samchain/econo-pairs-v1 huggingface dataset:
Page 1  Capital and (for a change) Liquidity Buffers − speech by Victoria Saporta Given at the Bank of England  Page 2  Published on 14 July 2022  Our Prudential Regulation Authority (PRA) requires UK banks to hold ‘buffers’. These are extra funds that banks can use in times of stress. Vicky Saporta says there is evidence that banks are reluctant to use these buffers and she explains why. Then she starts a discussion on what the PRA could do to make it easier for banks to use them. Speech Good morning. Last year, I reflected on the emerging prudential lessons from the Covid-19 stress. [1] I noted that one major lesson was that the banking system remained resilient and continued to provide credit to the real economy, demonstrating why the post-Global Financial Crisis capital and liquidity reforms were necessary. I did, however, also identify some potential issues with the current capital framework, some of which were also reflected in Sam Woods’ more recent ‘Bufferati’ speech. [2] In short, I noted that the evidence suggested that capital buffers are likely not to work as intended. During a systemic stress, firms might not be willing to use their buffers and instead cut back on lending to the real economy to avoid dipping into them. But capital buffers are only one of available instruments to support the banking system during periods of stress – there are other important instruments, including the vital liquidity buffer framework.

08.10.2020  Banking resolution: firm foundations for stability SRB Conference 2020/Session II: Resolution planning under the Banking Package: continuity and innovation Pablo Hernández de Cos Governor  Good afternoon, ladies and gentlemen. Let me begin by thanking the organisers, and the SRB Chair in particular, for giving me the opportunity to participate in this conference. Five years have passed since the Single Resolution Board was established as the resolution authority within the Banking Union. That is certainly a short time by institutional standards but, looking back, I would argue that the progress made has been significant. Under the leadership of its chair, Elke König, the SRB has finalised resolution plans – along with their MREL requirements – for all significant institutions. It has likewise fostered their resolvability, and has put in place effective mechanisms for cooperation with the national resolution authorities. All these arrangements have already proved their effectiveness. From a broader perspective, I would also argue that a more robust European crisis management environment has been conceived. Harmonisation of procedures not only strengthens the Banking Union as it is; I am sure it will also prove essential in future crossborder consolidation initiatives. Bail-in has aligned incentives for managers and creditors alike in reducing excessive risk-taking. And, as a much wished intangible asset to a central banker like myself, the existence of a Single Fund is another milestone, partially mutualising risks in the Euro Area, which is moving forward with a more complete Monetary Union.
In closing, I wish to say this: If we succeed in restoring confidence in the Icelandic economy, which is the cornerstone of the IMF programme – and this includes lifting the capital controls and regaining access to foreign credit markets – we will be able to rise up from the depths. How quickly we can travel once we’ve reached the surface is another matter. It could be that we will have to content ourselves with less than before, but that is not a given. If we play our cards right, our small country – with its location and natural resources – can enjoy a wealth of possibilities. What we may never do again, however, is force our economy to grow faster than it is able to do – which has dire consequences for stability. 6  BIS Review 130/2010

Dimitar Bogov: “The savings deposits soar also during crisis” – interview in Radio Free Europe Interview with Mr Dimitar Bogov, Governor of the National Bank of the Republic of Macedonia, in Radio Free Europe, conducted by Mr Aleksandar Pesev on 29 September 2013. *  *  *  Mr. Bogov, is the ending of the crisis in the Euro area going to have a direct impact on the boost of the economic growth in the Republic of Macedonia? Of course, the Euro area and the European Union are the largest trading partners of the Republic of Macedonia, the largest portion of our export is placed there, and as a result, the demand in the Euro area has large influence on the production in Macedonia. We were encouraged by the data for the second quarter of the year on the Gross Domestic Product, where after six quarters of negative results, positive growth rate has finally been registered. We expect that this will endure also in the following period, we are aware that this growth in the Euro area and the European Union is still very fragile, meaning, there are still risks, but we are optimistic, the indicators that emerge in the Euro area economy every day are mainly positive, so it is expected that it will reflect adequately on the Macedonian economy growth, as well. Can the recent trade war we had with the neighboring Kosovo somehow spoil the perceptions for this positive growth?
In that context there has been a good BIS Review 88/1998  -7-  deal of talk about concerted interest rate cuts in Europe and the United States to stimulate domestic demand and offset the effects of recession elsewhere. And it is true that those effects - both lower world commodity prices and falling external demand - do mean that interest rates in the industrial countries generally can be lower than they would otherwise be, which in turn will help to sustain global demand. But we do not all start from the same point. Rates have in fact been cut in the United States and the United Kingdom, where underlying domestic demand growth also shows signs of slowing. In Continental Europe, on the other hand, domestic demand growth has, as I say, been picking up. But even here interest rates have already come down in some of the smaller countries and are likely to be generally lower than they would have been in the absence of the global slowdown. Markets are, in fact, now expecting rates to converge by the end of the year on German rates, where only a couple of months ago, they expected convergence at significantly higher rates. None of this, Mr. Chairman, it seems to me need affect the prospect for the euro - if anything it may reinforce the more recent firmer tone of the euro currencies.

The main goal of the Strategy was to achieve universal access to and usage of a broad range of quality and affordable financial services that meet the needs of individuals and enterprises and targets overall financial inclusion of 80% of the adult population by 2022; In 2017, under the National Strategy on Financial Education (phase I) financial education was integrated into both primary and secondary school curriculum; In 2019, phase II of the National Strategy on Financial Education was launched, to address the gaps identified under phase I; and Through the financial literacy campaigns, the number of financial services accounts designed for children increased to more than 20 compared to only 3 at the beginning of 2013. We strongly believe that the formulation and implementation of these national Strategies have provided a robust framework that facilitates effective stakeholder engagement between the Government, financial sector regulators, financial service providers and the general public. This collaboration has resulted in increased public awareness of the availability of financial products and services across the country, therefore contributing to the increase in overall financial inclusion in Zambia from 37.3% in 2009 to 69.4% in 2020. As financial sector regulators and services providers, we are obliged to disseminate information about the different types of services and products that are available to the public as well as some of the risks that maybe associated with them.
Our commitment to join the euro area is indisputable, yet this process has to be managed in a very careful manner. 2. FINDING THE RIGHT BALANCE BETWEEN CONSUMPTION AND INVESTMENT During recent years, the contribution of investment to growth was smaller than it should have been, with consumption spending being the main driver of GDP dynamics. Welfare has increased markedly, but the concern for rendering these welfare gains sustainable should prompt a switch to policies aimed at fostering investment, thus boosting the productive potential of the economy. A short-term focus on economic policies and paying no heed to accumulating macroeconomic disequilibria ought to be avoided, as they eventually lead to suboptimal outcomes. The adequate approach is to ensure a rebalancing between consumption and investment, not by discouraging consumption, but by stimulating investment. This is also a way to reduce development gaps between Romania’s regions. Indeed, the EU accession acted as a catalyst for real convergence at country level, yet development imbalances in Romania did not decrease significantly. Romania currently has regions that are similar in terms of living standards and development levels to Western economies, while some other areas are considerably lagging behind: in 2017, the wealthiest region in Romania was almost four times richer than the poorest one (based on regional per capita GDP). Therefore, even though the EU membership has acted as a catalyst for country-level real convergence, the 2/4  BIS central bankers' speeches  development gaps across the regions of Romania have actually increased.

What we observed before the crisis, and what we became painfully aware of when it erupted was, however, that public and private agents in some countries did not change their behaviour, that financial markets did not play any disciplining role and that the loose application of the Stability and Growth Pact and the Broad Economic Policy Guidelines rendered them ineffective as stabilisation devices. The Pact and the Guidelines were not strong enough to prevent the accumulation of a series of imbalances. We also discovered two other gaps during the crisis: too little attention had been paid to how financial markets work within a monetary union and no crisis management mechanism was available. To be stable, the European building needed operational repairs. The stability principles, as conceived in Maastricht, were insufficient and a new culture of stability had to take over. The ECB acted on several occasions to curb the so-called “tail risks” – the risk of the monetary union breaking up – and to gain the time needed for others’ actions to bear fruit. It is worth noting, however, that monetary action can hardly go beyond this as the cracks detected in the building were not of a monetary nature. At the Member State level, fiscal consolidation policies and structural reforms were needed and are being implemented to better accommodate domestic behaviour to the patterns of stability required within a Monetary Union. As for euro area governance, a deep process of reform has been undertaken.
Figure 3 Weak developments abroad have affected the labour market Employment by sector, thousands, seasonally-adjusted data 4900  2400 Government sector (left scale)  2200  4800  Services producers (left scale) Goods producers (left scale)  4700  2000 Total (right scale)  1800  4600  1600  4500  1400  4400  1200  4300  4200  1000 00  02  04  06  08  10  12  Source: Statistics Sweden  1  The Riksbank (2012)  BIS central bankers’ speeches  3  The relatively low level of economic activity abroad has also affected inflation in Sweden more directly. One reason for the low rate of inflation recently is namely that the prices of goods have increased slowly. The strengthening of the krona in recent years has led to a further reduction in import prices. On the other hand, service prices in Sweden have helped to keep up the rate of inflation. Figure 4 What lies behind the low inflation?

While there are few ILS deals sponsored by Asian insurers, we expect to see more interest as insurers become increasingly sophisticated and focused on efficient management of risk and capital. MAS is developing a regulatory framework for ILS and will consult the industry in due course. Development of more advanced risk management techniques has to be supported by more sophisticated research. For example, more reliable estimates of catastrophic losses will allow insurers to better price and write larger risks. For ILS to be priced and rated, more robust risk models are needed. Singapore is well-placed to serve as a centre for Asian insurance research. We therefore encourage the industry to deepen its ties and collaboration with academia, and identify the relevant areas where greater research can make a difference. MAS is prepared to consider supporting worthy projects financially. Conclusion Ladies and gentleman, the success of our initiatives to grow the insurance industry is contingent upon active participation from the industry. As new products are introduced and more players enter the market, there will be greater vibrancy in our insurance industry. There will be greater cross-fertilisation of ideas and upgrading of skills, which will underpin the continued growth of Singapore into a thriving insurance marketplace. MAS and GIA have enjoyed an excellent working relationship over the years, and we look forward to many years of close and fruitful cooperation. It is our collective aim to continue to grow the vibrant insurance industry in Singapore and to bring it to even greater heights. Thank you.
Brokers will be called on to provide expertise and advice in managing a more complex set of risks that will include environmental, geopolitical, supply chain and cyber risks in a more interconnected global and regional economy. In other words, the traditional information function of brokers will expand significantly. An area that will grow in importance for brokers is the SME sector. SMEs are a significant part of economies in Asia, driving growth and employment. In Malaysia, SMEs account for about one-third of Malaysia’s GDP and 59% of employment. Within five years, the contribution of SMEs to GDP is targeted to increase to 41%. Their importance to the economy however, remains disconnected with the extent to which these businesses are effectively managing their risks through insurance solutions. A significant majority of small businesses continue to be either not insured, or have inadequate insurance to secure the prospects of survival following business disruptions due to a natural disaster or other event. Among the most important reasons for this are cost and products offered by insurance providers that fail to reflect the specific risks that SMEs face. This is more acute for businesses at the lower end of the spectrum that operate with tight margins, have limited resources dedicated to formal risk management programs and are more vulnerable to business disruptions.

It must be recognised that many individual companies would have neither the resources nor the inclination to pursue these actions on their own. Yet such actions can shape policy, be a force for change, and build reputational capital and credibility with long lasting payoffs for the industry at large. As the broking and insurance community come together today, the questions that are being asked will almost certainly include: What lies ahead for the insurance broking industry? What are the key challenges that will face the industry? How will the landscape continue to change? Where will new opportunities lie? Where will new threats come from? And ultimately, how confident is the industry of its future? I am sure these questions will all be addressed in some way over the course of this Summit. A sampling of what has already been said and published on this subject would indicate that insurance broking is at a crossroad of critical strategic business decisions that will have a significant impact on its future prospects. We often hear this at different periods in time, and each time there is a sense that this will be the defining moment for the industry. I would like to suggest however, that this sense is more palpable in the current environment for a number of reasons that I would like to explore this morning. Let me begin with the Global Financial Crisis. While it is largely associated with a banking crisis, its implications have spread far beyond the banking sector.
The increase in the volume of financial assets is progressing at a higher rate than that of output, and has now reached a threefold of the global GDP, whilst back in 1980 it was approximately equal to the world output. Additionally, the fastest growing segment of the financial market is the segment of private debt securities. What is more, international issues of these securities grow at a higher rate than domestic issues, which means that companies increasingly finance their activities from funds raised abroad. Additionally, an important feature of development of the financial market is the gradual fall in significance of intermediation of the banking sector with a simultaneous increase of significance of the market intermediation 15 . As a consequence, the central bank’s channels of influence on the economy are changing. In the past the bank loan channel was deemed more important; it is now loosing its significance in relative terms. Until recently, the investment rate in the economy was to a large extent dependent on the domestic savings rate, which by the way was contradictory to one of the fundamental assumptions of some economic models of the full integration of capital markets. The economy was featured by the so-called home bias i.e. greater inclination of domestic investors to invest in domestic assets rather than in foreign assets 16 . The latest research 17 suggests that home bias over the past years could have dropped significantly, at least in the OECD countries. The decrease may be attributed to the very growth of cross-border capital flows.

Thank you very much for your attention. 29  D. Kohn “Remarks by Donald Kohn at Monetary Policy: A Journey from Theory to Practice, An ECB Colloquium held in honor of Otmar Issing”, 16 March 2006. BIS Review 57/2006  9
Andrew Bailey: The new approach to financial regulation 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 Chartered Banker Dinner 2013, Edinburgh, 1 May 2013. *  *  *  It is a great pleasure to be here this evening for the Chartered Banker Dinner. President, in the description of tonight’s dinner you made the important point that the Chartered Institute supports “ordinary” bankers providing a vital service to their customers at a very difficult time. I want to speak tonight about the importance of those vital services. The fact of the matter is that banks are in the dog house, and for reasons that are very well documented I am afraid. But, in saying that, it would be wrong to believe that this makes banks irrelevant and unwanted. On the contrary, the financial crisis has through adversity reminded us of the importance of banks to the functioning and health of the economy and their role as providers of critical financial services. Going back in history, it was Walter Bagehot in the 1870s who argued that the development of joint stock banks played an important part in the growth of the mid-nineteenth century British economy with its very high degree of openness to world trade.

Inflation targeting means setting the interest rate so as to achieve a numerical target for inflation. Norges Bank sets the interest rate with a view to stabilising inflation at 2.5 per cent within a reasonable time horizon, normally 1-3 years. The more precise horizon will depend on disturbances to which the economy is exposed, and how they affect the path for inflation and output. The inflation target represents a framework for, not an obstacle to, monetary policy’s contribution to stabilising output and employment. We have chosen flexible inflation targeting. Variability in output and employment as well as inflation is given weight. The objective of monetary policy is to safeguard the value of money in the long term, and seek to contribute to stabilising economic developments in the short and medium term. The objective of monetary policy is low and stable inflation. The instrument is the interest rate. The interest rate influences inflation with a lag and with varying intensity. As interest rates fall, household and local government consumption and investment tend to accelerate. Higher demand leads to higher output and employment. Wage growth may pick up. Higher wage growth combined with higher profit margins will result in higher inflation. BIS Review 61/2004  1  Lower interest rates normally lead to a depreciation of the krone. Imported goods then become more expensive and inflation accelerates. Expectations play a key role in price and wage formation, and they are influenced by the interest rate.
This is illustrated in the chart, where the core model is represented by the yellow boxes at the top. The additional models are represented by the blue boxes, while the red boxes represent exogenous factors. The additional models are smaller models used to forecast variables such as wage growth, private consumption, investment and imports. We also look at conditions related to financial stability. The results produced by the core model and the additional models are tested against each other, and by means of an iteration process based on judgment we arrive at forecasts we believe are reasonable. The forecasts that result from the models can be referred to as model-consistent. These forecasts will not necessarily be consistent with the Bank’s perception of realistic economic developments. This is  6  See Husebø, T. A., S. McCaw, K. Olsen and Ø. Røisland (2004): “A small calibrated macro model to support inflation targeting at Norges Bank”, Staff Memo 2004/3, Norges Bank, se www.norges-bank.no. BIS Review 6/2006  5  because the models are too simple to describe the real world, and as a rule, judgment will need to be applied to adjust the forecasts. Judgment is used to ensure that the forecasts for the different variables are economically consistent. The work on models at Norges Bank has partly been focused on describing the role of the interest rate in the economy and partly on developing models that may be useful to decision-makers.

This prompted Bank Negara Malaysia to document the industry’s transformation in a box article that we published in our latest edition of the Financial Stability and Payment Systems Report. Today, the industry stands among the more developed money services markets in the world and our MSB companies have a good reputation that will open doors for growth opportunities both within and outside Malaysia. The industry’s credibility has also avoided the negative impact from de-risking strategies by banks that have been experienced in other countries. We should not forget however that good reputations are hard to earn, and easily lost. So while we have come a long way, a number of priorities must continue to stay in clear focus for the industry to progress further. Let me just mention three of these priorities. First, we must continue to work at reducing transactions that are conducted through informal channels – in particular, through education and enforcement activities. Since 2012, the Bank has taken enforcement actions against 140 illegal MSB operators. This included criminal and civil actions pursued against over 70 companies. We will continue to intensify our efforts on this front. Second, we must continue to raise compliance and professional standards across the industry, regardless of size. Every company that holds a licence must be able to meet the expectations that have been set to protect the integrity of the financial system and provide a high standard of service to the public. Over the years, more companies have been given licences for longer periods.