samchain/econo-pairs-v1 huggingface dataset:
Our domestic Islamic financial system is one of the most developed, with its diversity of players and financial products and services in Islamic banking, takaful and the Islamic capital market. Today, we are witnessing the establishment of another dedicated Islamic banking subsidiary that will contribute towards further strengthening the Islamic financial institutional infrastructure in Malaysia the launch of Affin Islamic Bank Berhad as an Islamic banking subsidiary of Affin Bank Berhad. With the domestic Islamic financial infrastructure in place, the emphasis is now to become more internationally integrated with the international Islamic financial system, thus increasing our economic and financial linkages with other parts of the world. Our efforts are to position Malaysia as an international Islamic financial centre and thus facilitate this international integration process. In this regard, the establishment of an Islamic subsidiary also increases the opportunity for entering into strategic partnerships with foreign interests, thereby increasing the potential for greater interface with more extensive markets beyond our domestic borders. On the domestic front, while tremendous progress has been achieved, much more needs to be done. The Islamic financial industry needs to allocate more resources toward investment in research and development to create more innovative products. Consumer awareness and consumer education also needs to be enhanced to support the growth of the Islamic financial industry.

The regulatory framework governing market practices by the Islamic financial institutions can also be strengthened further to ensure its continued soundness. This will involve the implementation of the prudential standards that have been issued by the Islamic Financial Services Board, the IFSB. Greater transparency through the observance of minimum disclosure requirements needs to be adopted by the industry. Good business practices need to be embedded in all aspects of Islamic financial operations, not only as part of good governance and corporate social responsibility, but also as part of brand building. Market efficiency in conducting Islamic business activities can also be enhanced further to ensure its sustained competitiveness as an intermediation process. As we are advancing into the third phase of the Financial Sector Master Plan, where the environment will become increasingly more liberalised and dynamic, we now have to look beyond the 2010 strategies. A key feature of the new environment is increased competition. The benefit of this trend will be to the consumers and businesses in terms of better prices, better range of products and services that are of a higher quality. This in turn would contribute to the overall performance of the economy. To be at the leading edge of competition, continuous efforts have to be intensified to enhance business efficiency and innovation. In this regard, the Islamic subsidiaries, with their increased autonomy in business operations, would be better positioned to determine their own business strategies and to realise the vast growth potential in the Islamic financial industry.
After that, I will focus on the Swiss economy and our new inflation forecast. The last part of my remarks will concentrate on the latest adjustment to the ECB’s monetary policy concept and the National Bank’s profit distribution. Financial markets After the war in Iraq the financial markets reassessed the economic situation. The risks emanating from the international political situation lost significance, and the markets returned their focus on the fundamentals. The different markets have been giving off mixed signals. On the one hand, yields on long-term bonds in the major currencies fell to their lowest level in years. This is a reflection of the fact that bond markets expect low inflation and subdued economic movement for an extended period. Equity markets, on the other hand, recovered somewhat in the second quarter. Risk premiums on corporate bonds went down as well. This is a sign that some market participants are quite confident that corporations will make a stronger showing. Exchange rates underwent a revaluation too. The marked decline of the US dollar against the euro can partly be interpreted as a normalisation after the previous exaggerations, and partly be attributed to the widening disequilibrium in the balance of payments and in the US budget. Moreover, given the extremely low US dollar interest rates, currency risks could be hedged at favourable conditions by concluding forward contracts - an attractive option in times of decreased risk capability. With the resulting forward sales the dollar came under further pressure.

As regards the Swiss franc, we have noted that the euro/franc exchange rate has for the first time reached its pre-9/11 level. The price losses on equities of the past few years - the SPI today is approximately 40% below its peak - have had a significant effect in Switzerland. They put pressure on both corporations and individuals, with foreseeable higher old-age provisions and nascent insecurity in this area being one of the concerns. The Swiss financial sector, which makes an above-average contribution to gross national product, has been particularly hard hit by the stock market correction. The cut-backs which are now necessary in the financial sector will put a strain on the Swiss economy for an extended period to come. Economic activity Economic activity in Switzerland weakened in the first quarter of 2003. According to preliminary estimates of seco, real gross domestic product contracted compared with the previous period and was again slightly below the previous year’s level. The renewed deterioration in the economic situation did not come unexpectedly. It was primarily the result of the recurring downturn of the global economy, which is partly a reflection of the uncertainties in connection with the Iraq war. Swiss exports were  BIS Review 27/2003  1  down again in the first quarter, and the foreign trade contribution became distinctly negative. Consumer spending had a slightly stabilising effect while investments continued to decline overall. Even though geopolitical uncertainties have meanwhile largely given way, the economic situation in Switzerland remains difficult.
At the same time, the strained financial situation in the public sector points to weak employment growth in local governments in the period ahead as well. Thus, employment growth is likely to be somewhat weaker during the year compared with our December forecast. As early as February, we changed somewhat our outlook for the rate of wage increases as a result of the situation in the labour market. There is reason to expect total rises in wage costs to average around 3.5 per cent in 2004 and 2005, which in terms of average collectively agreed levels leaves little room for more than about 2 per cent on average in the years ahead. The wage bargaining round appears so far to have gone relatively well, but the historical experiences of Swedish wage formation suggest that one should be cautious about assuming that we are home and dry. The parties appear to be far from agreement on a number of issues, and there are risks of conflicts arising. As long as the agreements are reached at moderate levels from an inflation perspective, longer agreement periods are preferable. This would alleviate some future uncertainty and should thereby contribute to a better economic situation. So while employment, measured by the number of hours worked, in the business sector was weaker than expected last year, GDP growth was roughly in line with the Riksbank’s expectations. This means that productivity was higher than anticipated.

Over the policy-relevant horizon, in an environment of modest growth in the euro area and well-anchored long-term inflation expectations, underlying price pressures should remain moderate. Risks to the outlook for price developments continue to be broadly balanced over the medium term. Upside risks pertain to further increases in indirect taxes, owing to the need for fiscal consolidation, and higher than expected energy prices over the medium term. The main downside risks relate to the impact of weaker than expected growth in the euro area, in particular resulting from a further intensification of financial market tensions. Such intensification has the potential to affect the balance of risks on the downside. Turning to the monetary analysis, the underlying pace of monetary expansion remained subdued. The annual growth rate of M3 stood at 3.2% in June 2012, slightly higher than the 3.1% observed in the previous month and close to the rate observed at the end of the first quarter. Overall, inflows into broad money in the second quarter were weak. Annual growth in M1 increased further to 3.5% in June, in line with the increased preference of investors for liquid instruments in an environment of low interest rates and high uncertainty. The annual growth rate of loans to the private sector (adjusted for loan sales and securitisation) declined to 0.3% in June (from 0.5% in May).
The role of banks and investment banks in our financial system A driving force behind Congress' creation of the Federal Reserve System in 1914 was its recognition of the need for a public institution to perform the role of lender of last resort. The financial landscape in 1914 (and continuing until relatively recent times) was one dominated by traditional banks. When the Federal Reserve was founded, there was no deposit insurance, so the willingness of individuals and businesses to hold deposits at a particular bank depended wholly on their degree of trust that the bank would be able to promptly furnish them with the money they had deposited – whenever they might request it. But – as Congress understood – the business of banking involves making loans as well as taking deposits. Because banks, in order to make money, needed to extend long-term credit to customers for things like the purchases of homes or investments in business equipment, not all of the money taken in by banks could be readily available to be paid out if depositors were to request it. In fact, only a small fraction of a typical bank’s assets were kept in liquid enough form to be immediately paid to depositors upon demand. This fundamental fact of bank operation left banks – and the banking system – open to liquidity shocks that, nearly a century later, have their echoes in recent market developments. The financial crises around the turn of the century were the historic catalyst for the Federal Reserve’s creation by Congress.

Thomas Jordan: Mortgage financing and the risks of a credit crunch in Switzerland and abroad Summary of a speech by Mr Thomas Jordan, Member of the Governing Board of the Swiss National Bank, at the Schweizer Ökonomentag, University of Zurich, 10 September 2008. The complete speech can be found in German on the Swiss National Bank’s website (www.snb.ch). *  *  *  The international financial crisis has raised the question of the risks of a credit crunch on domestic and foreign property markets. A credit crunch can occur if banks’ ability to lend is constrained, or if their lending practices become more risk averse. From a macroeconomic perspective, a credit crunch is relevant because it can reinforce an economic slowdown. The risks of a property market credit crunch differ from country to country. Mortgage markets in the US and UK are showing clear signs of a credit crunch. Both countries have typically seen a sharp slowdown in credit growth, falling house prices and weaker bank balance sheets. Mortgage lending in these countries over the past few years has increasingly been financed through securitisation. The current loss of investor confidence in securitisation has thus hampered banks’ ability to refinance mortgage contracts and, as a result, banks in both countries are finding it harder to grant new mortgage loans. At the same time, falling prices have dampened their risk appetite as regards lending. This decline in the supply of credit is now weighing on economic developments in these countries.
As from 2006, it is assumed that nominal growth in general government expenditure will be approximately the same as nominal growth in general government revenues and that the real tax level will remain unchanged. Growth in the euro area and Japan was weaker towards the end of 2004 than projected in the November Inflation Report. It appears that it will take time for structural changes that have been implemented, in Germany for example, to contribute to an increase in output. In the US, on the other hand, economic growth remains firm and capacity utilisation is rising. Even though developments in the US economy are favourable, higher interest rates, among other factors, will gradually result in an increase in household saving. At the same time, the plans call for a lower rise in government spending. Weaker growth in US demand may imply slower growth also in other countries. In addition to the euro area, economic growth is expected to slow in the UK and Sweden. On balance, we assume that growth among our trading partners will slacken this year and stabilise in the years ahead. Growth in Asia, except Japan, and in Central and Eastern Europe is expected to moderate but to remain strong. Robust expansion in China and India has in particular pushed up prices for oil and other important commodities. Growth impulses to the Norwegian economy may therefore be somewhat stronger than the overall outlook for our most important trading partners would indicate.

In addition, the reduction in the interest rate has probably contributed to holding up expectations of future inflation even when inflation is low. If there is confidence in monetary policy, economic agents will expect inflation to be close to target over time. Companies will draw up their budgets on this basis. This will then contribute to stabilising inflation. Many companies change their prices only once or twice a year. When they change prices, they probably take into account the expected rise in other prices. It has been important to prevent inflation expectations from falling and becoming entrenched at a low level. Surveys of inflation expectations nevertheless indicate that expectations are well anchored around the inflation target in the long term. The first signs of the effects of the interest rate cuts appeared in the foreign exchange market. The interest rate differential against other countries narrowed. It became more attractive to borrow and less profitable to invest in the Norwegian krone. The movement in the krone exchange rate was reversed and the krone depreciated through 2003 and into 2004. However, the impact on the krone exchange  2  BIS Review 27/2005  rate has been considerably dampened because external interest rates have remained low. High prices for oil and gas and other export goods also contributed to an appreciation of the krone last year. The depreciation of the krone in 2003 contributed to restraining the fall in prices for imported goods. The effect occurred gradually.
All in all, it is thus not unreasonable to consider that inflation targeting has contributed towards the higher average growth we have experienced over the two decades since targeting was introduced, as compared with the preceding period. 1  The Swedish inflation target was announced in January 1993 and started to be applied in 1995. For a more indepth review of the relationship with academic research and countries that had previously adopted inflation targeting, see Berg, C., “Experience of inflation targeting in 20 countries”, Sveriges Riksbank Economic Review 2005:1, Sveriges Riksbank. BIS central bankers’ speeches  1  It is important that inflation expectations are not too low There is consequently a lot to be gained from having low, stable and predictable inflation. But it is also important that expectations of future inflation are not too low. One reason for this is that inflation allows wages to develop more weakly in certain areas without requiring nominal wages to be cut. This means that unemployment can be avoided when changes occur that reduce the demand for certain types of knowledge, skill and experience. However, inflation expectations also affect the strength of the Riksbank’s primary monetary policy weapon – the repo rate – and thereby the Riksbank’s ability to stabilise the Swedish economy and lead it out of crises. This is a product of the way inflation expectations affect real interest rates.

However, speaking for myself, I have always seen the repo rate path as a component of our ambition to be transparent as it shows which repo rate we include in our forecasts. And we always emphasise that the repo rate path itself is a forecast and not a promise. One important source of the difficulties that Goodfriend and King point out is the unclear allocation of roles, responsibilities and instruments for managing the work of financial stability and macroprudential policy in Sweden. As I have already mentioned, I consider sorting this matter out to be a matter of great urgency, considering that Sweden has one of Europe’s largest banking systems in relation to GDP. 6  Goodfriend, M. and King, M., “An assessment of Swedish monetary policy 2010–2015”, Riksdag Committee on Finance, Sveriges Riksdag, 2016. 7  “Time to improve the inflation target?”, published 3 December 2015. BIS central bankers’ speeches  7  This spring, Goodfriend and King’s assessment will provide an excellent basis for the discussion of monetary policy and the issues that a modern central bank must manage. These unusual times are placing great demands on both monetary policy and macroprudential policy. It is important that we are able to meet these challenges in the right way. 8  BIS central bankers’ speeches  Figure 1. Inflation targeting has made inflation lower, more stable and more predictable. Note. Annual percentage change. Sources: Statistics Sweden and the Riksbank  Figure 2. Average mortgage rate and corporate rate, and repo rate  Note.
The Islamic Financial Services Board (IFSB) estimated that assets of the global Islamic financial services industry grew by 20.4% year-on-year to reach an estimated USD1.6 trillion as at end 2012.1 Last year also saw a record volume of sukuk issuances globally, with sukuk issuance from more countries, and of larger size and longer tenor. Key financial centres have continued to facilitate the development of Islamic finance within their jurisdictions. Singapore has made adjustments to our regulatory and tax regime to allow for the growth of Islamic finance since 2004. Hong Kong has recently amended its tax regulations to allow for issuance of sukuk, while the UK recently established an industry task force to facilitate further development of Islamic finance. Going forward, the broadening and deepening of economic and financial ties between Asia and the Middle East, the two major centres for Islamic finance, will also provide further impetus for future growth of Islamic finance globally. Connectivity between Asia and the Middle East There are three important observations to be made on the growing connectivity between Asia and the Middle East. First, the economic relationship between the two regions has expanded beyond the energyrelated sector. Asia’s demand for energy exports from the Middle East will continue to remain robust as the region expands. However, non-energy trade between the two regions is also growing fast. About 40% of GCC’s non-oil exports are to Asia. Saudi Arabia is the leading  1  Islamic Financial Services Industry Stability Report 2013, Islamic Financial Services Board (IFSB).

Moreover, alignment of market expectations with the central bank’s own targets, through fluent and transparent communication, allows monetary policy to exert a stronger influence along the entire yield curve. Yet notice that this latter channel becomes most relevant if central bankers approach markets from the sort of leadership position emphasised by Professor Blinder. I agree with him on this important point: central bankers should continuously monitor markets and should extract from them as much information as possible. But they must not put themselves under the thumb of what is sometimes capricious and short-sighted market sentiment. In any event, one of the most robust lessons we can extract from the recent period of global monetary and output growth stability is that low inflation may well be consistent with episodes of high financial volatility. Cases of financial stress have been recorded both in industrialised and in emerging market economies over the last few years without noticeable inflationary pressure. Even in countries whose financial system has proved more resilient, financial cycles have become wider and more volatile. Indeed, a long period of monetary stability coupled with low interest rates, as has been the case for some years now, may arguably be conducive to certain types of imbalances in asset markets. In such an environment the poor returns on low-risk investments and the softening of lending standards may lead investors to take on increasingly riskier projects.
In the first, efforts focused on remedying the shortcomings detected in macroeconomic and financial policy oversight and coordination, and on the creation of financial assistance mechanisms. In the second stage, following the June 2012 Summit of euro area Heads of  BIS central bankers’ speeches  1  State or Government, a banking union, greater fiscal integration and a common economic policy framework were proposed. Here you may recall that the European Commission communicated its plans for the banking union to the Parliament and the Council on 12 September, with a legislative proposal to give form to the first of the three pillars which would underpin such a union: a common supervisory mechanism for which ultimate responsibility would be centralised at the European Central Bank, while there would be scope for some degree of decentralisation, enabling the knowledge and experience of national supervisors to be harnessed. The move is just a preliminary one and should be viewed with caution, since in order to complete the banking union an integrated bank crisis management mechanism and a common deposit guarantee scheme will be needed. This will not be possible without progress towards a fiscal union, an area that obviously poses most significant political difficulties. Along these same lines, I believe we should welcome the European Central Bank Governing Council’s decision on 2 August to set in train the so-called Outright Monetary Transactions.

And, finally, before 1 April the following year, the Minister of Finance and General Government has to submit a report to the Government on the degree of fulfilment by all tiers of government of the objectives in the initial budget. I consider that these reports should in fact offer this complete picture of the budgetary projection that we are today lacking. I would further remind you that the Government has announced the creation in 2013 of an Independent Fiscal Authority to ensure compliance with budgetary regulations. This type of institution has proven useful in other developed countries in enhancing budgetary policy credibility. It is, however, crucial that such an institution should enjoy a degree of independence, effective responsibilities and resources in line with best international practices. I will now discuss the essential features of the State and Social Security budget for 2013. Macroeconomic setting and fiscal deficit The draft State Budget for 2013 is part of a macroeconomic setting in which real GDP is estimated to decrease by 0.5% as a result of a negative rate of change in national demand of 2.8%, which would be partially offset by a 2.3 pp contribution from the external sector. BIS central bankers’ speeches  5  This projection of a 0.5% decline in GDP in 2013 is clearly optimistic compared with the fall of around 1.5% currently projected by most international organisations and analysts. That said, I would like to make two observations.