samchain/econo-pairs-v1 huggingface dataset:
Normal competitive pressures can push valuation methods away from the conservative extreme and generate larger exposures to risk. As a result, individual firms and the overall market are more exposed to risk in a stress scenario than would be desirable. Another set of challenges comes with the broader damage to markets that can accompany the failure of a major financial institution. Firms have strong incentives to avoid large financial losses and to reduce the risk of failure, of course, but they do not have the incentive to internalize the potential external consequences of their distress on the financial system, and it is unrealistic for market participants to incorporate these risks into market prices. This “public good” dimension of financial stability means that while the whole economy benefits from a more stable financial system, each individual institution would prefer that others incur the costs associated with its provision. As a result, firms may collectively underinsure against the risk of failure and underinvest in the infrastructure and policies that promote financial stability. And finally, policies designed to reduce the risk of failure in financial markets create moral hazard, dulling the incentive individual firms face to self-insure against potential loss. We apply a set of capital requirements and supervisory constraints to offset the distortion created by the safety net, but these may not fully compensate for the impact on behavior of the broader range of financial intermediaries of the perception that the authorities will act to protect the financial system from systemic risk.

And to do so, we have significantly increased the frequency of our meetings. These meetings provide us with opportunities to communicate the reasoning and implications of our policy strategies, goals, and actions, and to hear how these affect other economies in the region. We exchange perspectives on shifting policy imperatives, and we share experiences and insights related to managing risks. Through the BIS, we also jointly meet with members of the private sector, including bank CEOs and chief economists from the region, to hear their views about the economy. This is another valuable aspect of our work as central bank governors, and it’s insightful for all of us to hear from leaders beyond our own organizations and the borders of our countries. Global Issues I touched on many topics—the pandemic, the war, and inflation. These are global issues with domestic implications, and when we address them to fulfill our own mandates, we affect the economies of other countries in the region as well. In this regard, the work of the BIS in bringing central banks together has never been more important. I look forward to continuing our dialogue and engagement in the future. Again, congratulations to the Central Reserve Bank of Peru, and best wishes for your second century. 2/2  BIS central bankers' speeches
Mr. Carse speaks on banking supervision in Hong Kong and the lessons learned from the financial crisis in Asia Speech by the Deputy Chief Executive of the Hong Kong Monetary Authority, Mr. David Carse, at the Asian Investment Conference “Asia: Meeting the Challenge” held in Hong Kong on 27/3/98. 1. I am pleased to be here this morning to speak to you on the topic of the supervisory lessons which Hong Kong can learn from the region and specifically from the crisis which has engulfed Asia since July of last year. This is a drama that is still being played out and we have not yet reached the final act. But I do not think that it is too early to make some kind of judgment about what went wrong and the lessons that can be drawn for the future. The Asian Crisis 2. I think that it is fair to say that the Asian crisis has surprised almost everyone by its speed and intensity and the ease with which it spread from country to country. Even those who were sceptical about the Asian miracle did not really expect anything like this. Of course, there were warning signs such as the current account deficits in a number of countries such as Thailand. But these could be regarded as the natural consequence of the heavy demand for investment in growing economies.

This includes the following main elements: BIS Review 28/1998  ˝  -4-  • Clear responsibilities and objectives for the supervisor set out in a suitable legal framework • Operational independence for the supervisor and the necessary resources to do the job • A proper licensing regime for banks • Sound prudential regulations and requirements that address the main types of risk faced by banks • The means to enforce supervisory requirements and gather information through on-site examination and off-site review • The power to take action against problem banks, including closure • The ability to conduct consolidated supervision and to cooperate and exchange information with other supervisors at home and abroad 15. These may seem like statements of the obvious. But the necessary measures were evidently not fully in place in a number of countries in the region. Reforms are now being implemented, in some cases with the help of the IMF and the World Bank. These include tighter limits on loan growth and on lending to sectors such as property; tightening of the loan classification framework and provisioning requirements; more disclosure of non-performing loans; strengthening of on-site examination to introduce a more risk-based approach; and enhanced legal powers for the supervisors to take prompt action to deal with problem banks. In a number of countries, problem banks and finance companies have been closed down or are being merged and efforts are being made to realize as much value as possible from their bad assets.
The extent of the reallocation will depend on how fast the revenues are used and how much is saved for future consumption. Suppose, as one extreme, that all income entering the government budget were used in that same period. This means that an increase in the oil price would increase government income and domestic demand, encouraging a reallocation of resources from the exposed to the sheltered sector. If the oil price fell again later, Norway would be left with an exposed sector that is too small, resulting in a current account deficit and expectations of an exchange rate depreciation that would be needed to restore the exposed sector. Such fluctuations in the use of oil revenues would lead to considerable instability in the Norwegian economy and large fluctuations in the exchange rate over time. Norwegian economic policy is organised to counteract such instability. The key issue is to prevent increased petroleum revenues from leading directly to increased government consumption, in other words to reduce the dependence of government spending on oil revenues. The share of government spending financed by oil revenues varies over the business cycle. For the past few years this share has averaged around 3% and it is expected to be kept at about that level over the coming years. To this end, Norway has created the Government Petroleum Fund, which receives revenues from the petroleum sector, transfers the amount necessary to produce a balanced government budget and invests the surplus abroad.

9  BIS Review 121/1999  Chart 10 How interest rates affect the economy  Exchange rate  NBs interest rates  •Market interest rates •Lending and deposit rates  •Demand & production •Loans, investment, share prices •Wages and prices •External balance  Legg inn filadresse her  8. Exercising discretion in monetary policy  The mandate stipulates the objective of monetary policy, but Norges Bank has to choose how to achieve the objective. As shown, the krone exchange rate has fluctuated in recent years in spite of Norges Bank’s active use of instruments, indicating that Norges Bank cannot fine-tune movements in the krone exchange rate. The exchange rate will also in the future be influenced by factors that are not under the control of Norges Bank, like fluctuations in international financial markets, the evolution of the price of oil, fiscal policy, and developments in domestic prices and costs. Thus, in its use of the interest rate Norges Bank focuses on the preconditions for stability of the krone exchange rate over time. The interest rate affects the exchange rate directly through returns on holding kroner, but also indirectly through the effects of the interest rate on inflation and output. More specifically, stability of the exchange rate requires that: •  Price and cost inflation must be brought down to the level aimed at by euro countries. •  Monetary policy must not in itself contribute to deflationary recessions, as this would undermine confidence in the krone. Let me explain in more detail.
We represent the public interest with objectives given to us by Parliament, for which we are accountable to Parliament. We must be, and no doubt will be, held to high standards as we seek to balance our pursuit of the public interest with a properly functioning market economy. 2  BIS central bankers’ speeches  We have set out how we supervise insurance companies in our approach document. We are a judgement-based supervisor, based on evidence and against a framework of rules. Judgement must be forward-looking as we have to assess risks to our objectives. I know that this emphasis on judgement can ruffle feathers – it can make us seem intrusive. I want our use of judgement to be always focussed on the key risks to our objectives. We are though conscious of the need to be proportionate in our approach and to take account of the regulatory burden we are placing on firms. In order to do so, insurers are divided into five categories of impact. Category one insurers pose the greatest risk to the PRA objectives through their size, interconnectedness, complexity or business type and category five insurers pose the least risk. Every firm has been told which category they are in and this should provide an indication of the level of supervisory interaction they can expect from the PRA. Moreover, we are not aiming to be a “no firm failure” regulator; rather, we aim to minimise adverse consequences if a firm fails.

Hamad Al-Sayari: Housing finance in the Kingdom of Saudi Arabia Speech by His Excellency Hamad Al-Sayari, Governor of the Saudi Arabian Monetary Agency, to the “Conference on Housing Finance in the Kingdom”, Riyadh, 17 January 2007. *  *  *  Dear Audience, It gives me a great pleasure to inaugurate the activities of the second day of the “Conference on Housing Finance in the Kingdom”. I would like to thank Euromoney and all other entities organizing this important and vital conference in the Kingdom at a time when we need, more than any time before, to shed more light on the issue of real estate finance, exchange views and benefit from the experiences of other nations in this area. Undoubtedly, this will contribute to developing the proper strategies and mechanisms to overcome the challenges of finance in this significant sector. Dear Audience, As everybody knows, the Saudi economy, in general, and the housing sector, in particular, have witnessed strong growth during the past years. The accelerated population growth rate in our country is considered among the highest growth rates in the world, calling for more financing needs for various development sectors, especially the housing sector. The government of Saudi Arabia, represented by the Real Estate Development Fund, has made, and continues to make, great efforts, under its development plans, in order to provide necessary finance to ensure the provision of appropriate housing for Saudi citizens, especially those of limited income.
This has facilitated the smooth flow of funds in the Islamic financial system. With the development of the bond market in Malaysia which now accounts for 81% of GDP, the Islamic private debt securities account for about 44% of the total outstanding amount of private debt securities in the market, while the monthly traded volume of the Islamic money market is now about RM30 to RM40 billion. The money market also effectively serves as a channel for the conduct of liquidity operations by Bank Negara Malaysia as part of its monetary policy. The rapid expansion of the Islamic financial services industry in Malaysia is also supported by a conducive legal and Shariah framework. In terms of the legal infrastructure, the Islamic Banking Act 1983 and Takaful Act 1984 governs the conduct of the Islamic banking institutions and takaful operators respectively. There is also the Government Funding Act which governs the issuance of government Islamic instruments. A dedicated High Court judge has also been assigned to preside over cases relating to Islamic banking and finance. An arbitration centre is also available to deal with disputes. The Central Bank Act has also been amended to provide for the establishment of a Shariah Advisory Council at the Central Bank as the sole authority and reference on all Shariah matters. The treatment of tax neutrality has also been accorded to Islamic financial transactions.

To ensure the soundness and stability of the Islamic financial system the regulatory and supervisory framework has also been improved for the Islamic financial institutions, with the incorporation of stronger standards for corporate governance, transparency, disclosure, accountability, market discipline, risk management and customer protection. In addition, the payment system has also been continually upgraded to ensure efficient and effective clearing and settlement of payments. It is now highly automated with the ability to handle scriptless debt securities trading, processing and settlement. By providing a real time settlement system for inter-bank fund transfers, the credit and settlement risk in the Islamic financial system has been minimised. Attention has also been given to human talent management to create a sufficient pool of competent bankers essential to spearhead innovation in Islamic financial products and services. To meet the increasing manpower requirements, institutions of higher learning and the Islamic banking and finance institutes have also initiated new programmes on Islamic finance. Leading initiatives in the global integration Islamic finance in Malaysia has now taken on a new dimension to become more internationally integrated. This is part of the strategy to evolve Malaysia as an integrated international Islamic financial hub that will have a greater role in facilitating international economic and financial flows. 2/5  The liberalisation of the Islamic financial system in Malaysia commenced in 2004 with the issuance of three new Islamic bank licences to foreign Islamic financial institutions.
How can we make regulation conducive to FinTech innovation, while still ensuring that the system remains stable, key players are sound, and consumer interests are safeguarded? This requires a keen understanding of emerging technologies and new business models, and being alert to potential risks, while taking care not to stifle innovation. Easier said than done! Let me give a few examples of how MAS has tried to strike the right balance. Take for example virtual currencies, or commonly known as crypto-currencies. MAS does not regulate virtual currencies; in fact, we welcome them as an innovation that can potentially reduce the cost of financial transactions. But we regulate the activities that surround virtual currencies if these activities pose specific risks. First, virtual currency transactions could potentially be exploited for money laundering or terrorism financing due to the anonymous nature of the transactions. And so intermediaries in virtual currency services will be subject to anti-money laundering requirements. Second, virtual currencies can go beyond being a means of payment to representing ownership of assets, as we see in many Initial Coin Offerings or ICOs. This makes them look very much like a share or bond certificate. So, if the digital token is structured like a security, then the ICO must meet the requirements of the Securities and Futures Act. This is to protect investors. FinTech developments are forcing regulators to review the way regulation is done. If FinTech is unbundling the financial services value chain, then regulators may have to “unbundle” their regulations too.

In an Appendix to this Report, we forecast that the negative net worth of the Bank will go from 2% to 3.8% of GDP between 2011 and 2013. Such deterioration is explained by the composition of our assets and liabilities. In the current circumstances, expanding our reserves would further worsen our financial position. Although the Bank’s negative net worth has not been an impediment for monetary policy conduct, taking actions that increase such negative value is a cost to be paid by all Chilean citizens. Having said all this about the convenience or not of a forex intervention, undoubtedly the best way for our exporting sector to boost competitiveness in the world markets is through constant improvement of processes, both by investing in technology and developing their human capital. Likewise, it is important to be constantly on the lookout for new markets of  BIS central bankers’ speeches  3  destination and product innovation, to ensure better conditions for their businesses. In any case, there are also internal issues that must be resolved to back our producers’ competitiveness, including any measures that disentangle administrative processes when creating and maintaining a firm and especially, establishing a policy that aims at developing a balanced energy matrix that can reduce energy costs. As we have said before, the cost of electric power in Chile, which is an important input of productive activity, is higher than the OECD member countries’ average. Let me now describe the macroeconomic scenario contained in our Monetary Policy Report.
Since the single European currency was introduced on 1 January 1999, the Swiss franc's nominal appreciation has been more than offset by the inflation differential between Switzerland and the euro area. The competitive position of our exporters has thus improved against their European counterparts. The dynamism of the Asian economies has boosted demand for commodities, notably oil. The soaring price of this "black gold" continues to pose a serious threat to the recovery of the industrialised economies. Guardedly optimistic outlook for 2005 As it is benefiting from price stability, low interest rates and a strong competitive position, the Swiss economy is well placed to profit from the world economic upturn. However, the outlook for the global economy in 2005 is not quite as good as it was in the past year: growth is put at around 4%, down from 5% in 2004. Growth will continue to be driven by Asia and America. Europe – and especially  2  BIS Review 30/2005  Germany, our biggest market – will continue to chug along with a growth rate of between 1.5% and 2%. In this slightly less dynamic environment, the Swiss economy is unlikely to exceed its 2004 growth figure. Business activity has fallen off slightly since the autumn but should slowly gain momentum again in the next few months. Overall, we are expecting GDP to grow by about 1.5%.

Thus far developments in the US have not resulted in a corresponding turnaround in Europe. Share prices in Europe have been relatively stable so far this year, and European economies are still showing solid growth. The effects on the Norwegian economy There are no signs of unrest among economic agents in Norway. Households and enterprises still expect growth in future income. If oil prices fall, the situation may be different. The chart shows the probability of various oil prices ahead. The curve is based on prices in the options market for contracts maturing in December. The vertical axis shows that market participants have priced in a 10 per cent probability that oil prices will be below USD 18 per barrel in December 2001 and a 10 per cent probability that oil prices will be higher than USD 35.5 per barrel in December this year. This would suggest considerable uncertainty. 6  BIS Review 19/2001  The chart shows that high oil prices and petroleum production are generating large current account and budget surpluses, with an attendant increase in Norway's disposable income. The current account surplus came to about 14 per cent of GDP last year, which is one of the highest surpluses recorded in an OECD country in the post-war period. In addition, government budget surpluses have increased sharply and reached 14 1/2 per cent of GDP. The Government Petroleum Fund shall serve as a buffer against short-term fluctuations in oil revenues.
I made reference earlier to the emphasis in international financial reform on laying down connections, rather than on raising up walls and restrictions. So let me turn to the process of technological advance, my final topic today. This is intricately linked with the question of globalisation, particularly in the case of information technology. Indeed, without it, globalisation as we understand it would not be taking place. Again, this is not a new trend: over the centuries new navigation aids, railways and steamships, the telegraph, the telephone, and later radio, television and satellites have all boosted the speed and quantity in which information travels around the world. Now the internet and other electronic channels have vastly expanded that capacity. 21. In the field of financial services, recent advances in information technology have played an enormous role in determining the speed and manner in which money circulates and the nature of the competitive landscape. Money, which was once solid, heavy and difficult to shift around, turns into electronic pulses, which can be sent around the world at the touch of a button in a matter of seconds. At the consumer end of the industry many of us now rarely enter a bank, but carry out our transactions on cash machines, over the telephone, and increasingly through computer terminals, and, no doubt in time, over WAP telephones. The little plastic card, of which we all have at least one in our pockets, has seen a growth in business by more than thirty times in the past thirty years.

This substantial, but not insuperable, reservation aside, I am confident that, in terms of producing business for Hong Kong’s banks, the creation effect of WTO entry will outweigh any diversion that will arise from the preference of some foreign banks and enterprises for dealing directly with the Mainland. There will still be factors that will encourage international businesses to use Hong Kong as a financial centre. These include the efficiency and sophistication of Hong Kong’s financial markets and the financial infrastructure, the critical mass that goes with being the world’s fourth largest banking centre, and all the qualities that single out Hong Kong, of which an audience such as this needs little reminder: the rule of law, the free movement of goods, capital and information, light government, and a trained and energetic workforce. Globalisation 10. WTO is about globalisation. So let me turn to that subject now. Hong Kong’s openness, and our connectedness to the larger world, place us in an excellent position to take advantage of the acceleration of globalisation that trade and financial liberalisation, and other forces are bringing about. Globalisation is not a new phenomenon. Our ancestors embraced the idea with the opening of trading routes, the building of canals and steamships, and the laying of railway lines and telegraph cables. And for a hundred and fifty years or more, Hong Kong has been a classic example of a global hub – a city at the crossroads of a number of regional and transcontinental trading routes.