samchain/econo-pairs-v1 huggingface dataset:
25/29  The evidence available also reveals that households cease to meet their financial obligations when they have to forgo a portion of the regular income they receive or when they lose their jobs. But lending standards and price-setting policies play a key role in mitigating these impacts. Hence, a key factor in the monitoring of bank mortgage lending standards is the extent to which interest rates charged vary in step with the risk borne. Prudent behaviour would advise charging a higher interest rate the greater the risk assumed. In this respect we can see that, set against pre-crisis behaviour, where there was scarcely any relationship between certain risk characteristics of mortgage loans and the interest rate charged, the relationship is now positive and statistically significant. Nonetheless, we should also note that this relationship has gradually diminished in intensity in recent years, in a trend that banks should strive to reverse so as to have prices properly reflect all the costs and risks assumed. Generally, then, the main conclusion that may be drawn from the foregoing analysis is that Spanish banks do not, for the moment, appear to be significantly increasing their risk profile. That said, some factors do require close monitoring. 26/29  3. Resilience of banks to shocks  One way of analysing banks’ resilience to shocks is to subject them to stress tests. The Banco de España conducts stress test exercises annually for all Spanish banks.

20/29  First, the private sector debt ratio stood at 130% of GDP in Q2, a drop of around 70 pp from the peak recorded in 2010, and is now below the euro area average. In recent months, external financing to non-financial corporations has continued to expand at yearon-year rates close to 1.1%, with significant – albeit increasingly modest – growth in financing through the issuance of corporate debt securities and a decline in bank lending that is flattening out. Even though the weight of corporate debt securities in bank balance sheets is very low, it has risen gradually in recent years, and it is therefore also something that should be monitored in the future. In this respect the credit cycle indicator used by the Banco de España (the credit-to-GDP gap, which compares the credit-to-GDP ratio with its long-term trend value) remains in negative territory (around -8 pp up to June 2019), although it is gradually approaching equilibrium. The forecasts for coming years suggest that this indicator will become positive towards the first half of 2021. Likewise, the indicator that measures credit intensity, which reflects the weight of change in credit relative to GDP, is currently close to equilibrium, on an upward path that is expected to be maintained in the next two years. By segment, in the case of non-financial corporations, there have been two key developments since the global financial crisis. First, their debt relative to GDP has fallen by around 40 pp, down to 73%, below the European average.
Although different levels of haircuts are applied to the different categories, one might say that the Eurosystem also allows banks to use collateral easily where either the interbank Repo markets are less liquid (such as in category 3+4) or where there is even no interbank Repo market at all (such as for non-marketable assets). Banks have the choice to use more or less liquid assets as collateral, a facility which constitutes a big advantage in critical liquidity conditions such as those currently experienced by market participants. BIS Review 120/2007  7  Some recent figures: The available eligible marketable collateral amounts to EUR 9 trillion. While the amount submitted to the Eurosystem nearly reached 11% of all eligible collateral by 31 August 2007 (nearly EUR 1 trillion), around 6% is effectively used to collateralize outstanding credit operations with the Eurosystem. By the end of 2006, uncovered bank bonds had become the largest single asset class put forward in Eurosystem operations (31%), surpassing government bonds for the first time (21%). ABS have also shown a steady growth, reaching 11.4 % of all collateral submitted by the end of 2006, and 19% by the end of August 2007 (+4% in August 2007). The year 2007 has also shown a steady increase in the use of credit claims, which by end of July 2007 represented roughly 10% of all assets submitted as collateral to the Eurosystem.

Consequently, the guidelines for the exercise of ownership rights must be based, not on a specifically Norwegian world view, but on internationally recognised norms. And we are open about our principles and practices without losing sight of the limits of transparency. Declarations and resolutions may have their place, but in our day-to-day work we aim for real dialogue and results. The list of global issues that require urgent attention seems never-ending, and there have been calls for the Fund to address many of these. But priorities always have to be made to avoid the risk of spreading resources too thinly. Norway has chosen its goals for the Pension  BIS Review 6/2008  1  Fund based on a long-term perspective, and we do not want to be ruled by the tyranny of the impulsive and changing priorities that beleaguer many public programmes and sectors. There is another important ethical principle behind the Fund, which should not be forgotten: namely, our obligation to future generations. For the prosperity we are enjoying now, incurs obligations. Our oil and gas reserves are limited. Justice would not be served if all our petroleum wealth was allocated only to the generation lucky enough to experience our “oil age”. We perceive it as an ethical obligation to invest our wealth also for the benefit of future generations. International capital markets play a crucial role in allowing us to fulfil this obligation. Allow me the pleasure for a moment to look back on our less illustrious history as a borrower.
Indeed, the SME Credit Bureau initiative represents a convergence of different objectives by various stakeholders, namely the Government, SME financiers and creditors, CGC and D&B. It is a big step in bridging the current gaps in the availability of credit information on SMEs. Nevertheless, the real and largest beneficiaries of the initiative would be the SMEs themselves. On this note, I would like to congratulate CGC and Dun & Bradstreet Malaysia Sdn. Bhd. in their new venture. I am also confident that this will open up a new chapter in the history of credit bureaus and enable these entities to play an even greater role in the future development of the financial industry in Malaysia, and consequently, enhance access to financing by SMEs. 4  BIS Review 67/2008

This event led to a rethinking of the configuration of the North American electricity grid, with built-in latencies and stricter controls on power circulation. In the mid-1980s, an attempt on the world domino-toppling record – at that time, 8000 dominos – had to be abandoned when the pen from one of the TV film crew caused the majority of the dominos to cascade prematurely. Twenty years later a sparrow disturbed an attempt on the world domino-toppling record. Although the sparrow toppled 23,000 dominos, 750 built-in gaps averted systemic disaster and a new world record of over 4 million dominos was still set. No-one died, except the poor sparrow which (poetically if controversially) was shot by bow and arrow. So to banking. It has many of the same basic ingredients as other network industries, in particular the potential for viral spread and periodic systemic collapse. For financial firms  16  Carlson and Doyle (1999). 17  Kelling et al (2003). BIS Review 40/2010  7  holding asset portfolios, however, there is an additional dimension. This can be seen in the relationship between diversification on the one hand and diversity on the other. 18 The two have quite different implications for resilience. In principle, size and scope increase the diversification benefits. Larger portfolios ought to make banks less prone to idiosyncratic risk to their asset portfolio. In the limit, banks can completely eradicate idiosyncratic risk by holding the market portfolio. The “only” risk they would face is aggregate or systematic risk.
We may have found ourselves in an unintended equilibrium where the idea that a bank should not fall below 100% LCR is hardwired within banks’ internal governance systems and internal risk appetites, meaning that when a shock hits banks are reluctant to use their liquid assets – they would rather deleverage. The regulatory messages in support of liquidity buffer usability communicated before and during the pandemic were on their own insufficient to address banks’ reluctance to use their liquid assets. If we would like to change this, we may need to be bolder. One way to proceed would be to learn from our experience with capital buffers. We have learnt that releasable buffers are the more ‘usable’ in practice, and that the portion of the capital stack that is releasable might not be sufficient. These considerations could be relevant for the liquidity framework, which comprises 100% usable and 0% releasable buffers – and no hard minimum requirements (as we have in the capital framework). In practice, the lack of a hard minimum in the framework may contribute to uncertainty around how much HQLA it is acceptable to draw down in times of stress. It leaves us in a situation where, even during times of stress, the 100% LCR threshold becomes the primary focus of firms. One solution could be the releasability of LCR in stress, through a counter-cyclical liquidity buffer that could operate in a similar vein with the CCyB.

Along with Pillar 2 add-ons in the UK, which are used to address additional salient risks not captured by the LCR. 34. A fuller discussion of the challenges in interpreting changes in the LCR can be found in Bank of England and PRA Discussion Paper 1/22 ‘The prudential liquidity framework: Supporting liquid asset usability’, March 2022 35. Goodhart, C (2008), ‘Liquidity Risk Management’, Banque de France Financial Stability Review. 36. Bank of England and PRA Discussion Paper 1/22 ‘The prudential liquidity framework: Supporting liquid asset usability’, March 2022  ,
The world today is encountering more extreme disasters such as epidemics and unpredictable weather-related calamities. In our own country, the worst flood disaster experienced in decades last year saw over 250 thousand people displaced with estimated costs of more than two billion ringgit to repair damaged infrastructure. This presents a sober reminder of the responsibility of all corporations to ensure that they are well prepared for and remain resilient against calamities, not just for their own survival, but in the interest of employees and the community that depend on them. Role and prospects of the insurance industry in advancing risk management The cost associated with negative tail-risk events will only escalate as business networks grow in complexity. The use of insurance continues to be an important way in which companies can reduce this cost by transferring risks to insurance providers. Insurers are well-placed to assume such risks given their long standing history in risk analytics which enables them to effectively exploit the law of large numbers and benefit from risk pooling. Among emerging economies, however, there is still a sizeable protection gap in spite of the increased frequency and severity of weather related disasters and other natural catastrophes. In 2014, insured losses in Asia only covered about 10 percent of total losses incurred as a result of natural and man-made disasters. Combined insurance premiums written from emerging markets accounted for only 18 percent of global premiums in 2014, against 82 percent recorded from the advanced economies.

This morning, I would like to talk about some of the changes we are seeing in the practice of risk management and reflect on important priorities for risk management as observed from our work at Bank Negara Malaysia with the financial industry. I will then offer some brief perspectives on business continuity management and close with some final thoughts on the prospects for the insurance industry in Malaysia to contribute towards the advancement of risk management capabilities across Malaysian businesses. Changing practices in risk management Since the financial crisis, risk management practices have come under intense scrutiny. The spectacular failures in risk management in the lead up to the crisis prompted deep reflections on what had gone wrong with risk management systems and practices – not least of all among companies that had invested heavily in sophisticated risk measurement and management systems only to have them ultimately fail to detect or control risk exposures. Closer to home, businesses in Malaysia are currently facing a set of challenging business conditions and some are likely to find themselves ill-prepared to respond to the challenges, with important implications for their future prospects. So what can we learn about the changing practice of risk management from these experiences? A first observation to my mind concerns the importance of building a strong risk culture supported by governance arrangements that are explicitly aligned to a firm’s risk appetite.
The Committee currently is in the final stages of preparing a paper on how the supervisory review of capital can be implemented effectively. The third pillar of the new capital adequacy framework, market discipline, will serve to reinforce capital regulation and other supervisory efforts to promote safety and soundness in banks and financial systems. The Committee, in January of this year, issued a paper on bank disclosures, covering banks’ capital structures, risk exposures and capital adequacy. Currently, our Transparency Group is considering whether it is possible to establish a set of core disclosures that would bolster market discipline. This will involve drawing upon our existing disclosure recommendations, and reviewing the extent to which disclosure in new areas - the internal ratings-based method, external ratings or internal assessment of other risks - might be appropriate. I hope that this overview has given you a sense of the key points the Committee has learned from the consultative process, and where we are headed. In the near-term, we are completing our work and expect over the next few months to make progress in a number of areas, including greater risk differentiation in the standardized approach and the development of supervisory standards for internal ratings. As we continue to fine-tune the new capital adequacy framework, we also are striving to avoid getting bogged down in secondary issues that could slow down the overall process. As I have often remarked, the perfect cannot be the enemy of the good.

Conclusion In closing, I want to emphasize that effective supervision of modern banking organizations will necessarily entail a closer and more cooperative partnership between industry participants and official supervisors. The industry’s participation in the formulation of a more risk-sensitive capital adequacy framework is a good example of this kind of constructive interaction. Indeed, the three pillars of the proposed framework - minimum standards, supervisory review of banks’ capital assessment methodologies, and market discipline - reflect the understanding that regulatory requirements alone are no longer sufficient to address the growing complexity of banks’ activities and the associated risks. Consistent with this notion is the need for effective corporate governance, which plays an increasingly important role in a rapidly evolving banking environment. It is clear to me, as a former commercial banker and now as a supervisor, that only if the industry and supervisors work together, each meeting our responsibilities and reinforcing the other, will we be able to successfully manage and supervise a modern financial system. While perspectives may differ from 5  BIS Review 51/2000  time to time, our objective is the same - to maintain a strong and vibrant financial system over the long term. BIS Review 50/2000  6
One of the most encouraging trends we have been able to report during these seven years has been the improved relationship between banks and their small business customers. Research by the Forum Of Private Business shows that the performance of the banks had improved significantly since 1992. The improvement is the result of a number of factors, for instance the implementation by the banks of codes of practice and the increased emphasis on training relationship managers to understand the specific challenges faced by small businesses. There is, of course, always room for improvement, but the increased degree of information sharing and trust has been notable. The reports have mapped other positive developments - for instance, a changed balance between term lending and overdrafts. The Three As In monitoring finance for small firms, we have sought with others to ensure that the types of finance on offer and the finance providers themselves are efficient and effective. We like to think of this in terms of the three “As”: availability, appropriateness and accessibility. In many cases, the availability of finance is a bigger issue for small firms than its actual cost. Availability is likely to be affected by a number of issues, above all the prevailing macroeconomic environment. Banks adjust their risk assessments of small firms as trading conditions alter: this can mean that in an economic downturn credit is rationed. There was evidence of this in the last recession.

Caleb M Fundanga: Foreign private investment in Zambia Opening remarks by Dr Caleb M Fundanga, Governor of the Bank of Zambia, at the Closing and Dissemination Workshop on Foreign Private Investment and Investor Perceptions Survey, Lusaka, 20 January 2011. *  *  *  The Deputy Secretary to the Cabinet, Mr Evans Chibiliti; The Deputy permanent Secretary at the Ministry of Works and Supply, Mrs Bweupe Kaonga; The MEFMI Executive Director, Dr Elias Ngalande; The IMF Country Representative, Mr Perry Perone; Heads of Government Departments present; Chief Executive Officers of various Companies and Associations present Colleagues from Bank of Zambia; Distinguished Participants; Members of the Press; Ladies and Gentlemen. It is my honour and privilege to officiate at this very important Closing and Dissemination workshop of Phase III of the Survey on Foreign Private Investment and Investor Perceptions. As I welcome you all, I wish to convey my appreciation for your contributions to the success of this project. May I, in this regard, express our special appreciation to the private sector colleagues for their cooperation during the survey. Let me also take this opportunity to extend my sincere gratitude to the Private Sector Development (PSD) Programme, for providing financial support for this very important project. Further, our thanks go to the Macroeconomic and Financial Management Institute (MEFMI), and Development Finance International (DFI) for providing technical support to this survey.
The credit boom may not have led to a rapid inflation in the price of goods and services, but it did support a surge in the price of a broad range of assets. Property prices soared (Chart 2). The price of stocks and bonds also rebounded strongly from their early decade lows. That rise in prices was driven by and reflected in a sustained rise in borrowing. A combination of factors – including a large flow of savings out of the emerging economies, and a reduction in the return that investors required to bear risk – had allowed the banks to raise large sums of money at a very low price. And, as memories of earlier busts faded, the margin that banks charged their customers over those lower funding costs was also compressed by increased competition. Households and companies were therefore able to borrow more money at ever more attractive terms. Loan to income ratios crept up. And UK banks became increasingly dependent on borrowing from wholesale investors overseas (Chart 3). By the eve of the Credit Crunch in 2007, the balance sheets of the banks and households and some companies to whom they had lent large sums of money had become stretched. All this looked sustainable so long as banks could continue to get access to cheap funds, and households and companies could rely on a steady stream of income and profit to service debt. But once the music stopped, those leveraged balance sheets were very vulnerable and adjusting them is proving very painful.

An investment boom preceded each panic – the earlier in copper and the later in housing – with much of the credit being funded by sources outside of any existing liquidity protections. When the bubbles began to deflate and prices began to fall, loan defaults quickly developed precipitating funding runs on the institutions involved in extending this credit. What seemed like large liquidity buffers by individual firms were quickly drawn down. Funding withdrawals precipitated asset sales, which put further downward pressure on asset prices. The resulting credit contractions adversely affected the real economy, setting up an adverse feedback loop that exacerbated the initial losses. 2  2  Walter Bagehot, 1873. Lombard Street. London: Henry S. King and Co.  BIS Review 92/2010  Given the parallels between the events of 1907 and 2007 and, more importantly, the similarities of the lessons learned from those episodes, I believe the most instructive name for our latest financial crisis is the “Panic of 2007”. In the rest of my remarks, I will explore in greater detail the factors behind the panic, as well as the responses by the Federal Reserve. The first question to explore is the extent to which the financial system had evolved over the past several decades. 3 Over this period, demand deposits lost their market share to money market mutual funds, which, while considered safe, are not guaranteed like deposits. This made it increasingly difficult and less profitable for banks to fund loans on their balance sheets using deposits.