samchain/econo-pairs-v1 huggingface dataset:
(c) Prioritising leverage ratios One, more radical, way of doing so would be to place a greater emphasis on measures which rely neither on models nor on risk weights – for example, through a simple leverage ratio. Basel III made significant headway in this regard. Once implemented, it will introduce for the first time an internationally-agreed 3% leverage ratio as a backstop to risk-based capital measures. The question is whether this formulation goes sufficiently far in tackling the consistency, incentives and uncertainty problems affecting risk-based standards. Is 3% inadequate? And, relatedly, should the backstop instead be a front stop? A widening array of officials and academics have recently opined on both questions, often answering yes to both (Admati and Hellwig (2013), Systemic Risk Council (2012), Johnson (2013), Haldane (2012),  BIS central bankers’ speeches  9  Hoenig (2013), Fisher (2013), Norton (2013), King (2013), Stein (2013), Brown and Vitter (2013)). The recent legislative proposal by US Senators Sherrod Brown and David Vitter is one of the most radical proposals to date. It advocates a tiered set of leverage ratio standards, rising to 15% for banks with assets in excess of $ billion. Risk-based standards would be jettisoned entirely. From a simplicity and robustness perspective, it has attractions. At the same time, the Brown-Vitter proposals clearly raise a host of practical questions. They are sufficiently far north of existing capital standards that they are perhaps at best seen as a (possibly distant) long-term resting place, not a practical near-term objective.

At the same time, regulators have continued to bulk-up their own resources in the face of a rising tide of regulatory rules. Ultimately, these costs are borne not by regulators or regulated firms, but by general taxpayers and bank customers. These come in the form of higher taxes, lower savings rates and higher lending rates. If system stability can be achieved in simpler ways, these are deadweight costs to society. (b) The unlevel playing field A second unintended consequence of the move to a model-based regulatory framework is that it has tended to work in quasi-discriminatory ways. In particular, it has tended to discriminate both between small and large banks and between new entrants and existing incumbents in the amounts of capital they are required to hold even against identical exposures. The reason for this is that small or new entrant banks will generally adhere to Basel I or simple standardised approaches for measuring risk. In general, they will have neither the data nor the technology to support internal model approaches. But simpler, standardised approaches tend to require much higher amounts of capital than internal model approaches. Indeed, this was a design feature of Basel II. Chart 8 demonstrates those differences among the major UK banks for a selection of portfolios. For an identical corporate exposure, a small bank on Basel I or a standardised Basel II approach holds, on average, twice as much capital as a large bank using models. For retail mortgages, these differences are larger still.
Without sensible economic policy implementation, however, the construction programme would be likely to lead to overheating of the economy, high inflation and instability. There is no the scope to discuss the Bank’s analysis further here, however, so I shall merely refer to the coverage in the latest Monetary Bulletin. In recent public discussions it has repeatedly been claimed that the exchange rate of the króna is too high and the Central Bank needs to take measures to bring it back down, such as a large-scale cut in interest rates, which are said to be much higher in Iceland than elsewhere. The fact of the matter is that the interest rate differential between Iceland and its main trading partner countries has narrowed significantly recently. The short-term interest rate differential has not been less since 1996. The Central Bank of Iceland’s policy rate is now lower than, for example, those of the Norwegian Central Bank and the New Zealand Reserve Bank, both of which also apply inflation targeting. The same applies to the policy rate in real terms, calculated relative to these banks’ respective inflation targets. In fact, in real terms the Central Bank of Iceland’s policy rate is at its lowest point since 1996. In this context it is also important to point out that after the change in the monetary framework in March 2001, i.e.

However, the group chaired by Governor Liikanen has come out with the simplest proposal. The second element of the reform of the regulatory framework is that of macroprudential supervision. While microprudential supervision concerns itself with individually considered financial institutions, macroprudential supervision contributes to financial stability by identifying, monitoring and mitigating the risks that may affect the financial system as a whole. While such a concept may not be entirely novel, this crisis has underlined the absence of macroprudential authorities with well-defined mandates in this field and clearly defined intervention instruments. The main advanced economies have set up macroprudential authorities such as the Financial Stability Oversight Council (FSOC) in the United States and, in the United Kingdom, the Bank of England’s Financial Policy Committee. I would just mention that at the Banco de España, too, we have begun work to accommodate our organisational structures to the needs of the macroprudential approach. Thank you very much for your attention. BIS central bankers’ speeches  3
Bank of England work suggests a central range of 0-1% for the long-run equilibrium real interest rate in the United Kingdom.6 Widely cited estimates for the United States suggest that the long-run  3 In addition to affecting the market rates directly, monetary policy easing could lead to a further compression  in market rates because of spill-overs via exchange rates (in case of interest rate cuts) or compression of term premia (in case of asset purchases). See Brainard (2017). 4 King and Low (2014) document a sizeable decline in market based measures of long-term real interest rates in several advanced economies. 5 See, e.g., Eggertsson et al (2017), Gagnon et al (2016), Rachel and Smith (2017) on the role of demographics and productivity growth and Vlieghe (2017) on the role of financial liberalization and increased risk taking. Some very different candidate explanations have also been suggested. Borio (2017) links the fall in long run real interest rates to monetary policy regimes, while Caballero (2017) links them to a shortage of safe assets. 6 See Bank of England (2018), Box 6 on pages 39-43. 4  All speeches are available online at www.bankofengland.co.uk/news/speeches  4  equilibrium real interest rate fell to close to zero during the crisis and has remained there into 2016.7  Of course, the long-run real rate is not the only driver of real interest rates.

In sum, a lot of work remains to be done both in the near- and in the medium-term. These perspectives underpins the agenda of today’s Seminar, which we have organized around two panels. A first panel, on Short-term Challenges towards a Complete EMU, will discuss the reform agenda that is feasible to pursue in the current European parliamentary cycle (until 2019). 4/5  In a second panel, on Long-term Prospects for a Cohesive EMU, we would like to address the medium- to long-run steps necessary to increase the euro area’s capacity to prevent crisis and to manage them. Finally, Economy Minister Ramón Escolano will close the Seminar explaining the strategic vision underlining the recent proposals on EMU architecture articulated by the Spanish government. The proposals constitute, in my view, a politically realistic program to advance the process of governance reform in the short-term without losing sight of the longer-term needs. The final goal being providing the EMU with a more solid institutional framework that help ensure the prosperity and well-being of euro area citizens and improve the public perception of the integration project. Now, according to the agenda, I give the floor to the moderator of the first panel, Paloma Marín. 5/5
As I pointed out in my brief remarks on the financial standing of the banking sector, Turkish banks have reached a level of financial and institutional development that should not be underestimated. But despite all the aforementioned positive aspects, there are also various threats to the wellbeing of the Turkish banking sector which I believe are worth mentioning. Turkish banks, like all the other banks in the world, are exposed to credit risk, liquidity risk, interest rate risk and foreign exchange risk. This is true even in the absence of an environment of global crisis and macroeconomic risks stemming from political uncertainties. These are other issues that merit separate consideration. I will turn now to financial risks. The most important of these is credit risk, which Turkish banks pay the most attention to managing. The Turkish banking sector has become used to accepting and managing credit risk over the years. A credit culture has been developed in which firms, sectors, regions and individuals participate. Increased competition in the sector clearly has implications for the risk-taking process, which requires that the banks restudy their credit strategy. An overall examination of credit risk showed that the banking sector has been able to manage its credit risks by keeping the level of non-performing loans low in spite of an environment of shrinking international financing.

As of November 1998, state-owned commercial banks account for 35 percent of the banks in the consolidated balance sheet of the sector, worth $ billion, and private banks account for 54 percent of the balance sheet, totalling $ billion. Meanwhile, the share of foreign banks, with assets of $ billion, has held steady at around 6 percent. Despite the recent privatization of two state-owned commercial banks, this class of banks has retained its prominent role in the banking sector. But the influence of Turkey’s state-owned banks in the banking sector is less significant compared with the influence of state-owned banks in some EU and OECD countries. As of November 1998, five major banks, including two of the four state-owned commercial banks, held 44 percent of the total assets of the banking sector. These five banks held 51 percent of total deposits and accounted for 42 percent of total credit extended in the sector. Total equities of these five banks comprised 48 percent of the total equity of the sector. If we say that these banks also own almost half of the total branch network of the sector, we could understand this concentration. However, the total share of the five major banks representing the concentration in the Turkish banking system is smaller than the share representing the concentration in most OECD countries. Again according to 1995 figures, concentration in Sweden’s banking system is 86 percent, in Holland 81 percent, in Finland 74 percent, in Belgium 59 percent, in England 57 percent and in Spain 49 percent.
In order to ensure timely and credible information for the effective supervision of banks and other financial institutions, the Bank of Zambia has been playing a key role in developing the Bank Supervision Application System (BSA), which is a Southern African Development Community (SADC) region initiative. The BSA is a standardized tool designed for capturing supervisory information, financial and risk analysis and provides a workflow mechanism for communicating the different aspects of the supervisory process. Distinguished delegates, the legal and regulatory framework governing the supervision of the financial sector must provide for a fast and flexible way of adapting the banking system to the constantly changing financial landscape. The legal and regulatory frameworks in Zambia  2  BIS Review 63/2010  comprise of the Banking and Financial Services Act, Chapter 387 of the Laws of Zambia; the Bank of Zambia Act, Chapter 360 of the Laws of Zambia; the National Payment Systems Act; the Prohibition and Prevention of Money Laundering Act; the Bank of Zambia Anti-Money Laundering Directives; and the Bank of Zambia Corporate Governance Guidelines. The speed at which changes to these regulatory frameworks can be made is a crucial element of the reform process in regulatory and supervisory arrangements as it improves policy responsiveness. A number of challenges exist in this area including the need to update some of the Statutory Instruments (SIs) in order to reflect the dynamics presently characterizing the financial markets.

For the surviving clearing members, they would suddenly find themselves having unmatched positions, with continuing obligations to clients but a non-performing CCP on the other side. Two strategies come to mind, which I am airing for debate. The first would be “recapitalising” the CCP so that it can carry on. The second would be to aim to bring off a more or less smooth unwinding of the CCP’s book of transactions. On the former route, in the banking sphere the basic strategy is to develop regimes for bondholders to share in the losses after the equity is wiped out; a distressed bank gets “recapitalised” in some way through a reconstruction of its liabilities. But CCPs do not issue debt, so there is not obviously an economic equivalent of recapitalisation by way of haircutting the debt claims of bondholders. Recapitalisation would seem to entail an injection of new outside capital. That should not come from the public sector. So the only options are the surviving clearing members themselves or a new “owner”. On the face of it, the clearing members would have to be involved, as surely the stricken CCP’s default fund would also need replenishing in order for it to continue. If the default fund were to be replenished by its surviving clearing members, that could in principle be sorted out at the time or it could be pre programmed. In practice, making it up at the time must be dangerous.
In my view the reasons include the increased role of services in the economy, the importance of labor costs in such an economy, the reduced share of oil consumption relative to GDP, and as I mentioned earlier the improved conduct of monetary policy versus the 1960s and 1970s.5 Figure 10 shows that the service sector has grown from a little over 60 percent of private sector employment in 1970 to a little over 80 percent in 2010. As the economy has come to emphasize services versus manufacturing, it may be that commodities (and thus their prices) have become somewhat less important to the production of goods and services. And goods prices are more volatile than services prices, and more likely to be priced like commodities. Figure 11 shows the per capita consumption of oil declining in the United States. Conservation measures by consumers and businesses have made the economy less dependent on oil than in the 1970s. While oil remains a very important commodity, the trend towards reducing dependence on oil provides greater insulation from oil-induced supply shocks. Figure 12 shows the U.S. share of world oil consumption (in blue) ticking down, but also clearly shows (in red) the steady climb in the share consumed by three of the so-called emerging-market economies – China, India, and Brazil. Figure 13 shows the growth in oil consumption in those three countries, in the upper three lines. Both charts depict quite strikingly the heightened demand for oil emanating from emerging markets.

2 Committee for the Study of Economic and Monetary Union presided over by Delors, Jacques, “Report on  economic and monetary union in the European Community”, 17 April, 1989. 3 See The international role of the euro – Interim report, European Central Bank, June 2018. 4/4  BIS central bankers' speeches
Zeti Akhtar Aziz: Moving towards a more competitive market Keynote address by Dr Zeti Akhtar Aziz, Governor of the Central Bank of Malaysia, at the 2005 dialogue session with insurers and takaful operators, Kuala Lumpur, 9 August 2005. *  *  *  The annual Dialogue between Bank Negara Malaysia with insurers and takaful operators is held to discuss issues confronting the insurance and takaful industries, major policy initiatives by Bank Negara Malaysia as well as current economic and financial developments affecting the industry. This year's dialogue is being held on 9 and 10 August and attended by the Chairmen, members of the Board and Chief Executive Officers of insurers, takaful operators and bank holding companies. Themed "Moving Towards a More Competitive Market", the dialogue this year will provide a platform for insurers and takaful operators to discuss strategic issues relating to the challenges of the more competitive and rapidly changing financial landscape. The keynote address delivered by the Governor, Bank Negara Malaysia at the opening of the Dialogue session is attached. The Malaysian economic and financial landscape continues to be dramatically transformed. As this transition process gains momentum, the key issues confronting the insurance and takaful industries today are: defining effective growth strategies in an increasingly borderless world; sustaining confidence in the face of increased demands for greater transparency; responding to the challenges of regulatory and accounting changes; and managing risk in an increasingly complex and volatile environment.

Higher solvency risk also increases other risks at the macro level, such as the risk of “financial repression”. 5 As public debt rises to unsustainable levels, domestic financial institutions may be “encouraged”, if not forced, to hold domestic sovereign debt in their portfolios. This would lead to inefficient allocation of capital, high costs of financial intermediation and thus lower growth. 6 Finally, in the case of reserve currencies, higher solvency risk would potentially hamper the stability of the international financial system. These questions are just a few examples of the issues on which we need further work. To conclude, it is clear that current and increasing levels of public debt in advanced economies raise problems which are not only of a macroeconomic nature, but affect many other dimensions of the global economy. On the other hand, our ability to understand the complexity of the issue is still limited. This situation is worrying, to the extent that our societies may take decisions on the basis of imperfect models and wrong assumptions. Not everybody agrees with the concerns I have just raised, and many take the current very low yields on some government bonds as a comforting sign. My impression is that they may be confusing relative and absolute concepts of risk. And such a mistake could entail very high costs for our societies. Thank you for your attention. 2  Reinhart, C. and K. Rogoff, 2010, “From Financial Crash to Debt Crisis”, NBER Working Paper 15795.
Beyond regulatory capital requirements, euro area banks need to stabilise their earnings streams so that organic capital growth can be restored, solvency ratios can be safeguarded and asset growth can gradually resume. As I have already mentioned, in order for credit markets to recover, it is not only credit supply that will need to expand, but also – and possibly to a larger extent – credit demand, which depends on several factors, including GDP growth, unemployment and inflation, which in turn affect the expectations of banks’ customers. As regards the role of monetary policy, the exceptional circumstances related to the financial crisis led to the introduction of extraordinary measures. Our aim was to support the liquidity in the financial system and (indirectly) to enhance the flow of credit to the private sector, above and beyond what could be achieved through policy interest rate reductions alone. In particular, we have fully accommodated banks’ liquidity needs at fixed interest rates, we have further expanded the list of collateral that we accept in our operations and we have provided liquidity for longer periods, of up to one year. Through such one-year refinancing operations, we provided € billion in June and an additional € billion two weeks ago. In addition, we have provided liquidity in foreign currencies, notably the US dollar, to address the needs of euro area banks to fund their dollar assets. Finally, we have been buying covered bonds directly since July this year, as this market segment is an important source of funding for banks.

Dear ladies and gentlemen, I hope that this project will deliver long-term results, and will strengthen the regulatory and operational frameworks at the Bank of Albania, an institution that makes substantial contribution to the sustainable economic development of Albania. On behalf of the Bank of Albania, let me iterate our readiness and commitment for the successful implementation of the Twinning Project, as we strive with professionalism and responsibility to achieve its objectives. Concluding, I would like to thank the European Commission, for its support in securing funding for this project. I am certain that the Commission will continue to support future initiatives of the Bank of Albania, as we deal with approximation challenges and endeavour to progress toward the European family. I would also like to thank the EU Delegation to Albania for their support and valuable suggestions during the design and consultation phases of the project, as well as the General Directorate for Financing and Contracting, for their insistence throughout the design and selection process for compliance with all EU procedures related to fund management. Special thanks go to Banca d’Italia, an institution that has constantly supported us with their invaluable experience. I believe that the experience and dedication of Mr Gola is an added guarantee in this regard.