samchain/econo-pairs-v1 huggingface dataset:
In addition, the lowest permitted level for total Tier 1 capital is raised from four per cent to six per cent. Basel III also introduces a capital conservation buffer of 2.5 per cent, consisting of Core Tier 1 capital. This means that the banks should have a Core Tier 1 capital holding of at least seven per cent. If a bank falls below the seven per cent limit, its entitlement to pay dividends and to conduct share buy-backs will be restricted. The proportion of profits that must be retained within the bank increases the further below the seven per cent limit the bank goes. The idea behind this is to force the banks to accumulate their profits as capital instead of paying them as dividends to the shareholders. However, this will not affect Sweden, at least not directly. Swedish banks are well capitalised and have a quota for Core Tier 1 capital that is already above seven per cent. We will, however, see effects at the international level and, as we are highly affected by what happens abroad, Swedish banks and Sweden in general will also benefit from the fact that banks in other countries will become more resilient. Apart from the changes in levels, there are also stricter requirements regarding the quality of the capital held by the banks. As equity constitutes the difference between assets and liabilities on the balance sheet, both the size and quality of the capital will be highly affected by how a bank’s assets and liabilities are valued.

On the contrary, Basel III has many important components, including completely new requirements concerning the banks’ liquidity management and limits for debt levels. The new regulations will be implemented over a period of six years, starting in 2013. 5 In some cases, however, the banks may be forced to meet the requirements earlier due to the demands of the market and individual countries. I  4  Basel II states the liquidity risk is a central factor in the banks’ risk management and that risk management should comprise adequate systems and calculation methods for the correct assessment of the extent of the risk. 5  For a detailed schedule for the implementation of Basel III see Financial Stability Report 2010:2. 4  BIS central bankers’ speeches  will discuss all of the components of Basel II in more detail, but let me begin with perhaps the most fundamental change, the revised capital regulations. Higher capital levels and a new definition of capital The changes in the new regulations mainly affect Tier 1 capital and Core Tier 1 capital. I will therefore focus on these two components. An important new feature is the stipulation of a minimum level for Core Tier 1 capital. In contrast to the present vague wording about the role of equity in the capital base, Basel III makes it clear that all banks must have at least 4.5 per cent of their risk-weighted assets in share capital and retained earnings.
When inflation in Norway is expected to be broadly in line with that of other countries, the exchange rate will usually also return to its normal range following periods when the krone has been particularly strong or particularly weak. The advantage of a flexible exchange rate is perhaps most evident when the economy is sluggish. If the krone were to remain at a level that is too strong, nominal wages would have to remain unchanged over a longer period or fall in order to bolster companies and jobs. This only occurs when unemployment is very high. With a flexible exchange rate, a depreciation of the krone can also boost competitiveness. A flexible exchange rate can reduce fluctuations in employment and output. 4  BIS Review 34/2004  Empirical studies2 have also suggested that economic growth in industrialised countries with floating exchange rates has been as strong as, and often stronger than, growth in countries with a stable exchange rate. A precondition is that there is an economic policy framework so that inflation does not spin out of control. The real exchange rate The chart shows developments in two measures of the real krone exchange rate, i.e. consumer prices and relative labour costs in Norway relative to trading partners, measured in a common currency. The real exchange rate measured by relative labour costs in a common currency is an expression of the cost competitiveness of Norwegian companies.

The fixed exchange rate was an intermediate target for achieving low and stable inflation. The exchange rate remained stable up to autumn 1996, partly because wage growth was low and overall demand did not generate pressures in the economy. Gradually, the krone began to show wider fluctuations. The experience of the last half of the 1990s demonstrated that monetary policy cannot fine-tune the exchange rate. Developments in international financial markets led to more pronounced fluctuations. And more fundamentally, when labour market pressures rose and incomes policy failed, exchange rate developments no longer provided signals for wage formation and fiscal policy. High petroleum revenues, fiscal slippage and expectations of increased use of petroleum revenues contributed to this. The exchange rate was therefore no longer suitable as a nominal anchor. Towards the end of the 1990s, increased emphasis was placed on the fundamental preconditions for exchange rate stability. Monetary policy instruments were oriented with a view to bringing price and cost inflation down towards the price stability objective of the European Central Bank (ECB). BIS Review 34/2004  1  Monetary policy In most countries, price stability, or low and stable inflation, is the objective of monetary policy. Historical experience from Norway and other countries has shown that the absence of price stability has resulted in unstable output and employment. History shows that higher growth cannot ultimately be achieved in exchange for higher inflation. An economic policy that fuels inflation does not generate higher economic growth. On the contrary, it paves the way for subsequent recession and unemployment.
The excessive financial expansion was also accompanied by a reduced perception of risk by investors and intermediaries, contributing to spending growth and the leveraged buyout boom. This situation was gradually changing as central banks tightened their monetary policy, but the most radical change took place from the summer of 2007, when the turmoil led to a rapid and substantial reassessment of the risk of financial instruments and a sudden standstill in many segments of the money and capital markets. There then began a process of deleveraging, the opposite of the one that took place in the previous years of this decade, in which debtors are striving to rebuild their balance sheets, while investors exercise the greatest prudence in choosing where to place their savings. During the stage of strong credit growth, the Spanish economy accumulated certain imbalances, linked to the fact that (residential and capital) investment exceeded national saving. However, Spain has preserved a number of very important stabilising factors, such as the balanced budget, to which I will refer later. Also, as I have mentioned in detail in other speeches, Spanish banks were not involved in the financial innovation operations that, through the creation of highly sophisticated instruments, lie at the source of the current financial crisis. This means that our institutions are in a somewhat more solid position to face the new stage than those of other countries.

In this connection, it should be kept in mind that all macroeconomic adjustments are different. That seen in Spain in 1992 and 1993 stemmed from an accumulation of substantial losses in competitiveness, which could be recovered fairly rapidly through the devaluation of the peseta. But the devaluation also led to a steep rise in the import bill which reduced Spain’s real income and made it necessary to impose tighter financial conditions in the form of high interest rates, making the adjustment of national demand particularly pronounced. In the current circumstances, membership of the euro area prevents a sharp currency depreciation from reducing household purchasing power and, at the same time, limits the possible financial shocks that domestic borrowers might suffer. However, belonging to the euro area also makes it impossible to rapidly restore nominal competitiveness to a more advantageous level for national production. For this reason, it is much more important than in the past for Spain to set in train immediately all the mechanisms that allow it to curtail cost rises and to increase productivity gains, so as to make production competitive and to reduce the negative effects on employment. Hence the external sector could provide a substantial offsetting influence in the adjustment phase and a larger boost to the subsequent recovery. This moderate cost behaviour demands a responsible response from firms and trade unions to the current labour market situation.
So to address that topic tonight, I would like to first set out some principles, as I see them, behind the actions of central banks in so called “credit-easing” operations. 1  The announcement is at http://www.hm-treasury.gov.uk/press_05_09.htm. Subsequent letters exchanged between the Governor and Chancellor were published on 29th January and can be found at http://www.bankofengland.co.uk/publications/news/2009/005 and those published on 5th March can be found via http://www.bankofengland.co.uk/publications/news/2009/019.htm. The letters published on 5th March were dated 17th February, from the Governor, and 3rd March from the Chancellor. BIS Review 23/2010  1  Intervention by the authorities The Bank of England intervenes routinely in financial markets so as to implement monetary policy and provide liquidity insurance to the banking system. These operations, normally restricted to banks and building society counterparties, stem directly from the Bank’s core responsibilities of maintaining monetary and financial stability. But these responsibilities do not give the Bank a mandate or the ability to provide a source of long-term funding for the commercial banking system 2 , nor is it for the Bank to take material risks with public money. In the case of monetary policy, the central bank expands and contracts its balance sheet to meet its objectives. Typically that involves injecting and/or draining cash (central bank money) in order to set interest rates or, as with quantitative easing programmes, changing the money supply directly. The Bank also provides liquidity support to commercial banks in times of stress (for example through its Discount Window Facility).

And the Bank intends to consult the market shortly on what the requirements should be in respect of loan-by-loan information for such assets to be eligible in the future. Along with other monetary authorities taking similar actions, 8 standardisation of information provision may help improve investor confidence in the underlying securities. Non-bank lending Also during 2009, the Bank used its market and corporate contacts to identify why bank lending dominated the supply of credit and what the obstacles were to lending from nonbanks. There appeared to be no easy wins but a recent HMT consultation paper which draws  8  6  See the ECB announcement: http://www.ecb.europa.eu/press/pr/date/2009/html/pr091223.en.html. BIS Review 23/2010  heavily on the Bank’s investigation, explores options to facilitate the supply of credit from non-bank lenders. 9 Interactions with other monetary policy actions The commercial paper and corporate bond schemes seem to have been reasonably successful in helping to improve key markets and hence facilitating access to credit, at least for larger corporates. Smaller firms who supply those larger firms, may also have seen some “trickle down” benefits. One indicator of this is that the rise in the level of company insolvencies during the recession has been surprisingly small so far, given the fall in output (Chart 7). But the major supportive factor has probably come from the very low level of Bank Rate and the programme of quantitative easing.
It would have sent rather strange signals if the Riksbank had in this situation declared that the repo rate would not be raised, but would remain at 0.25 per cent for several years to come. Apparently, despite the fact that Sweden recovered from the crisis fairly quickly, the repo rate should have been held at a crisis level. But even today, with the increases made since the crisis, there are some signs that households’ repo-rate expectations are below what can be considered a reasonable long-run level for mortgage rates (see Figure 6). The situation had certainly been much worse if the Riksbank had held on to a repo rate of 0.25 per cent for more than four years. I believe that it would have been very difficult to manage the expectations this would have created among households and on the credit and housing markets. In my world, such a policy is simply not realistic and must be disregarded as a meaningful comparison. It is therefore rather unfortunate, and somewhat surprising, that calculations of the number of “lost jobs” based on this assumption have had a relatively large impact on the debate.3 As far as I know, in the countries in similar situation to ours with regard to household debt and the housing market, such as Norway and Canada, there has been no corresponding debate about whether or not the policy rate should have remained at the level to which it was cut during the crisis.

14  Examples include Norges Bank (2013), p. 8: “Weight was also given to the fact that house prices and debt have risen faster than income for a long period. A lower key policy rate may increase the risk of a renewed acceleration in house prices and debt accumulation and of build-up of financial imbalances.”; Bank of Canada (2013): “[T]he Bank must also take into consideration the risk of exacerbating already-elevated household imbalances.”; and the Reserve Bank of New Zealand (2012): “In addition, the PTA’s stronger focus on financial stability makes it clearer that it may be appropriate to use monetary policy to lean against the build-up of financial imbalances, if the Reserve Bank believes this could prevent a sharper economic cycle in the future.”  BIS central bankers’ speeches  7  intend to go into these here, but merely point out that if the supply had adapted better to demand, the price increases in the housing market would have been more limited and thus household debt would have given less cause for concern.15 Merely slowing down the demand side, without trying to make the supply side function better, is probably not sustainable – at any rate it does not appear to be a particularly wise long-run strategy. Housing policy probably also needs to be included in the equation for a lasting solution to be achieved.
I would also add that this discussion represents a dangerous and unwelcome distraction from more important debates on issues such as how to enhance the euro area’s economic governance, make our economies more dynamic, ensure the sustainability of public finances and strengthen the banking sector, which deserve our full attention and to which we must devote our energies. 2  A recent study covering more than 200 cases of debt restructuring since 1970 finds that the impact of defaults on the ability of defaulting countries to access credit subsequently is larger and more protracted that previously believed. See Cruces, J. and Trebesch, C., “Sovereign defaults: The price of haircuts”, unpublished mimeo, 2010. 3  Cottarelli, C., Forni, L., Gottschalk, J. and Mauro, P., “Default in Today’s Advanced Economies: Unnecessary, Undesirable, and Unlikely”, IMF Staff Position Notes, No 10/12, IMF, Washington, DC, 2010. BIS central bankers’ speeches  7

Islamic finance is an established industry in Malaysia. Islamic banking assets stood at RM874 billion or 30.4% of total banking assets as at end September last year, with an annual growth of 10% over the past three decades. The end of Q3 last year also saw takaful contributions amounting to RM1.7 billion with market penetration at 15%. Growth of Islamic finance in Malaysia has been resilient and supportive of social and economic developments. What underlies this growth is the robust foundation and building blocks that the government and Bank Negara Malaysia, together with the industry, have worked towards, namely in infrastructure development, institution building, robust regulatory framework and product development. We are now at a stage where we view that the foundations are solid and the industry is ready to deliver solutions to meet your needs. Islamic finance as an enabler of growth There is now a wide ranging spectrum of Islamic financial products to meet the needs of businesses.
Ranee Jayamaha: Policy framework for regional cooperation and the role of the central banks Speech by Dr Ranee Jayamaha, Deputy Governor of the Central Bank of Sri Lanka, at the Central Bank of Sri Lanka, Colombo, 6 July 2007. *  *  *  Thank you for this opportunity to share some thoughts on the need for cooperation to develop a regional payment initiative and the role of the central banks in that endeavour. 1. Background  As articulated by the Governor, the SAARC region’s trade and financial services are developing at a faster rate, with India achieving a rapid growth of around 8-9%. Most of the SAARC Group of countries, including India, have opened up or are considering to open their capital accounts in keeping up with global trends and the regional needs. Accordingly, trade and investment flows and demand for financial services will exceed the present levels over the next couple of years. Hence, payment system gains much importance as it is a critical facilitator in cross-border flows, as well as domestic transactions. It should be able to cater not only to the present needs, but also the future demands. For purposes of this presentation, the payment system is treated in a broader sense to encompass the payments, clearing and settlement systems. At a national level, some of the SAARC and ACU countries have already reformed or are about to reform their payment systems to minimize risks and increase safety and efficiency, although the degree of such reforms vary widely.

Adequate investment in infrastructure is crucial to promoting the further growth of the region, spreading the fruit of economic developments and raising the living standards of people in Asia. Given the region’s huge infrastructure needs, mobilising private sector investments is important. Governments and ADB have a key role to play in promoting an enabling environment for private investment. Making this right will enable the region’s vast savings to be efficiently channelled to fund its own investment needs, thus helping the region to realise its full growth potential. Thank you. 2  BIS central bankers’ speeches
David Clementi: Current Threats to Global Financial Stability - a European View Speech by Mr David Clementi, Deputy Governor of the Bank of England, to the British-American Chamber of Commerce, New York, on 22 January 2001. *  *  *  Introduction It is a great pleasure to be here in New York. I was last at a British Chamber of Commerce meeting towards the end of 1998 when I talked about the readiness of London for the arrival of the euro. My message then - that while the UK might be outside EMU, the City of London was very much part of the Euro area - has been borne out by events. London remains by far the largest financial centre in Europe and the most international. Nowhere has a larger concentration of foreign banks, or greater daily turnover in foreign exchange and derivatives or trading in foreign shares. And much of the new business in euro is conducted through London. The majority of euro-denominated debt is issued in London; and more than a third of deals on the London Stock Exchange take place in euro. US financial organisations, many of them represented here tonight, make a significant contribution to this success. This evening I would like to address two rather different subjects. The first is to reflect on recent developments in the US economy and the potential impact this has for the UK and for the stability of the financial system more generally.

As regards the economy and the financial markets in particular, the season has been harsh and often stormy, and now, on March 28th, when the vernal equinox is past and the days are lengthening visibly with every week that passes, there are few signs that spring is near for the economy. And despite the fact that this rather pessimistic statement is anything but an exaggeration, it is surprising to realise how many people are still convinced that things have seldom been better than they are now, and that Icelanders are enjoying boom times in most respects. But is this really as astounding as it might seem at first? Our employment levels are very high, excess demand for labour is considerable, public access to credit institutions has been subject to few limitations until very recently, and though credit has not exactly been cheap, terms have not been as unfavourable as one might expect, thanks to high levels of employment and rising disposable income. The Treasury has been operated with an acceptable surplus and is well able to meet the demands made of it. As a result, there is considerable pressure to increase government expenditure, though neither the labour market nor other economic conditions have yet required such increases. The government must be steadfast in resisting the pressure to increase expenditure at a time when it cannot honestly be said that the money doesn’t exist.
It is now my pleasure to give the floor to Fritz Zurbrügg, who will present our financial stability assessment. BIS central bankers’ speeches  3

The problem we face is that unemployment’s critical level cannot be identified for certain and we do not know when shortages and rapid wage increases will actually arise. Estimating these matters is difficult and the results cannot be taken for granted. It is therefore hard to tell how much scope there is for a temporary phase of economic growth above the long-term trend. The ability to look ahead and formulate monetary policy cautiously is particularly important when an economy is moving further and further along an upward phase. Otherwise there is a risk of price and wage increases accelerating so that the brakes have to be applied more abruptly later on, leading to a situation that is worse than would otherwise have been the case. Thus it is in this phase of rising activity that we can be said to influence the depth of the next slowdown. It was the overheating in the late-1960s, the mid-1970s and the end of the 1980s that set the stage for the subsequent deep troughs. And each recession was worse than its predecessor. Looking back, it is easy to see that economic policy ought to have been tightened much earlier than was the case on those occasions. At the same time, it has tended to be difficult, not least in fiscal policy, to take such measures sufficiently early, particularly as that needs to be done before the problems are clear to everyone.