develop derivatives markets and this achievement as well as its significance for the entire economy is a very important step for Turkish economy.

At this point, two factors come into the foreground: The most important and principal factor to be underlined in both an economic and social aspect is chronic inflation and the uncertainty that its presence has caused in Turkey for thirty years. This period has seriously damaged the economy. For instance, money and capital markets have failed to develop, long-term financial resources have remained limited and it was not possible to develop markets, which occupy a significant share in the capital markets of developed countries, namely those for the provision of housing financing. Moreover, our economy has failed to achieve sound integration with international markets and a short-term vision has prevailed in all fields, including the social arena. Furthermore, chronic inflation triggered volatility in basic economic indicators, including growth and employment, as well as in variables such as exchange rates and interest rates. The excessive volatility in economic fundamentals resulted in a continuous increase in uncertainty and crises. Thus, after each economic crisis, uncertainty jumped to a higher level. Uncertainty and volatility caused a vicious circle and made risk management almost impossible. Dear Guests, At this point, let me elaborate on the concepts of uncertainty and risk, which have a key role in the development of derivatives markets and are of great significance for both policy practitioners and the economic agents acting as decision-makers. Although the word “risk” refers to both its literal meaning and uncertainty in daily use, in fact these two concepts differ from each other as to their effects on economic agents and events1.
Having worked with financial firms to improve their risk management and resilience over a quarter of a century, I remain, perhaps surprisingly, optimistic that we will be able to work through the differences, although I will be the first to acknowledge that there are no easy answers. The four Rs each prompt a more detailed question that take us to the main issues we need to resolve in the coming months in order to make sure regulatory reforms (reforms being a bonus R) are geared to enhancing the prospects for success: First, thinking about the governance and management needed for success: how do Boards take responsibility for the particularly long-term nature of BPA business? Second, what does effective risk management look like for BPA firms today, given the continuing evolution of MA asset portfolios and exposure to long-term economic uncertainty? Third, in aligning resilience to risk taking, what roles do balance sheet valuation and capital requirements each play in a going concern regime? And finally, in designing and maintaining a regulatory regime that has robust and risksensitive qualities, what package of Solvency II reforms will support the risks being taken now and for the long term? Responsibility of the Board Let me start with the inherent challenge of making decisions for the long-term. Imagine that instead of packing a suitcase for our 2022 summer holiday, we are instead asked to pack all of the suitcases we will need for every holiday over the next 30 years.

However, there may be reason for some upward revision to the inflation forecast made in May, and perhaps even to the one made in August. One factor which could indicate a higher inflation rate, at least in the short term, is the high oil prices. Resource utilisation may also be slightly higher than anticipated in the coming years. One reason is the strong figures for Swedish growth that we have seen over the summer. Another is that fiscal policy will probably become more expansionary  BIS Review 51/2004  5  now. Inflation can nevertheless be expected to be in line with the Riksbank's target two years from now. This is also the picture painted in a speech by Riksbank Governor Lars Heikensten in London today. Conclusion Let me summarise what I have said this evening. Despite stock market fluctuations and a periodically weak economic climate, both household indebtedness and house prices have increased substantially, on a national level, in recent years. There have been similar developments in many countries, and households’ debts and interest payments as a percentage of disposable income are not remarkably high in Sweden. Although the debt ratio is approaching the high level prior to the financial crisis at the beginning of the 1990s, the low interest rates have meant at the same time that households' interest expenditure as a percentage of income has largely been halved since then.
Against this backdrop, we welcome two European texts that are currently being finalised (i) the Digital Operational Resilience Act (DORA), which aims, among other things, to bring critical service providers under the supervision of financial regulators; (ii) and the Digital Market Act (DMA), which is intended to ensure that service providers have equal access to the hardware and software components of electronic devices. These competition and sovereignty concerns should also be taken into account in the revision of PSD2. Secondly, the industrial lever. While our market is and must remain open, it is nonetheless essential to encourage innovation by European players. This is why, in the area of payments, the Banque de France actively supports the EPI2 initiative for a modern European solution. In conclusion, we can see that the changes taking place in the financial sector offer the prospect of even more accessible, efficient and innovative financial services, while at the same time raising new challenges for both market participants and public authorities. I am convinced that the only way to meet these challenges is through a multi-faceted approach, with cooperation between public and private players. That is why the Banque de France is fully committed to promoting innovation within a framework of trust: first, at the level of the regulatory framework and as a supervisor, then by facilitating private initiatives and mobilising the market, and lastly, as a driver and player in innovation.

Trichet: It is not an issue, taking into account the decisions taken by the Greek government to reduce the public deficit and the statement by the euro area Heads of State or Government. Il Sole 24 Ore: Will the current crisis suggests a slowdown of the EMU enlargement process? Trichet: Participating in the euro zone requires from all member governments sound fiscal policies, a sound monitoring of production costs and structural reforms. Today’s difficulties have shown that a bad management influences negatively all participants, while a good one is positive to all, given how our economies are closely intertwined because of the single currency. As I said before, peer pressure is a crucial aspect of the euro zone functioning and it has a profound economic rational and legitimacy. Therefore it is also true that to enter the euro zone there must be an overwhelming sentiment within society that the country is  BIS Review 45/2010  1  preparing to share a common destiny with the other members. This calls, in my opinion, on newcomers to have a clear bipartisan agreement on the desire to join EMU. Il Sole 24 Ore: In a certain sense participation in the euro area must have both a multinational and a multipartisan framework. Trichet: That’s correct. We are participating in an endeavour of great historical importance. One cannot jump in and jump out of the euro area as one hops on and off from a bus. Participation in EMU commits the destiny of a country.
Zeti Akhtar Aziz: The global Islamic financial market today – challenges and way forward Luncheon address by Dr Zeti Akhtar Aziz, Governor of the Central Bank of Malaysia, at the annual “The Asset Triple A Awards for Islamic Finance”, Kuala Lumpur, 6 July 2010. *  *  *  It is my great pleasure to be here this afternoon on this occasion of the Annual “The Asset Triple A Awards for Islamic Finance” by the Asset Publishing and Research, to deliver some remarks on the key challenges and way forward for Islamic finance in the international financial system. Islamic finance has experienced its most rapid pace of development in this decade demonstrating its competitiveness and resilience as a form of financial intermediation. While the Islamic assets are now more than $ trillion, it is estimated that the global Islamic finance industry will reach the $ trillion mark in the next three to five years. The sukuk market has become the most significant and vibrant segment in the international Islamic financial system. Issuers are seeing the sukuk instrument as an attractive alternative means for raising capital, whilst investors are increasingly seeing it as a new asset class in their investment universe. This has generated significant cross-border flows as funds are raised from beyond domestic financial markets and as investors diversify their portfolios into assets from other jurisdictions. The sukuk market currently stands at almost $ billion, with a growth rate of about 40 percent annually.

This is largely due to the scarcity of the instruments in the market. In Malaysia, the growing ringgit sukuk market has resulted in an active secondary market. This is largely due to the regular and varied issuances throughout the year. This is supported by the investment in research and development and in talent development to ensure the availability of expertise in the structuring of sukuk instruments and in sukuk documentation. Having the potential to innovate new instruments will depend on having the necessary talent. This is an area of focus in Malaysia to develop the skills, expertise and capability. The Islamic financial system in Malaysia now offers a wide range of financial products and services that are competitive and able to meet the changing requirements of the domestic and global economy. Way forward for the global Islamic financial system As we advance forward, we need to recognise the forces of change and the transformation taking place in the international financial system and global economy. Relentless efforts have been initiated to reform the international financial system by the international community to address the weaknesses that have contributed to the recent crisis. In this environment, Islamic finance needs to continue to evolve to remain effective and competitive. The Islamic financial system does not exist in isolation and will continue to develop as an integral part of the global financial system.
Debt-servicing costs of borrowers whose net monthly wage is lower than lei 500 rose by 32.2% of the said income, whereas those of borrowers with an income higher than lei 3,000 increased by less than 7% of their net monthly wage. Designing similar solutions for both borrowers with income lower than lei 700 and an average DTI ratio of 184% and borrowers with income higher than lei 7,000 and an average DTI ratio of 26% is not warranted. CHF-denominated loans are usually long-term loans, with an average residual maturity of 13.2 years. However, about 40% of CHF-denominated loans have a residual maturity shorter than five years and other 40% of them have a residual maturity longer than 15 years. In fact, the average value of CHF-denominated loans is significantly higher than that of leudenominated loans, but it also varies a lot depending on borrowers’ income level. Such disparities argue against applying a similar approach to borrowers’ debt-servicing difficulties: there are various individual specific situations, therefore one size does not fit all, which calls for the adoption of several differentiated solutions. CHF-denominated loans are concentrated among a handful of banks (three banks account for 77% of CHF borrowers and for 69% of the CHF-denominated loan volume; these banks jointly held 14% of total bank assets in November 2014). Moreover, the net currency position in CHF was not a source of speculation for banks, given its very low share in total own funds and its extremely low volatility when compared with other currencies.

Monetary policy  In order to deter foreign currency lending and, implicitly, to strengthen the traditional channels of monetary policy transmission, the NBR actively used as an instrument the minimum reserve requirements ratio on foreign currency liabilities. This ratio continued to be raised during 2004-2006, its level increasing by 5 percentage points each time in August 2004, January 2006 and March 2006 to 40%. Additionally, the NBR extended the scope of minimum reserve requirements to foreign currency-denominated liabilities with residual maturity of over two years, as follows: (i) starting February 2005, on the liabilities incurred subsequent to this date; (ii) starting July, on the liabilities incurred prior to February 2005. The high restrictiveness thus imposed on the minimum reserve requirements ratio on foreign currency-denominated liabilities of credit institutions was kept in place until 2009, when the knock-on effects of the economic crisis on Romania prompted the central bank to implement a countercyclical monetary policy. B. •  •  Prudential regulation In 2003, prior to Romania’s joining the European Union, the central bank issued norms setting forth certain conditions for granting loans to households, such as: –  capping the indebtedness level at 35% of the net income for mortgage loans;  –  requiring from borrowers a down-payment of 25%;  –  providing real and/or personal collateral equal to at least the amount of the loan requested for consumer loans that are not intended for goods purchasing;  –  capping the LTV ratio at 75%.
To reduce the risks to the financial system and increase the degree of freedom for monetary policy, monetary policy needs to be complemented by an efficient macroprudential policy, among other things. Inflation targeting is based on an assignment that largely disregarded the risks inherent in financial stability. The Riksbank’s responsibility in this area is expressed in the legislation as the task of “promoting a safe and efficient payment system”. More specific details are not given. I consider that the Riksbank’s responsibility should include financial stability and this should be clarified in the Sveriges Riksbank Act. An important question in this context is what formal role the Riksbank should have in the work to reduce risks and vulnerabilities in the financial system. After the financial crisis, the framework surrounding the preventive work for financial stability has been reviewed in several countries, including Sweden. The outcome of the Swedish inquiries has not improved the Riksbank’s chances of working preventively on reducing the risks in the financial system – rather the opposite. I do not consider that dispersing responsibility among several different authorities and reducing the Riksbank’s role is a good solution for Sweden. The risk is that it will become unclear who is to act should a risk arise in the financial system and how accountability is to be demanded should a crisis nevertheless occur.

Trade in various assets entails large economic gains, among other reasons because consumption in different countries can be evened out over time. Other advantages are the transfer of technology that often accompanies foreign investments and the increased competitiveness in the domestic market that results when foreign companies are allowed to invest locally. A better complement to monetary policy is thus formed by measures restricting supply and demand for credit, which is to say primarily macroprudential policy measures. Measures for reducing the risks are needed now Having low interest rates for a long time entails risks for the financial system. Low real interest rates are contributing to the growing trends of rising housing prices and increasing household debt. Investors with predetermined nominal required rates of return, such as fund managers, insurance companies and pension funds, are finding it more difficult to reach their targets. This risks leading to an excessive increase in risk-taking, the overvaluation of assets and the accumulation of financial imbalances. In several of the countries worst impacted by the global financial crisis of 2008– 2009, the crisis had been preceded by rapidly-rising debts and housing prices. The downturn after a crisis also risks being deeper and more prolonged if indebtedness has risen rapidly before the crisis. The risks of household indebtedness therefore need to be managed and the longer this is put off, the more expensive it risks becoming. Measures thus need to be applied now to reduce the risks in the financial system. Household demand for loans needs to be dampened.
As the industry organisation, HKAB has  2  BIS Review 116/2009  already become quite deeply involved in such matters: for example, it has played an important co-ordinating and think-tank role in ensuring the safety and efficiency of e-banking, and in promoting accessibility to banking services, particularly among vulnerable groups; it is also one of the joint issuers of the Code of Banking Practice, the reference-point for relations between banks and their customers. HKAB can, I believe, contribute even more in the future, and consolidate its role as industry representative, by strengthening its resources, for example by creating a separate secretariat with a professional chief executive. One of the key causes of the recent financial crisis was the use – or abuse – of innovation by financial intermediaries for short-term private gain at the expense of longer-term stability and effective working of the financial system as a whole. And one of the reactions to this has been a call – a very loud call in some places – for banks to go “back to basics” in conducting their business. If such a reaction were to lead to a return to the sort of inflexible banking services many of the older among us remember, then this would be a pity. If, on the other hand, it were to result in greater reflection and rethinking about the true function of banking in society, then this would, in my view, be a healthy development.

Quite apart from our own Hong Kong-specific initiatives, there are movements for reform at the international level, resulting from a very different experience in the more developed economies, which we cannot ignore. This point brings me to my second observation: the need to move with the times. The past year has seen a plethora of ideas and proposals for reforming financial regulations, and interventions by government that were unprecedented in their nature and scale. Even in economies less deeply affected by the latest crisis, including Hong Kong, it has been necessary to deepen government involvement, for example in more extensive deposit guarantees or in more intense supervision of banks' risk management – although it is gratifying that so many of the tools that we have been able to rely on, including the apparatus and contingency arrangements for ensuring liquidity, have been developed in a pre-emptive rather than a reactive way. On the various emergency measures, I am quite sure that in the fullness of time, these will either be turned into standing arrangements or withdrawn, hopefully through smooth exit strategies. But, current sentiment is clearly demanding much closer regulation and supervision of banks over the longer term. Quite what form this will take remains to be agreed on in international forums, although the thinking already seems to be towards improvements in the level and quality of banks' capital; new global standards for measuring, managing and supervising liquidity risk; and macro-prudential supervision to reduce the pro-cyclical dynamics of financial markets.