samchain/econo-pairs-v1 huggingface dataset:
Page 1  Climate Capital − speech by Sam Woods Given at a webcast hosted by the Global Association of Risk Professionals  Page 2  Published on 24 May 2022  We recently tested the UK’s largest banks and insurers on how prepared they are for financial risks caused by climate change. Sam Woods talks about the results. Speech Climate change is now firmly in the focus of prudential regulators across the globe. In that context, I want to use this speech to outline the results of our first exploratory scenario exercise on climate risk – the ‘CBES’[1] – which were published earlier today. But before that, I want to put those results in context, and set out how I see climate risk fitting within the Prudential Regulation Authority’s (PRA’s) wider mission. [2]  The role of prudential policy Tackling the threat from climate change will involve efforts by governments across the globe, as well as by many other organisations and individuals. In the UK, the effort to get to Net Zero greenhouse gas emissions is being led by government, with a wide range of other public bodies doing their part. Where does prudential policy fit into this effort? The role of prudential policy is to ensure the safety and soundness of banks and insurers, so that they can continue to provide vital financial services to the real economy.

Climate and capital Should climate risk be captured in capital requirements? [4] In one sense, the answer is an obvious yes. Climate change will inevitably drive losses for banks and insurers – even in a scenario where governments around the world take swift and early action to bring us to net zero. Just as with any other risk, PRA-regulated institutions must have the resilience to keep serving the real economy in the face of these losses. Capital requirements are an important part of how we deliver that resilience. That said, while capital can address the financial consequences of climate change, we don’t think it is the best tool to address directly the causes of climate change – for example by reducing capital requirements to subsidise ‘green’ assets, or increasing them to penalise carbon-intensive ones. How to address the causes of climate change is a decision for governments and parliaments, not financial regulators. [5] For one thing, by diverting the capital framework from its core goal of keeping the financial system standing, such interventions carry significant risks. At worst, we might end up under-capitalising banks and insurers for the risks they face, raising questions about their overall resilience. Or we could end up over-capitalising them inefficiently, reducing their ability to support the economy through the transition. And there is little evidence that fine-tuning capital requirements in this way would actually achieve its intended goals. In the EU, changes made to the bank capital framework with the aim of supporting SME lending have had little demonstrable impact.
Basle II is a step in the right direction in many ways, particularly in its treatment of off-balance sheet vehicles and in stimulating improved risk management systems, but it still has known pro-cyclical features which we need to address. If we cannot do so effectively an alternative may be to require larger capital and liquidity buffers across the whole cycle. The past seven months have been testimony to Mark Twain’s comment that “history doesn’t repeat itself but it does sometimes rhyme.” The structured credit markets and the growth of “originate and distribute” banking have amplified the turmoil in credit markets in recent months. But under the new clothes, the old credit cycle is still recognisable. It is important we learn the lessons about the new credit instruments and markets. But we also need to address again the roots of the credit cycle.

In Banking Banana Survey this year indicated that technology risk rose from no. 18 in 2012 survey to no. 4 due to a high increase in the frequency and sophistication of cyber-attacks. Financial institutions have exposed to all risks of technology security: access risk, accuracy risk, availability risk, and agility risk. Concerning the systemic risks, the Bank of Thailand as a regulator established the IT principle called “SIA”, which stands for Security, Integrity and Availability that covers infrastructure protection at the prevention stage of both physical and logical controls: CCTV / access control; firewall, IDS / IPS, AntiVirus and password, respectively. In the arrangement of contingency plan, all systems will be tested or reviewed regularly. Furthermore, key risk indicators and risk tolerance will be closely monitored, and loss data collection will be reported to the board of directors and the Bank of Thailand. Lastly, the Bank of Thailand has to correct the IT contingency plan implementation. Additionally, market conduct will serve as an alignment to each stage to determine customer protection by sharing correct information and suggestions to customers; and by interacting with customers’ complains. As a central bank, we wish to support more on inter-operability for both wholesale and retail which is a part of standard setting I mentioned earlier: for example, standardized codes for all banks and real sector.
Between 1989 and 2004 the turnover in the global spot FX market increased by nearly 100% (Chart 3). Chart 3: Average daily net turnover in the global spot FX market USD billion 700  621 568  600 494  500 394  400  387  317 300 200 100 0 1989  1992  1995  1998  2001  2004  Source: BIS  An increase in international capital flows and the development of information and communication technologies have triggered portfolio investments on international markets. On the other hand, enterprises and banks have increasingly frequently raised capital abroad. For instance, between 1989 and 2000, the value of cross-border investments in shares increased over twelve-fold, whereas between 1994 and 2005, the value of debt securities issued on foreign markets increased six-fold (Chart 4 and Chart 5). Non-bank financing of enterprises has also gained in significance. In 1980, enterprises raised USD 4.5 trillion on the capital market, whereas in 2004, the figure stood at over USD 60 trillion (Chart 6).

The lessons we derived from this experience will lead global decision makers to reconsider their policies. We have already started to observe critical and permanent changes in global financial order. The future of the financial system will be in a much better shape with a pre-emptive approach. The coordination is especially needed in terms of better regulation and supervision of financial market instruments. In order for the mission of the COMCEC and thus of the Organization of the Islamic Conference to be successful, it is necessary for the decision making mechanisms to acquire a more active and global dimension. The success of the economy policies of the Islamic counties under the roof of the COMCEC depends on the formation of measures to increase trust and establishment of a close cooperation in economic and commercial areas. Annual meetings of the Governors of the Central Banks of the COMCEC countries will be very important in terms of catching up with the world’s agenda and following the recent developments. Economic activities of the related countries will be supported the most by increasing the cooperation between the central banks of the COMCEC countries, enhancing the functioning of the active mechanisms of communication in international platforms and sharing the experiences. The recovery of the economies of the Islamic countries will be fastened by increasing the exchange of information in the fields of economy, finance and banking among the member and observer countries’ central banks and financial authorities.
The prolonged period of global low interest rate environment leads to another potential concern: search-for-yield that leads to underpricing of risks. It should be noted that search-for-yield is not uncommon and is all well and good if investors are wellinformed and manage their risks accordingly. However, we cannot deny that some investors are underpricing the associated risks. Debt accumulation among households;  3/5  large expansion of foreign investment funds with high concentration in some emerging economies; saving cooperatives’ growing asset base; maturity mismatch of corporate borrowers; and rapid growth of unrated bonds are some examples of the issues the Bank of Thailand has been monitoring over the years. More recently, we also notice an upward trend in mortgage loans to homebuyers who search for rental yield, driven partly by high LTV ratio for mortgage loans offered by fierce competition in the financial sector. Furthermore, mortgage NPLs, especially among second and third home buyers, have continued to rise. On the regulatory side, the Bank of Thailand continues to monitor warning signs of financial stability risks and address them accordingly. For example, last year, we tightened credit card regulations as well as uncollateralized personal loan limits to mitigate household debt problems. It is also our view that collaborations between various regulatory bodies and market participants are increasingly important for effective risk monitoring and assessment, together with appropriate measures to manage risks that might arise in the future.

I’d like to conclude with another quote on the future, this time from Nelson Mandela, more than 150 years after Kierkegaard: “A bright future beckons. The onus is on us, through hard work, 4/5  BIS central bankers' speeches  honesty and integrity, to reach for the stars.” I have every confidence that today’s agents have what it takes to thrive in the future, but the hard work of laying the necessary foundations must begin today. With that, I thank you for your time, and wish all of you a productive day ahead. 1 Customer  Behavior and Loyalty in Insurance: Global Edition www.bain.com/publications/articles/customer-behavior-loyalty-in-insurance-global-2017.aspx  2017. 2 Insurance Barometer Study survey in 2016 by the Life and Health Insurance Foundation for Education (LIFE) and  LIMRA 3 Customer  Behavior and Loyalty in Insurance: Global Edition www.bain.com/publications/articles/customer-behavior-loyalty-in-insurance-global-2017.aspx  5/5  2017. BIS central bankers' speeches
A monetary policy that is guided by an inflation target is basically concerned with adapting the development of demand to the economy’s long-term growth. That is not easy, I can assure you, and our chances should not be exaggerated. Towards the end of last year, however, activity in the Swedish economy did begin to slow to a growth rate that can result in a stable long term development. The last time we met, early in October, we discussed the situation in these terms and I concluded that if the strong economic upswing were to continue, it would be necessary to raise the repo rate. Other central banks around the world had been facing a similar situation for some time. The U.S. Federal Reserve, for example, had raised its instrumental rate successively during 1999 and 2000 to 6.5 per cent. Last year the European Central Bank raised its rate to 4.75 per cent and the Bank of England’s rate was increased to 6.0 per cent. I recall that last year many observers counted on relatively large interest rate hikes in Sweden as well. They thought they saw signs that the Swedish economy was on the way to becoming overheated and argued rather vigorously that the Riksbank therefore ought to act quickly — starting in the autumn of 1999 and continuing with further steps up to last summer — in order to avert the threat they saw looming on the horizon.

Financial services are a critical tool to help people step onto the economic growth ladder and create a brighter future by tapping their own creativity in creating jobs and incomes. It can also be instrumental for broader human development, by letting clients invest in themselves and seek protection from shocks and bad fortune. It is however, gratifying to note that following the survey, commercial banks and other nonbank financial institutions in Zambia have increasingly become receptive to lending to small and medium-sized enterprises and have in this regard established departments dedicated to small and medium enterprise lending and introduced financial products specifically designed to meet the financing needs of these businesses. In working with Banking on Health, banks have shown interest in learning about the private health sector, a sector whose business characteristics were largely unknown to banks. However, banks can still misunderstand the risks, overestimate the costs, and underestimate the potential returns of lending to sectors, such as the health sector. In addition to the structural barriers in the financial sector that limit access to finance, many private health care providers have limited financial and business-management skills and often struggle to prepare a bankable loan applications or business proposals. It is difficult for commercial banks to assess the credit risk of a loan without the financial statements and business plans to support the loan application.
The ECB’s asset purchase programme may prove to have a weaker effect on interest rates and investment in the euro area. Long-term interest rates are already very low. Inflation is at risk of becoming negative and is propping up real interest rates. The willingness of firms to invest is still being restrained by uncertainty and weak growth prospects. When central banks buy government bonds on a large scale, they pay using new money. A common concern is that pumping new money into the economy fuels inflation. Conditions have not been normal in recent years, however. The challenge now facing the euro area is weak growth combined with the risk of falling prices. Even though growth in the world economy is gradually picking up, it is unlikely that we will again see the high growth rates observed in the years prior to the financial crisis. Perhaps this is not something to wish for either. Some of that growth was driven by unsustainable borrowing. Several conditions suggest that the traditional advanced economies are facing more deeprooted challenges. Productivity growth has declined since the 1970s (see Chart 10). Through several decades to the end of the 20th century, an expanding labour force and higher education attainment contributed to driving the economy forward. Growth was accompanied by solid returns and considerably higher real interest rates than observed in recent years. These growth impulses are fading away. The labour force is expanding at a slower pace in many countries.

In the longer term, this means less money in the national coffer, with an attendant reduction in Norway’s fiscal space. At an oil price of around USD 60 per barrel, transfers to the GPFG may come to a halt. Rather, it seems that at today’s level of petroleum revenue spending there will soon be a need to make transfers from the GPFG to the fiscal budget. Measured as a share of GDP, the GPFG may have already reached the peak. Calculations in the National Budget for 2015 illustrate this point (see Chart 15). The broken red line shows the trajectory for fiscal space assuming a real return of 4 percent. The estimation is based on the oil price level prevailing late last summer. If the return is closer to 3 percent, there will be little room for increasing petroleum revenue spending over the fiscal budget. On the contrary, in the course of a few decades, petroleum revenue spending as a share of GDP will have to be reduced, that is to say fiscal policy will have to be tightened. If, in addition, the oil price settles more permanently around the level observed so far this year, fiscal policy must be adjusted earlier. If petroleum revenue spending follows the real return, we will be heading for a period of sizeable fiscal retrenchment each year. In addition, pension obligations will show a pronounced rise further ahead. The fall in oil prices has been a reminder of the uncertainty surrounding future petroleum revenues.
Platforms such as this contribute to the rich marketplace of ideas that will spur us to think of innovative policies and effective ways to implement them. Tackling the issue of affordable housing requires us to be creative, proactive and holistic in our solutions. This will require collaboration and commitment from all parties involved; policymakers, the private sector, developers and the public at large. It will not be easy, but it is necessary for us to build a better future not just for our families, but for our future generations. 3/3  BIS central bankers' speeches

The combined effect of these developments affected negatively the real sector of the economy, mainly the business sector. In the first quarter of this year, business confidence index fell under its historic average, reflecting a more difficult financial situation. The latter was also shown by the lower-thanplanned realization of fiscal revenues as well as by the decline of loan portfolio quality that banking sector has encountered throughout the period. In the short-term, the public authorities took measures to lessen the impact of the global financial crisis in the economy. Through the significant increase of the fiscal expenditures share designated for investments, mainly in infrastructure, the government supplied an important impetus for the support of the real sector of economy to cope with the global crisis effects. The Bank of Albania has also been active to provide liquidity in the interbank market, with the aim to preserve the stability of the banking sector and to lessen the expected decrease of its intermediation role. We removed quantitative limits in the size of the liquidity injections through our week-long reverse repurchase agreements, and extended the maturity of our injection operations up to three months. Following a cut of the policy rate by 0.5 percentage points in January and the subdued inflationary pressures at home, the monetary policy paid an important attention to the financial stability, by keeping the policy interest rate unchanged throughout the period.
Miguel Fernández Ordóñez: Reflections on the Spanish banking sector and economy Opening remarks by Mr Miguel Fernández Ordóñez, Governor of the Bank of Spain, at the “XVIII Encuentro del sector financiero”, organised by Deloitte-ABC, Madrid, 5 April 2011. *  *  *  Good morning, I am most grateful to Deloitte and to ABC for giving me this opportunity to share with you some reflections on the banking sector and economy of our country. In my talk I am going to take a hopeful view of the future of our economy and our banking system, based on the extent of the adjustment already under way and the progress made with fiscal consolidation and structural reforms. Let no one be mistaken, I am speaking about the future, because the present continues to be dominated by an overwhelming statistic: the more than four million who are unemployed. Until this number is significantly reduced, nobody is entitled to even hint at the slightest satisfaction. But it is true that, for the first time since imbalances began to build up in the late 1990s, Spanish society seems to be prepared to change and to undertake reforms that are absolutely essential, not just for growth, but for solid and sustained growth. And such change, perceived and appreciated by the markets, is the main base for a hopeful view of the future, although there is clearly still much to be done and no time for any let-up in our efforts.

Andres Sutt: Macroeconomic co-ordination and fiscal policy in the expanding Eurozone Statement by Mr Andres Sutt, Deputy Governor of Eesti Pank (Bank of Estonia), at the conference “thinking EUconomy - Wirtschaftspolitik europäisch denken”, Berlin, 3 May 2006. *  *  *  The enlargement of the European Union with the clear message that all countries without an opt-out clause will, in the future, be also members of the EMU, is a most welcome and forward-looking approach in view of an ongoing globalisation and integration processes in the world. Eventually, the adoption of the single currency by all Member States provides clear benefits for the Union as a whole. From the macroeconomic point of view it would support further economic integration and higher growth rates by fostering trade and investments. Therefore, euro area enlargement will provide tangible benefits for all European citizens over time. The main policy challenge for both the current and prospective euro area members is to ensure that the best use is made of the monetary stability provided by the framework of the European System of Central Banks (ESCB). From the perspective of the new Member States, the issue at stake is how to maintain the economic structure supportive for sustained growth and rapid real convergence. Strong fiscal stance is instrumental in this regard.
The maturity composition of the Treasury portfolio, not shown in the figure, would be different from what it was before the financial crisis. On the liability side, at normalization, non-reserve liabilities in the median scenario would be considerably larger than they were pre-crisis. Some of the growth in the reverse repo programs we have observed since the crisis might be a second-round effect stemming from the growth in reserves, and therefore some decline in this category is possible as the overall balance sheet size declines. However, my overall read is that much of the increased demand for non-reserve liabilities, particularly currency in circulation, is likely to be persistent past normalization, and indeed demand for reserves is also likely to be higher.7 But what is the longer-run appropriate size for the balance sheet?

On the other hand, trying to maintain an artificially depreciated exchange rate, especially in contexts of growing financial integration, can only foster speculation and capital inflows, as it increases expected appreciation. Any exceptional measure must be applied only in extreme circumstances and for a limited period of time, once every other instrument has been reasonably exhausted. References Borensztein, E., O. Jeanne, and D. Sandri (2009). “Macro-Hedging for Commodity Exporters.” CEPR Discussion Paper 7513. Caballero, R.J. (2009). “Sudden Financial Arrest.” Mundell-Fleming Lecture prepared for the IMF 10th Jacques Polack Annual Research Conference. Calvo, G., L. Leiderman, and C. Reinhart (1993). “Capital Inflows and Real Exchange Rate Appreciation in Latin America: The Role of External Factors.” IMF Staff Papers 40: 108–51. Calvo, G., L. Leiderman, and C. Reinhart (1994). “Capital Inflows to Latin America: The 1970s and the 1990s.” In E. Bacha (ed. ), Economics in a Changing World, proceedings of the Tenth World Congress of the International economic Association, Vol. 4, London: McMillan. Cowan, K. and J. De Gregorio (2007). “International Borrowing, Capital Controls and the Exchange Rate: Lessons from Chile.” In S. Edwards (ed. ), Capital Controls and Capital Flows in Emerging Economies: Policies, Practices and Consequences, NBER and The University of Chicago Press. 6  BIS Review 72/2010  De Gregorio, J. and A. Tokman (2005). “El Miedo a Flotar y la Política Cambiaria en Chile.” Economía Chilena 8(3): 29–54. Kamil, H. and B. Sutton (2008). “Corporate Vulnerability: Have Firms Reduced Their Exposure to Currency Risk?” IMF, Regional Economic Outlook, Western Hemisphere, chapter 5, October.