samchain/econo-pairs-v1 huggingface dataset:
The ECB had to deal with this issue, for example, in the context of the first two longer-term refinancing operations announced in December 2011. When some bankers raised concerns that there might be stigma attached to the ECB’s programme, we said that the decision to accept long-term loans from the ECB should have been seen as a rational business decision and not as a sign of bank distress. 4 The importance of clearly identifying the nature of the frictions leading to the market failures before designing the intervention is also emphasised in another contribution by Thomas Philippon. In his 2013 paper in the Journal of Finance written with Philipp Schnabl, he characterises the optimal intervention in a financial industry plagued by the debt overhang problem. 5 When banks are financed with too much debt, they forgo productive investments, i.e. lending, because in the event of bankruptcy the debt holders would appropriate most of the cash flows. Thomas Philippon and his co-author show that in this case the optimal intervention consists of capital injections against preferred stock (plus warrants) and it is conditional on sufficient bank participation. This design makes it possible to restore the efficient level of lending by providing capital to banks, and at the same time minimises the cost of intervention by controlling for the potential opportunistic behaviours of banks. In particular, the authors highlight two types of opportunistic behaviours induced by the intervention.

The crisis revived the debate about the optimal size of the financial industry and the finance-growth nexus. Often, and especially at the beginning of the recent crisis, public opinion has blamed the excessive growth of the financial industry and the extremely advantageous remuneration packages in the sector. One argument in the debate against the traditional finance-growth paradigm is that the high wages may draw talent away from other productive sectors in the economy since financial and non-financial sectors compete for the same scarce supply of human capital. 9 Thus, an excessive growth of the financial sector may not be fully desirable. Thomas Philippon formally analyses this trade-off in his (2010) AEJ Macro paper and discusses the implementation of corrective taxes and subsidies to guarantee the optimal allocation of resources between the financial and the productive sectors. 10 Thomas Philippon’s paper published in the Quarterly Journal of Economics in 2012 11 analyses the allocation and compensation of human capital in the financial industry. Together with his co-author Ariell Reshef, he documents the pattern in wages and skill intensity in the financial industry in the US between 1909 and 2006. The authors show that this pattern is non-monotonic. High compensations in banking and the ability of the financial industry to attract the most skilled workers are not permanent features of this industry. As the paper shows, changes in financial regulation are important determinants of these patterns. Tighter regulation tends to lead to an outflow of resources from the financial sector.
It will lay down minimum standards for banks to hold some resiliently liquid assets and about the funding of illiquid assets. To date, much more prominent has been the work on capital. Although there has been some dilution of the proposals from a few months ago, real substantive progress is being made in reforming the minimum standards and in introducing various buffers, taking into account credit cycle conditions and the circumstances of SIFIs. The key element of the overall package is that “capital” will mean capital. The world of hybrid instruments – pretending to be so-called capital instruments but which in fact cannot truly absorb losses in a going concern – should become more or less a thing of the past. The Bank of England would like it to be completely consigned to the past. Only equity can absorb losses. For that reason, in calculating regulatory capital, deductions from capital should really be from equity. As part of the emerging compromise, there will be some derogations from that, but the derogations should be transparent. Markets should learn to evaluate bank’s capital adequacy on the basis of what is made transparent about the makeup of that capital. The other really key change will come in stages – partly in the package this autumn and partly during next year and beyond – which is reducing the pernicious regulatory arbitrage that has existed between “banking book” capital requirements and “trading book” capital requirements.

The Level 3 Committees play a very important role in this respect. Furthermore, we see a need for the current regime for the supervision of liquidity risk to be reviewed against the background of financial market developments, including the introduction of the euro. As regards financial stability, which represents an area of particular interest to the Eurosystem, we are of the opinion that the refinement of financial stability arrangements should remain a key priority for the EU. There are three broad areas where the Eurosystem sees room for enhancing the present arrangements, namely financial stability assessment, the management of financial stress and deposit insurance. In this respect, let me recall that the provision of Emergency Liquidity Assistance is a central banking function and that there is an agreement within the Eurosystem on how this facility operates in the euro ara. Thus, there are no specific issues relating to the provision of Emergency Liquidity Assistance that need to be addressed in the context of the post FSAP work. Finally, let me stress again that the Governing Council of the ECB is very strongly attached to the full completion of the single market for banking services and to a level playing field making absolutely no difference between nationalities. I am now ready to answer your questions. 3/3
In spite of the above and based on our interactions with some of you, there remain a lot of myths and misconceptions on Malaysia’s FEA rules, even amongst the banking fraternity. It is my hope that I am able to dispel these misperceptions surrounding Malaysia’s FEA rules specifically on activities that can be undertaken by non-residents for investments in Malaysia. 2  BIS Review 151/2010  It is also my hope that you will make the effort to convey this message to your colleagues, clients and international counterparts. Let me now share with you five of the misconceptions Myth 1: FEA rules are restrictive We recognized that for an investor, capital mobility is important. Malaysia has always ensured that the rules are not restrictive to capital flows or do not penalise investors who contribute to the development of the country. Today, non-residents are free to transfer their funds into Malaysia for investments in any type of ringgit assets and also remit out of Malaysia, all income as well as proceeds from the divestments of these ringgit assets in foreign currency. Also, there is no levy imposed. Myth 2: FEA rules are restrictive on non-residents to manage risk on investments in Malaysia Apart from free capital mobility, the ability to manage risks of investments is equally essential for an investor. In recognizing this need, the current FEA rules freely allows non-residents to hedge ringgit exposures of their investments in ringgit assets with the onshore banks supported by underlying commitment.

This is a commendable achievement but we still have a lot to do. As Malaysia moves forward with the economic transformation programme, the demands for the financial sector as enabler, catalyst and driver of growth will increase. The financial sector as a whole is expected to grow in size, from 4.6 times GDP now to 5–6 times GDP by 2020. The significance of financial markets, relative to funds raised through financial intermediaries such as banks, will continue to rise. In meeting the needs of the new high value added economy, our financial sector needs to be developed further and innovative in its approach in order to facilitate higher levels of domestic and international trade and investments. One such innovative approach is the development of a comprehensive and vibrant Islamic financial industry. It is our aspiration to transform Malaysia as the Islamic Financial Hub. Crucial to the transformation is intensifying of our efforts to further develop the foreign currency markets in Malaysia. In particular, we should seek to capitalise on our competitive advantage in Islamic financial markets and move beyond our previous focus of advisory and promoting primary market issuances and move up to build an end-to-end value chain capability – where we should also focus on secondary market trading, settlement and custody services. But this aspiration of ours could only be achieved if there is a collaborative effort between the industry and the authorities.
This puts the responsibility for assessing and responding to risk in the most appropriate place, namely in a bank’s own management and directors. They are in the best position to know their customers and their risks, and it is therefore most appropriate - and critically important - that they understand their responsibility for administering the bank’s assets and its activities in a responsible manner The second pillar highlights the important role that supervisors play in ensuring that each individual bank is holding adequate capital. Under the New Accord, supervisors will be responsible for evaluating  2  BIS Review 52/2003  the internal processes banks use to determine their need for capital to ensure that managers are exercising an appropriate degree of judgement. The responsibility of a supervisor is to ensure that the banking system operates in a safe and sound manner and that individual banks are run by capable and competent leaders. But supervisors are not the managers of the banks. The decision on how each bank should best respond to different risks: that job should always rest with senior managers and a bank’s board of directors. Instead, by engaging managers in a dialogue about the risks they face and the controls they have adopted to address them under the second pillar, supervisors create incentives for managers to behave prudently and find ways to improve their performance. The third pillar seeks to leverage the ability of markets to provide discipline to banks to ensure that they are not holding unrealistically low levels of capital.

We have worked hard to strike a right balance between many other competing objectives, such as finding the balance between introducing incentives for banks to improve their risk management and implementing a system of prescriptive rules. We have sought a balance between complexity and risk sensitivity; between complexity and comparability; between soundness and conservatism; and between flexibility and consistency, and so on. Even the structure of the accord can be regarded as a balance among three different policy approaches: rules, discretion and market discipline. In addition to seeking a balance in the New Accord, the Committee’s work has also been guided by two other words, namely consistency and cooperation. I will have more to say about both later, but I would like to emphasize the word “consistency” now. We will achieve the full potential of a prudential standard such as the New Capital Accord only when we support it with other financial economic policies and regulations that share a consistent set of goals. Policy makers have long understood the value of monetary stability, and in recent years we have learned much about the importance of financial stability and how it interacts with our monetary policies. Interactions between the real economy and financial markets are becoming more intricate on a domestic level and more relevant to the global economy.
This will ensure investors know how much utility companies are investing in low carbon alternatives. And what progress car manufacturers are making towards fuel efficiency. Scenario analysis  The recommendations recognise also that static disclosures of current carbon footprints will not be sufficient to reveal a company’s climate-related financial risks and opportunities. For investors to price financial risks and opportunities correctly, they need to weigh firms’ strategies against plausible public policy developments, technological advances and evolving physical risks and opportunities. In a ground breaking innovation, the Task Force recommends that companies explore and disclose the potential impacts of climate-related risks and opportunities on their businesses, strategies and financial planning under different potential future scenarios. A full exploration of transition risks may require consideration of financial risks and opportunities under several scenarios, which firms may develop directly or using commonly available models. Reflecting the commitments made in Paris, the Task Force recommends that this should include using a 2-degree scenario. And consistent with the concept enshrined in the Paris Agreement of common but differentiated responsibilities, transition scenarios could take account of different national targets for emissions reduction. This makes them particularly useful for companies headquartered in emerging economies. 5  All speeches are available online at www.bankofengland.co.uk/publications/Pages/speeches/default.aspx  5  Over time, the Task Force expects to see a greater emphasis on quantitative analyses in scenario-related disclosures, including the underlying assumptions associated with the climate-related scenarios used. Scope extends to asset owners and managers.

This is the first step towards Bulgaria’s full integration into the euro area, i.e. to the core of the European Union, an act the importance of which goes far beyond the banking and financial sector. In a matter of days, on 1 October, the Bulgarian National Bank, through its banking supervision, will become the first Bulgarian institution that is a full-fledged member of an important euro area institution – the Single Supervisory Mechanism. This, inter alia, is a notable example of institutional development. Only a few years ago the supervision was one of the most vulnerable and most criticized regulatory institutions in the country. Now, it is one of the most sound and strong institutions, unanimously welcomed to the family of EU banking supervision. This example of institutional development may also be applied in other important areas. This will allow us to cope not only with the challenges of the present but also of the future day. Please allow me to end on this note and to thank you sincerely for the privilege to be with you on this day and to wish you a successful academic year. 2/2  BIS central bankers' speeches
BIS Review 53/2003  3  Negative events such as the accounting scandals in large US companies, fears of terror, war in Iraq and the spread of SARS contributed to weak growth and low inflation in other countries. Developments in the international equity markets and the risk of higher oil prices also contributed to strengthening the krone. Changes in the economic outlook abroad are clearly reflected in developments in interest rate expectations. Interest rate expectations in the US have been adjusted downwards considerably since summer 2002. The same applies to Europe. Developments in interest rate expectations were a reflection of an ailing world economy. The situation has changed somewhat since the summer. A slightly more rapid rise in interest rates abroad is now expected. Fluctuations in the exchange rate and monetary policy easing Interest rate developments abroad have had substantial influence on the effect of interest rate setting in Norway. About 40 per cent of the appreciation of the krone from May 2000 to January 2003 can be explained by the increase in the interest rate differential between Norway and other countries. When the equity bubble burst in 2000, capital was moved from equities to interest-bearing securities, affecting capital flows and exchange rate movements. This shift in themes can explain 55 per cent of the appreciation of the krone. A third reason may have been high oil prices and fears that war and terror would disrupt the oil supply.2 While growth in the Norwegian economy stalled last winter, wage growth has moderated more rapidly than expected.

Like other central banks, we are constantly refining our forecasting tools to enable us to become better at predicting the future. Hopefully we will gradually increase the precision of our forecasts. However, at  2  BIS Review 101/2006  the end of the day it is not realistic to believe that we should be able to predict this type of event in its entirety. With regard to developments in recent years, it is also an important insight that inflation has been held down by forces that are essentially favourable for the economy. To put it another way, developments have been dominated by positive changes in what is known as the supply side of the economy. The fact that prices are pressed down by increased competition and increased foreign trade is something we all can benefit from – as consumers. And the fact that productivity growth in the economy is high should benefit everyone in the long term, in the form of increased welfare. Our monetary policy strategy Before we look ahead, it may be useful if I explain how we reason in general when making our interest rate decisions. The objective of monetary policy is price stability – in other words, low inflation. We have specified this as consumer prices, measured according to the consumer price index, increasing by two per cent a year. As it takes time before interest rate changes have an effect, monetary policy must be based on forecasts of the inflation rate a couple of years ahead.
It will benefit Malaysia through greater efficiency and productivity, thereby enhancing our country’s competitiveness. We have no choice but to improve the way we conduct our financial affairs. The banking system has allocated huge amount of resources. From 2009 to 2017, the industry has invested RM893 million to enhance the e-payment infrastructure. Moving forward, the industry will invest a further RM346 million to expand the POS terminal network and RM40 million to develop the Real-time Retail Payments Platform to spur the usage of mobile payments. By the end of 2020, it is envisaged that individuals and businesses will be able to make and receive payments seamlessly via online banking, payment cards and mobile payments. There 3/4  BIS central bankers' speeches  are no reasons whatsoever for us not to migrate from a costly and inefficient payment mechanism to a cheaper, safer and more efficient payment mode. To reflect the higher cheque processing cost, hasten the migration away from cheques, and incentivise individuals and businesses to migrate to a lower cost of doing business, beginning 2 January 2021, the cheque fee will be increased from 50 sen to RM1.00 and gradually thereafter, to reflect the actual cost of cheque processing. However, users of financial services will continue to be given a choice of using cheques, if they prefer to use an expensive and inefficient option rather than a cheaper one. To support businesses and individuals, over the next three years a few initiatives will be implemented.

Thus, the euro area countries that are being the hardest hit are those where the most affected sectors have a greater weight (in particular those relating to services requiring greater social interaction). Second, the recent increase in national public debt levels is unprecedented. Despite being widespread, this is having a more intense impact on the countries that were hardest hit by the crisis, some of which also had a less fiscal room for manoeuvre prior to the spread of the virus, which could limit the responsiveness of national fiscal policy. Similarly, this uneven impact has interrupted the correction of the external imbalances recorded since the end of the financial crisis. Specifically, the five euro area countries with a greater external imbalance measured by the net international investment position, i.e. the five countries with the highest level of net foreign liabilities, posted a tourism surplus of nearly 6% of GDP in 2019. The impact of the pandemic on these flows, which largely came to a halt in 2020, was very significant. In many cases this will lead to a reversal of the correction process I mentioned previously and it could increase imbalances within the Monetary Union. Given the current degree of integration in the area, adverse developments in one country will have negative consequences, in terms of activity and employment, on all the others.
Financial institutions, including insurance companies, unit trusts, and other non-bank financial institutions, need to continue to develop innovative financial products that can meet the needs of savers throughout their life cycle. The availability of a wide range of savings instruments for savers is a necessary pre-requisite for effective mobilisation of the nation's savings. Indeed, the ongoing evolution of an innovative, dynamic and diversified financial system in Malaysia will not only help Malaysians save, but also invest effectively for their future by facilitating the more efficient allocation of personal resources. Thank you. 2  BIS Review 2/2004

The recent global financial crisis serves as a reminder that status quo is never good enough. Financial development is therefore a journey that should never end, with milestones along the way. BIS central bankers’ speeches  1  As we move on to the next stage of our journey, it bodes well with a saying that “Yesterday was a walk in the park. But tomorrow is a step in the dark.” While I would not exactly call our past events a walk in the park, there are approaching challenges that depict dark clouds above our path. The contextual trends and challenges that I am going to highlight tonight derive from technological developments, the ageing society, urbanization, and regionalization. Firstly, with technological developments, traditional barriers to entry were brought down, allowing non-banks such as fintech companies and cross-border players to the market, and helped reduce operating costs. At the same time, consumers expect better and more timely services. Banking is something that customers want to do “anytime and anywhere”, and they want to do it cheaply as well. While technology may help us reach our destination faster, it also dictates that we be more adaptive and responsive to changes. Banks that get stuck in the past will lose out quickly. A second challenge that put banks’ adaptability to the test is the shifting demographic structure of Thai population.