samchain/econo-pairs-v1 huggingface dataset:
But that is not the issue either. The question is whether the distinction between banking and non-banking financial functions has been eroded, again whether those functions are carried out in separate entities or on the same balance sheet. I do not think it has. Take, for example, long-term savings institutions - life insurance companies and pension funds. They clearly perform a vital economic and social function, and they are subject to separate functional regulation because of their special importance as homes for the long-term savings of the personal sector and as providers of long-term capital. But their liabilities are totally unlike the very liquid liabilities of banks, and the liquidity of their assets and liabilities are much more closely matched - indeed their marketable assets tend to be more liquid than their liabilities. The distinction remains even where these activities are carried out in a banking BIS Review 13/1997  -6-  group, though in this case the different businesses have to be conducted on ring-fenced balance sheets and subject to different prudential tests, reflecting the quite different nature of the contracts and the different risks involved. That is not to deny that there may well be risks running from one part of the group to another - for example reputational risks or operational risks arising from shared systems or personnel and so on. It is not to deny either that there can be large cross-functional financial exposures.

Philipp Hildebrand: Principles for sound compensation practices Summary of a speech by Mr Philipp Hildebrand, Vice-Chairman of the Governing Board of the Swiss National Bank, at the Economic Outlook 2009 (Unternehmer NW-Schweiz), Basel, 23 April 2009. The complete speech can be found in German on the Swiss National Bank’s website (www.snb.ch). *  *  *  Most financial institutions viewed compensation systems as being largely unrelated to risk management and risk governance prior to the crisis. Short-term profits were rewarded with generous bonuses with little regard to the longer-term risks taken on behalf of the firm to generate those profits. With hindsight, it should therefore be no surprise that these bonuses fueled the excessive risk-taking that has ultimately undermined the global financial system. It is important for the future stability of our financial system that compensation systems be viewed as an integral part of the risk management system in financial firms, and designed and governed with this in mind. The Financial Stability Board (previously the Financial Stability Forum) has drafted a set of sound compensation principles for large financial institutions with exactly this goal in mind. The Principles were endorsed by the G20 leaders at the London summit earlier this month and aim to be widely implemented by the 2009 remuneration round. BIS Review 50/2009  1
The first one is poverty, which has long been one of the most important issues policy makers in developing countries strive to overcome. When there is insufficient wealth to nourish basic needs, indebtedness could become inevitable and it is difficult to get out of the vicious cycle of debt. The second factor is the growing trend in consumerism which largely overshadows consumers’ self-restraint and eventually entices them to spend recklessly. In this wellconnected era, consumerism has rapidly intensified and spread widely through various perceptive channels especially the mass media. Let me give you one example of this consumerism we have experienced. Not long ago, the Bank of Thailand invited the bank’s  BIS central bankers’ speeches  1  CEOs to a meeting and we showed them their own television advertisement. The campaigns were trying to induce people to apply for loans with streamlined process. This could lead people to believe that applying for a loan was as simple as daily shopping at a supermarket. An average ordinary individual could easily get the cash and spend on vacations, buying some fashionable outfits, or paying for a wedding ceremony. Worse, one advertisement related the number of loan application to the chance of success in a lucky draw, the more you borrow, the higher chance of success to win gold necklaces. After watching those commercials, the CEOs were surprised to learn how far their marketing campaigns had gone and agreed to promptly revise the concepts of their marketing messages to minimize further imprudent behavior.

Our journey officially began with the establishment of the first Islamic bank in 1983 and in the year that followed, the first Takaful operator. We have never looked back since then to evolve a comprehensive domestic Islamic financial system operating alongside the conventional financial system, comprising the Islamic banking institutions, the takaful industry, the Islamic money and capital markets. These respective components have been progressively liberalized over the years, allowing for more foreign presence in the market to become internationally more integrated. This has led to diversity in market players, and the increased competitive forces now provide the impetus for increased innovation in the market. The dynamism in the market has been supported by a robust regulatory and supervisory framework, reinforced by the legal and Shariah framework, the payment and settlement systems. Our Shariah framework in particular is distinctively robust, through the consultative role of the Shariah Advisory  BIS Review 102/2010  1  Council of Bank Negara Malaysia and Securities Commission, complemented by the Shariah board of individual Islamic financial institutions. This strategy has served us well, as it had nurtured innovation whilst ensuring stability in the marketplace. Collectively, the strategies that we had adopted have brought about significant progress on several fronts, in the areas of institutional structure, diversity of players, operational efficiency and the wide range of products and services. Several global players have chosen Malaysia as their regional base for Islamic finance.
However, in the euro area such dilution is only 10%, owing to a greater national bias in asset holdings. The main private channel for risk dilution in the euro area at present is that of lending by the European banks that operate in different Member States. But this channel becomes unstable and may even shrink or disappear in situations of uncertainty owing to the link between sovereign States and their domestic banks. As is known, capital markets in Europe are less developed and less integrated than in the United States. Corporate financing on equity markets is very limited and, moreover, shows a strong national bias. In the United States, cross-border holdings of assets play a significant role in mitigating the shocks that affect a State. However, in Europe this mechanism is very limited. This is why it is crucial to complete the Capital Markets Union project so as to achieve greater depth and integration of European Union capital markets. That will allow for greater risk-sharing in private euro area channels and less reliance on bank financing, which will result in greater stability in the euro area. The aim of this project is to provide new financing sources for firms at a lower cost, and at the same time to attract more foreign investment towards the European Union. To achieve this, the European Commission proposed a plan of action in 2015 with over 30 measures to construct an integrated capital market in the European Union, to be completed by 2019.

Thus, growing banking disintermediation might diminish the general effectiveness of such instruments, if other participants in the financial system, to which these tools were not applicable, were to engage in activities similar to those of banks. 5/7  To mitigate this risk, the forthcoming creation of a Spanish Macroprudential Authority will provide the appropriate forum in which all financial system supervisors may share their analysis of risks and coordinate the most suitable response, without leaving “gaps” that might restrict effectiveness Private risk mitigation measures in the Economic and Monetary Union In any event we should be mindful that, to ensure greater stability in European financial systems, it does not suffice to adopt measures at the national level; it is also necessary to push through a greater level of development and integration of European capital markets so that, in conjunction with the Banking Union, the risk-sharing and mitigation mechanisms at the level of the euro area as a whole are strengthened. In this connection, allow me to dwell on the importance of private risk mitigation measures. The crisis highlighted the scant power of these channels in the Economic and Monetary Union, compared with other monetary unions. It also became evident that these channels diminish, or even disappear, precisely when they are most needed. It is estimated that in the United States the cross-border ownership of capital across states enables 40% of the asymmetric shocks affecting a State to be diluted among the rest through private capital markets.
And in the UK, we will be helped by the FPC’s responsibility to advise the government on when the perimeter of regulation needs to be altered. Deposit insurance and resolution The reforms of Deposit Insurance are hardly less important. In the UK, there is a push towards the deposit insurer, the Financial Services Compensation Scheme, being able to pay out within 7 days. The Bank attaches very high priority to this indeed. There is still work to be done. It will entail costs for banks. The weaker standard of 20 days being contemplated by the EU is a serious mistake. That will eventually become apparent when, somewhere in the EU, depositors in a failed bank protest that they are suffering severe hardship from being cut off from their current account for weeks. Those are circumstances in which there would be calls for the state to step in to prevent the closure of ailing banks. This highlights the biggest hole in the old Social Contract – the absence of a regime for resolving distressed banks in a way that avoids both taxpayer support and systemic disorder. How to go about doing this was the principal subject of my speech here two years ago. Much has happened since. Next month, the G20 Financial Stability Board will publish a consultative document on the resolution of systemically important financial institutions (SIFIs). It will cover resolution instruments; cross-border co-operation; and steps needed to reduce obstacles to resolution inherent in the organisation and practices of firms themselves.

But the maturity mismatches inherent in bank balance sheets makes them susceptible to runs and so to collapse. And their role in the economy’s payments and credit system makes their failure especially costly. In consequence, sound banks have long had access to liquidity from central banks; and they are also compelled by the state to join industry-wide deposit-insurance schemes that mutually guarantee the value of transactions deposits. Those state-sponsored measures reduce the probability of unwarranted failure, but they also increase the private returns to bankers and their shareholders by transferring some risk to the state. The final part of the Contract is, therefore, that banks’ business should be subject to regulation and supervision, so that the state can influence the risks that banking poses to the wider economy. In pretty well every dimension, that Social Contract was found wanting. The regulatory regime was revealed to be riddled with design faults. Supervisors in many countries did not compensate for those regulatory flaws. And they even drifted away from focusing on the soundness of the system as a whole, to a narrower interest in consumer protection: a perverse development as consumers’ most basic financial need is the safety of the banking system. Central banks’ liquidity-insurance facilities were also found in need of running repairs. And in some centres, notably the US, it turned out to be necessary for the monetary authorities to extend liquidity temporarily to non-banks.
Given the major implications that the structure and functioning of the financial sector may have for macroeconomic developments, a strengthening of the accession countries' financial markets, including the enhancement of legal frameworks and prudential supervision, is needed. The principal reasons for this are twofold. First, the weakness of the financial sector has been partly responsible for the relatively modest growth rates observed in some accession countries during the last decade. In spite of substantial structural reforms in the real sector of the economy, the as yet insufficient development of the financial sectors may have made the transition to a fully functioning market economy more costly in many accession countries. Financial sector development is, therefore, crucial if potential economic growth is to be increased and real incomes are to catch up with those of the euro area. Second, financial stability in the accession countries is of great relevance to the ECB, since it is a central aspect of ensuring the smooth conduct of monetary policy in an enlarged euro area. Financial sector vulnerabilities have to be avoided as they may complicate the efficient working of the monetary policy transmission mechanism. They may also pose great challenges for the conduct of monetary policy, for central banks' credibility and for the maintenance of price stability. Finally, accession countries have embarked on the process of developing a modern financial market infrastructure.

With regard to the length of the period of ERM II membership, in view of the varying degrees of convergence of the accession countries, limiting the duration of ERM II membership to the minimum permissible time to qualify for the adoption of the euro – that is, two years – may not be an optimal choice for all accession countries. Longer membership of ERM II may, in some cases, be helpful since it would allow accession countries to retain the exchange rate as an instrumental policy variable during the catching-up process. Indeed, this option has proven useful for most of the current euro area participants. Again, it is worthwhile to recall the examples of Greece, Portugal and Spain. In the case of Greece, the final revaluation of the drachma on 17 January 2000 took place at the request of Greece, with the agreement of the EU authorities, to support the country's efforts to preserve sustainable price stability and progress in real convergence without jeopardising the competitiveness of the economy. Portugal and Spain, which participated in the EMS/ERM for a longer period of time, also used the option of realigning the respective exchange rates of the escudo and the peseta at several points along the road towards entry into the euro area. Participation in ERM II should, therefore, not be seen as a mere “waiting room” prior to the adoption of the euro.
ECONOMIC PERSPECTIVES Annual address by Governor Øystein Olsen to the Supervisory Council of Norges Bank  THURSDAY 17 FEBRUARY 2022  Economic perspectives 2022  NORGES BANK ECONOMIC PERSPECTIVES 17 FEBRUARY 2022  INTRODUCTION Today, nearly to the day, a hundred years have passed since the first annual address was delivered. The governor at that time, Nicolai Rygg, painted a gloomy picture. The speculative boom in Norway during the First World War had created a bubble that burst. A wave of losses ensued. The economy was marred by stagnation and bankruptcies. The problems in the business sector spread to the banks.1 If banks had failed, the problems facing businesses would have intensified. It was therefore crucial to make sure the banking system weathered the crisis. There was no disagreement about that. The main issue under heated debate was who should bear the losses and who should guarantee new capital. Not many weeks after the first annual address, Norges Bank had to step in to rescue one of the big banks. When the next big bank encountered problems, Norges Bank was again called upon to intervene. But Nicolai Rygg now put his foot down. The loans provided should be guaranteed by the State and not by Norges Bank. Not only did Nicolai Rygg have to deal with a banking crisis, but also an erosion in the value of the Norwegian krone due to periods of excessive money supply.

Frozen capital markets threatened even solvent banks. At an early stage, there were fears that the pandemic that hit us in 2020 might also trigger a financial crisis. Three different situations, but one common endeavour for central banks: The financial system had to be protected. At the start of the pandemic, access to market liquidity was narrow, and the price of available capital was disproportionately high. Norges Bank stepped in and provided additional liquidity support to the banks (Chart 2). The purpose was to contribute to smooth market functioning and ensure that the policy rate cuts passed through to the interest rates faced by households and businesses. 3  NORGES BANK  Chart 2 Additional liquidity support during the pandemic  ECONOMIC PERSPECTIVES 17 FEBRUARY 2022  F-loans. In billions of NOK 200  200  150  150  100  100  50  50  0 Jan-20  Apr-20  Jul-20  Oct-20  Jan-21  Apr-21  Jul-21  Ordinary F-loans Extraordinary F-loans  0  Source: Norges Bank  The actions taken build on several important principles:3 First, the risk transferred to the central bank should be as low as possible. If the support schemes are too favourable, we risk undermining the banks’ own motivation to maintain sound credit and liquidity policies. Those who take risks must also be prepared to bear the losses. Second, loans should only be given to banks that are solvent. The central bank’s role is not to help recapitalise banks.
On top of the promotion of e-commerce, PromptPay together with other e-Payment initiatives, for example shared point of sales (POS) terminals, digital tax messaging, standardized QR codes, will lead to significant reduction in costs of cash management and paper processing, currently borne by banks, businesses, consumers, as well as the Bank of Thailand. In addition, the move from cash-based transactions to more electronic-based transactions can potentially reduce incidences of corruption and improve governance through greater transparency. On the regulatory front, an important development is the crafting of the Payment System Act which aims to consolidate fragmented laws and regulations governing electronic payments. The Act will set out business rules and regulatory framework for our payment systems that meet international standards. To date, the Act has been endorsed by the cabinet and expected to soon be presented to the National Legislative Assembly. Let me say a few words about FinTech. We view FinTech as an important addition to our  financial service ecosystem. FinTech would give consumers more options and save operating costs for financial institution and service providers. On a bright side, FinTech firms are agile and efficient by nature. Yet allowing certain types of them to run freely may destabilize the ecosystem. We need to promote financial innovation while ensuring that potential risks from its misuse would not contribute to systemic risks’ build-up. Equally important, there needs to be adequate consumer protection. The Bank of Thailand aims to foster a symbiosis between FinTech and our current financial ecosystem.

The passage of this Act is a win-win for small businesses as well as banks. The Bank of Thailand regulations on loan classification, provisioning requirement, and valuation guidelines have been issued to help banks adopt this new collateral regime. 4/5  BIS Central Banker's Speeches  Ultimately however, we would like to see Thailand moving from collateral-based lending towards cash-flow-based lending especially for small businesses with few or no eligible collaterals but otherwise viable prospects. In order to do so, we need to have sufficient data for credit risk enhancement and monitoring. In light of this objective, we are developing an industry-wide SME database from pooled bank data for banks to use for their planning and risk management. In addition, we are working with relevant parties to amend the Credit Bureau Act to expand its membership to players like Peer-to-Peer (P2P) lenders. These efforts would get along well with the government policy to expand the roles and coverage of Thai Credit Guarantee Corporation (TCG) to provide credit access for SMEs lacking collateral security. Ladies and Gentlemen. If we look beyond our domestic market, increasing regional integration brings numerous exciting business opportunities. Thailand’s strategic location at the heart of Mainland ASEAN along with close economic relations with our neighbors make us a natural candidate to become a regional connector of trade and financial services. We have offered many fronts to enhance such connectivity.
Engage with the official sector about how LIBOR affects your firm and your challenges in this transition. And note that just last week, the ARRC published a checklist designed to support market participants with the adoption of SOFR.16 Implementation will be complex: financial contracts need to be scrutinized, operations need to be evaluated, and technology needs to be updated. The work involves numerous jurisdictions and multiple asset classes, and will require changes from how business is conducted to how systems are built. These things take time, and time is running out. Conclusion The LIBOR transition is a serious issue the industry needs to address. Both the official sector and market participants have made enormous progress, but we need to see much broader and consistent preparation for the transition. If your firm is one of those hoping the problem will go away, or feeling nostalgic and counting on an extension to the deadline, take this message back: The clock is ticking, LIBOR’s days are numbered, and we all need to play our part in preparing the industry for January 1, 2022. Thank you, and I hope you enjoy today’s conference. 1 Federal Reserve Bank of New York, Statement Regarding Repurchase Operations, September 20, 2019 2 For recent statements regarding the FOMC’s longer-run monetary policy implementation framework and  balance sheet normalization, see FOMC Communications Related to Policy Normalization. 3 John C. Williams, 901 Days, Remarks at the Securities Industry and Financial Markets Association, New York,  July 15, 2019.

The Financial Stability Board’s Official Sector Steering Group (OSSG) has indicated its support for ISDA to include such a trigger to avoid fragmentation between cleared and uncleared derivatives.10 Derivatives contracts account for 95 percent of the exposure to U.S. dollar LIBOR, so universal changes to these contracts would be a significant leap forward. If the market signs up to the ISDA protocol when it’s published, it will be a considerable milestone and will go a long way toward reducing risks to firms, markets, and the financial system. In addition, the ARRC has released four sets of recommended fallback language for different types of cash products and has published potential paths forward for adjustable-rate mortgages (ARMs).11 While mortgages are a small part of the overall exposure, it’s vitally important that consumers understand what the changes being made mean in real terms. Last week, the Federal Reserve Board, the FDIC, the OCC, and other agencies released a proposal on adjusting margin requirements for covered swap entities that, among other things, are meant to remove unintended hurdles to signing the ISDA protocol and moving away from LIBOR.12 The Financial Accounting Standards Board has similarly released an exposure draft with proposals to smooth the transition from an accounting perspective.13 Finally, earlier this year, the SEC staff issued a statement highlighting risks and disclosures for market participants to evaluate proactively as they transition away from LIBOR.14  The Challenges Ahead 3/5  BIS central bankers' speeches  Progress has been made, but there’s still much to do.