samchain/econo-pairs-v1 huggingface dataset:
Within Bank Islam itself, there is a track record and brand name for innovation, with the development of new business models and product offerings. This partnership would thus contribute towards accelerating this process and towards serving as a bridge to strengthen the relationship of the Islamic financial markets as well as the investment and trade ties between the West Asian and North African regions, with East Asia. Strengthening the capital of a financial institution, however, is not the only factor that will determine its capacity and potential to perform. Equally important is the quality of its talent, the systems that it has in place, in particular, its risk management and ICT systems and its governance structure, its leadership and its corporate culture. Thus, while this capitalisation exercise will put Bank Islam in a stronger position to tap new opportunities, all the other elements also need to be in place to enable the institution to realise its true potential. Sound corporate governance and effective management of banking institutions are vital to ensure their effective and sound functioning. In particular, significant shareholders are expected to play an active role to ensure that capable individuals are appointed on the Board and senior management of banking institutions. Bank Negara Malaysia had as early as 2001 required the Board and management of Bank Islam to undertake remedial actions on several operational and control weaknesses.

When the weaknesses  BIS Review 99/2006  1  were not adequately addressed, the process of reconstituting the Board and management of Bank Islam was initiated in 2003. In such an exercise, key shareholders are expected to be proactive in making prudent and responsible action to remove any member or employee that is found to be unsuitable or not having the required calibre so as to avoid a prolonged process in the reconstruction of the Board and management of the bank. It needs to be recognized that the responsibility for the safety and soundness at the institutional level rests primarily with the Board and the management of each banking institution and the key stakeholders such as the significant shareholders. Institutional investors should also have an active role and make swift and bold decisions in ensuring that only capable individuals are appointed and remain on the Board and senior management of banking institutions. Currently, virtually all the directors and key executives of Bank Islam are new, with diverse banking experience. In accelerating the provisions and in instituting the measures to address the bank's system, processes and business culture, it has now paved the way for drawing in new shareholders. It can now offer a valued proposition. And indeed, the participation of a new strategic investor will in fact further strengthen the bank. This has allowed the existing and new shareholders to focus taking the bank to the next level and to capitalize on the new opportunities the environment offers.
Recent evidence shows that the large amount of slack in the economy has contributed to disinflation over the past couple of years. This can be seen in the steady decline in core inflation between mid-2008 and the end of 2010. As shown in Chart 18, core PCE inflation in December had risen at just 0.7 percent on a year-over-year basis, down from 2.5 percent in mid-2008. Slack in our economy is still very large, and this will continue to be a factor that acts to dampen price pressures. Nevertheless, there are several reasons why we need to be careful about inflation even in an environment of ample spare capacity. First, commodity prices have been rising rapidly (Chart 19). This has already increased headline inflation relative to core inflation, and the commodity price changes that have already taken place will almost certainly continue to push the headline rate on year-over-year basis higher over the next few months. Second, some of this pressure could feed into core inflation. Third, medium-term inflation expectations have recently risen back to levels consistent with our dual mandate objectives (Chart 20). If medium-term inflation expectations were to move significantly higher from here on a  1  However, growth alone will not resolve the longer-term problem of the disparity between promises made to state and local workers in terms of their public employee pension and health benefits and the resources set aside to pay for those benefits.

For many larger institutions, a release of loan loss reserves has been important in supporting earnings. Credit availability has improved somewhat as very tight standards start to loosen (Chart 9). As a result, some measures of bank credit are beginning to expand again (Chart 10). Second, monetary policy and fiscal policy have provided support to the recovery. On the monetary policy side, the unusually low level of short-term interest rates and the Federal Reserve’s large-scale asset purchase programs (LSAPs) have fostered a sharp improvement in financial market conditions. Since August 2010, for example, when market participants began to anticipate that the Federal Reserve would initiate another LSAP, U.S. equity prices have risen sharply and credit spreads have narrowed (Chart 11 and Chart 12). Long-term interest rates have moved higher after initially declining, but this does not appear troublesome as it primarily reflects the brightening economic outlook. On the fiscal side, the economy has been supported by the shift in policy toward near-term accommodation. In particular, the temporary reduction in payroll taxes is providing substantial support to real disposable income and consumption. This could have a particularly strong impact on growth during the first part of the year. Third, growth abroad – especially among emerging market economies – has been strong and this has led to an increase in the demand for U.S.-made goods and services. Over the four quarters of 2010 real exports rose 9.2 percent (Chart 13). After a disappointing performance earlier in the year, U.S. net exports surged in the fourth quarter (Chart 14).
Bond yields have, consequently, been low by historical standards, a phenomenon which has substantially facilitated private investment. This in turn, will not fail to have a highly positive effect on growth. A third benefit of the Euro is the removal of exchange rate risk and transaction costs for intra Euro area trade. This has promoted trade integration among Euro area countries without diverting trade with other countries. Indeed, it appears that business cycles tend to be more and more synchronized over time, an evolution which allows for greater efficiency and  BIS Review 115/2007  1  sustainability of the common monetary policy. This shows that monetary union is a self sustaining process: real convergence is to some extent a result, as much as a precondition of economic integration. Another benefit of the Euro is the boost it gives to financial integration in Europe. In many segments, European financial markets have reached the depth and liquidity which, up to now, were the preserve of dollar markets. This stimulates productive investment, helps in restructuring and, more generally, allows a better allocation of savings and sharing of risks. The current market turmoil is a clear test for this achievement and while the problems affecting the Euro markets have been comparable to those affecting the other major markets, the strength of the Euro shows, to some extent, that it has become a safe haven in our globalized financial world. The Euro is becoming extremely attractive, as a vehicle, a transaction, an investment and a reserve currency.

It is however a present concern to the extent that recent signs of increasing labour market shortages and decreasing FDI inflows question the capacity to maintain GDP growth at the high levels recorded in the past. Addressing these risks and challenges will require the conduct of prudent macroeconomic policies insuring short-term stabilisation, with fiscal authorities avoiding pro-cyclical loosening and generous spending policies, and monetary authorities preserving price stability and guaranteeing financial stability. However, macroeconomic policies alone are not sufficient to improve the long-term growth potential: they are aimed at fostering a stable and transparent business environment, but have to be supplemented by the implementation of structural policies designed to enhance labour market participation, labour mobility, competition in goods market, investment in education, R&D and infrastructure. It appears very clearly that the challenge of a stable and sustainable path for the catching-up process is closely interlinked with the challenge of a successful integration in the Euro area. For that purpose, it is in the interest of the New Member States themselves to be patient while accelerating structural reforms in order to meet both these challenges. Euro area accession will come in due course as the well deserved reward for the efforts of each country in creating the conditions of its own long-term economic prosperity. I look forward to such accessions. BIS Review 115/2007  5
These matched each other almost pound for pound and were both constant through the wars. 20 The political reaction was immediate. It was Sheridan, Irish playwright and Whig MP, who only a month after suspension described the Bank as an “old lady” who’d “fallen into bad company…at the St James’s end of town” and been “seduced” by the “young gentleman” Pitt. Gillray’s famous cartoon memorialised the description and the nickname “Old Lady” stuck. 17  16  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  16  David Ricardo – blamed the subsequent rise in prices squarely on the suspension and the growth of unbacked banknotes and called for an immediate restoration of convertibility. Yet, in some ways, one might be surprised that prices didn’t rise further (inflation averaged 2% between 1792 and 1815). One reason was that, despite the criticism, the Bank did not, by and large, abuse its new-found discretion21. It ran what might be described as an accommodative policy, allowing prices to rise and fall with government spending and the general level of demand, but not an outright expansionary one (Chart 12a). Another is that, while the timing was a matter of fierce debate, the belief that convertibility would be reinstated at some point, and at the original price, was widespread (it was eventually restored in 1821).

Government debt and inflation Speech given by Ben Broadbent, Deputy Governor Monetary Policy 2020 Annual Meeting of the Central Bank Research Association London School of Economics via videolink 2 September 2020  I’ve received helpful comments from colleagues at the Bank of England. I’d like to thank Jack Meaning, Nickie Shadbolt and Ryland Thomas and especially Mette Nielsen for their help in preparing the speech. The views expressed are my own and do not necessarily reflect those of the Bank of England or other members of the Financial Policy Committee or the Monetary Policy Committee. 1  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  Good afternoon. Thank you for asking me to speak to you today. This is an important and innovative time for central banks, across their many functions, and it’s vital we learn from our own and others’ research on the big questions. The Bank of England launched its new Agenda for Research1 yesterday and Andy Haldane will I’m sure want to tell you more about it in the panel following this talk. The topic I’ve chosen today certainly isn’t a new one. In fact, it’s almost as old as economics itself. I want to talk about “monetary finance” – what it is (and what it is not), what it’s worth and when it’s been used in the past. Old it may be, but there’s been quite a bit of talk about this topic very recently.
Its advocates say that one of the advantages of a target for nominal GDP is that it forces the central banks to give consideration to developments in the real economy and not just to inflation. In general terms, a nominal GDP target would appear a fairly unnecessary complication in this context, particularly if one already conducts a policy that means there is scope, or even an obligation, to give consideration to the real economy – through a flexible inflation-targeting policy, such as the one conducted by the Riksbank and the Bank of England, or that conducted by the Federal Reserve, with a dual mandate to strive for both price stability and a good development in employment.15 A counterargument of a more practical nature is that inflation targeting can be based on better data. While the CPI and other relevant price measures are published every month, GDP and the GDP deflator are only published quarterly, and with a relatively long time lag. Moreover, the CPI is only revised in exceptional cases, while GDP data are revised almost routinely, and sometimes substantially. One argument that I think also weighs heavily, from a practician’s point of view, is the difficulties I foresee with regard to communicating a nominal GDP target. The inflation target is now fairly well accepted and the general public appears to understand it. It would probably be a different matter with a nominal GDP target.

The central banks became independent during a period that one might be able to call the “golden age” of inflation targeting, when everything looked relatively straightforward – when the policy rate was in principle set to attain price stability and when one took financial stability more or less for granted. The world that now appears to be emerging is more complicated. It is necessary to reconsider where the boundary lines should be drawn between what should be delegated to independent central banks and what should be managed by the political system. Finding the best way of doing this is one of the major challenges ahead of us. 17  See Gerlach (2013). Results from a study by Bech, Gambacorta and Kharroubi (2012) indicate that monetary policy is less efficient when it comes to counteracting a recession and contributing to a recovery after a financial crisis. Posen (2013) says that more powerful quantitative easing would have facilitated the recovery in the United Kingdom, but that the fact that this was not implemented has nothing to do with inflation targeting and it would not have been easier with a different type of monetary policy. 18  See, for example, Banerjee, Cecchetti and Hofmann (2013). Whelan (2013) says that inflation targeting should actually be abandoned in favour of a solution where the central banks are given a broader mandate and more instruments at their disposal.
The aim of these collateral swap facilities is twofold: first, balance sheets of financial institutions become more liquid, and second, the prices of the collateral are indirectly supported, as fire-sales of such assets accepted as collateral become less likely. An attractive feature of collateral swaps is that they leave the amount of central bank money unaffected. They support liquidity in the banking system without driving short-term money market rates below the policy target. Furthermore, the size of these operations can, potentially, be very large, since there are almost no limits as long as the Treasury provides the securities or the central bank can issue its own bonds. The single most far-reaching action by a central bank in the crisis so far, however, was the Federal Reserve’s decision to facilitate the takeover of Bear Stearns by JPMorgan, in that it took over risky assets in significant quantities. By stepping in, the Federal Reserve put an end to a disorderly de-leveraging process on the part of highly interconnected financial institutions, and probably made a crucial contribution to defusing the third and most recent wave of the financial market crisis. Given its open access policy with respect to counterparties and the broad collateral base, it was not necessary for the SNB either to increase its range of counterparties or to expand its list of collateral. 7 Neither has it been necessary to introduce a facility for swapping illiquid for liquid assets, so far. How should we assess the impact and success of central bank actions so far?

Regarding price stability, monetary policy is fully responsible for prices in the long run. Or to put it more simply – a broad-based and sustained rise in prices is always attributable to monetary policy. As for economic  BIS Review 71/2008  1  fluctuations, monetary policy can affect them, but it cannot control them entirely. 1 Concerning the stability of the financial system, the role of monetary policy measures is mostly limited to crisis management, through reacting to increased liquidity demand and providing support to the banking system in times of crisis. In the longer term, central bank action does not determine financial stability directly, it is other factors, such as regulation, supervision, and incentive structures which determine the stability of the financial system. 2 I would also like to say a few words on the hierarchy of these objectives. It is sometimes argued that only one objective can be pursued – on the assumption that a central bank has only one instrument, usually a short-term interest rate. Some objectives must therefore be subordinate to other objectives. In theory, this view is certainly correct. However, practice is more complex than theory. In practice, the problem of having more objectives than instruments in monetary policy is less severe than theory might suggest. There are three reasons for this. First, the three objectives are not necessarily contradictory. On the contrary, they are mutually conditional: A policy that ensures price stability in the long run also contributes to stabilising the economy and the financial system.
This provides a telling example of the perverse incentives that the Draghi Report had highlighted a decade earlier. Booking practices and pricing were distorted by lax overall regulatory capital requirements, a zero-weighting on 364-day committed lines to shadow banks, accounting regimes that recognised unearned profits on highly illiquid securities, and an implicit state subsidy to housing finance from public agencies that were themselves over-levered and profit-maximising. Policy responses and lessons Looking back, armed with these conjectures, what could or should have been done as our economy and others accumulated debt? A few years ago, a couple of us discussed this in the margins of a regular gathering of economists in London.21 One thought was that Western governments should have “gone on the biggest infrastructure splurge since Victorian times”, spending the inflows on investment rather than consumption. I can’t help wondering whether all the investment would have been well judged. Another thought was that the UK and others should have tightened fiscal policy, in order to raise national saving and so improve our external position. That would have added to global saving, possibly pushing the world real rate lower, asset prices higher, and so possibly further fuelling private sector borrowing. But were we trying to answer the right question that evening?

4  Represented by, for example, Bernanke (2005), “The Global Savings Glut and the US Current Account Deficit”. 5  See King (2011), “Global imbalances: the perspective of the Bank of England”. BIS central bankers’ speeches  3  So we need richer stories to make sense of what happened. It is precisely in that spirit that colleagues at the Bank for International Settlements6 have stressed the importance of gross capital flows. As Cecchetti has emphasised, whereas global current account balances (the counterpart of net capital flows) expanded in the twenty years to 2007 from about 1% of world GDP to about 3%, the gross capital outflows of all countries increased from around 3% to over 15% of world GDP (Chart 5). And the aggregate international investment position of all countries7 increased from under 50% to over 150% of annual world GDP. Opening up the possibility that gross capital flows matter transforms the picture. For example, as Borio points out, Europe’s gross capital flows were enormous, accounting for around half of gross inflows into the US in the run up to the crisis. And sufficient of that was invested in US ABS for the US’s mortgage crisis to be transmitted across the Atlantic, including to France and Germany, pretty well instantly in 2007 – and before the solvency of the banking system was in doubt. Even if gross and net flows had been equal, wouldn’t the composition of those flows have made a difference?
Banks are facing continuing pressures on their business models from a number of sources, including: •  The consequences of a low growth, low rates environment with ongoing private deleveraging;  •  The impact of a new regulatory framework designed to fix the fault lines that caused the crisis; and  •  The effect of determined progress on removing the implicit public subsidy of TooBig-To-Fail. Finally, some residual concerns about regulatory uncertainty, particularly in the euro area, may have been secondary reinforcements to the macroeconomic drivers of recent market turbulence. Financial reform and the state of the financial system However, this is not 2008. The largest cross-border banks are considerably stronger than during prior episodes of market stress. Common equity requirements are seven times the pre-crisis standard for most banks. For global systemically important banks (G-SIBs), they are more than ten times higher. Global standards require banks to hold much higher liquid asset buffers, to strengthen their trading books, and to reduce and simplify the formerly complex web of interbank exposures. In response, banks have built higher and better quality capital buffers (Chart 7), largely through retained earnings, and have reduced leverage. Between 2008 and 2015, advanced economy G-SIBs raised close to $ of equity, while almost $ was raised by major UK banks, over a period during which these banks’ risk-weighted assets fell.

In summary, I would like to conclude that so far, the Thai financial system has shown signs of resilience with promising prospects for the future. But we will continue to press on with the structural reforms to achieve sustainable growth and soundness of the banking industry. The Master Plan provides us with a road map to a more balanced and efficient financial system. While the Bank of Thailand will continue to strengthen risk-based supervision and foster observance of corporate governance for financial system stability, financial institutions will need to continuously and vigorously improve their risk management capacity for the upcoming formidable challenges in order to thrive in the new financial landscape. 4  BIS Review 43/2004