samchain/econo-pairs-v1 huggingface dataset:
However, recent developments increase the downward risks, especially in the external economy, for which the Central Bank must be ready to respond. IV. Final remarks  Mr President, dear Senators, the MPR cut decided by the Board last Friday has been described as “surprising” or “unexpected” by the observers. Indeed, it was an adjustment that most analysts did not see coming, in either its timing or magnitude. However, it was not an unpredictable change in light of the background, analysis and communication that the Bank had been delivering in the preceding months. Moreover, it is a decision based in depth on the report that I have presented today. Before I finish, I would like to draw your attention to the exceptional nature of the circumstances that led to this decision and its implications for the Bank’s communication and actions in the future. At the beginning of this presentation, I mentioned that we have defined this decision as a “recalibration” of monetary policy, as it is an adjustment of the MPR to generate a monetary impulse compatible with the inflation target in the face of significant and consistent changes in the estimates of capacity gaps, inflation and the policy rate. This time around there has been an unusual combination of new information for all the structural parameters plus the new inflation measurement, pointing in the same direction.

To ensure stability as regulations are lifted, leveraging on technology to improve data monitoring systems have enhanced the ability to monitor developments to assess any emerging risks to the system. During this period of strong fundamentals and rising potential for economic expansion, Malaysia has the flexibility to introduce measures not only to support growth but also to improve the quality of the growth and its long term sustainability. This includes significant investment in education and according priority towards achieving socio-economic stability. Overall, a balanced and holistic approach to economic management is aimed to ensure the foundation for a strong economy and its competitive position in the global economy. Thank you.
There is anecdotal evidence that some large HLIs are becoming less willing to supply information to their counterparties as memories of the LTCM saga are fading. It is thus important that regulators continue to promote the introduction of suitable supervisory incentives that would encourage continued compliance with sound risk management practices by the financial institutions. Secondly, these proposals may not be sufficient to resolve the problem faced by smaller and open markets. Even with reduced overall leverage, HLIs could still build large foreign exchange positions relative to these markets. It might also be possible for HLIs to build up potentially destabilising  3  BIS Review 24/2000  positions in smaller markets while remaining inside internal limits on leverage and/or liquidity risk. Enhanced risk management cannot therefore be relied upon, in isolation, to alleviate the problem. A second proposal to enhance market stability is to improve transparency and disclosure to make markets work better. There have been two major international initiatives in this respect, one at the firm level and one at the market level. At the firm level, there is the Multidisciplinary Working Group on Enhanced Disclosure, chaired by Peter Fisher of the Federal Reserve Bank of New York, which has developed a disclosure template for individual firms to voluntarily disclose their risk exposures. This initiative is breaking new ground, as it is the first time that the private sector would be providing more information about their risk exposures.

Rapid deleveraging of positions in markets associated with the default of an HLI of the size of LTCM could have systemic impact even in large and mature markets, thereby threatening the global financial system. It has been said that a repeat of the like of an LTCM debacle is most unlikely to occur, given the downsizing of hedge funds. I certainly hope that this is the case but I also notice that the recovery of investor sentiment has seen more money from institutional investors as well as high net worth individuals flowing to the hedge funds. The second scenario, commonly known as the “Elephants in the Pond” problem, is a situation whereby the HLIs take very large and concentrated positions in smaller financial markets and adopt aggressive trading practices that could be destabilising to such markets. It is very encouraging that the “Elephants in the Pond” problem is by now recognised quite extensively as a real issue to be tackled. What is being done and is it enough? Different approaches have been floated to tackle the problems arising from the two scenarios I just described. The prevailing approach is through improving counterparty risk management. This is done indirectly by asking the banks and other financial institutions to be more prudent in granting credit lines to the HLIs, and directly by encouraging the HLIs to enhance their own risk management standards.
Hall has pointed out that a tighter household borrowing constraint can help explain the depth and persistence of the most recent recession in the U.S.2 Mian and Sufi observe that unemployment is much higher in counties across the U.S. where households were more debt constrained by the fall in the price of housing.3 Their finding provides further support for the hypothesis that it is the especially debt-constrained households that are under the greatest pressure to reduce current consumption. Given the effect that sudden reductions in borrowing capacity are expected to have on broader economic activity, it is then encouraging to see that, at least at the aggregate level, households are increasing their borrowing. This suggests that the forced cuts in spending caused by declines in borrowing capacity are becoming less of a major concern for households. I’d now like to turn to some of the empirical analysis that can help explain both the decline in aggregate U.S. borrowing after 2008 and the subsequent turnaround of this trend in 2013. First, as we now know all too well – and as seen in Chart 2 (House Prices Peaked and Fell Precipitously), house prices in the U.S. rose at steadily increasing rates from 2000 through 2006, followed by an approximately 31 percent reversal that persisted through 2011. That  1  See Gauti B. Eggertsson and Paul Krugman (2012), “Debt, Deleveraging, and the Liquidity Trap: A FisherMinsky-Koo Approach,” Quarterly Journal of Economics, 1469–1513. 2  See Robert E. Hall (2011), ‘‘The Long Slump,’’ American Economic Review 102, 431–69.

For one, the dramatic increase in student debt implies that a fundamental change has taken place in the way we finance higher education in the U.S. A combination of rising college costs, reduced subsidies from cash-strapped state governments to their state universities, and cutbacks in home equity loans and other sources of financing has left new college attendees with larger debts. There’s been a tremendous amount of attention to the growth of student loans in recent years, and our data indicate some of the reasons why. First, student loans are the only form of debt that grew consistently even through the depths of the crisis and the long period of debt paydown. Second, the growth in educational debt, like that of auto loans, is concentrated among the lower and middle credit-score groups. Unlike other types of loans, student debt continued to grow steadily during and after the recession; now, at almost $ trillion, it comprises 9 percent of household debt and represents the second largest source of debt for U.S. households after mortgages. Student loans provide critical access to schooling, given the challenge presented by the increasing costs of higher education. Those with college degrees earn a high return on their educations; they are much less likely to be unemployed, and they earn on average twice as much as those with only high school diplomas.
By the end of August, outstanding resident loans subject to moratoria had peaked at € billion, equivalent to almost 17% of resident lending, with households accounting for the lion’s share, though these represented 10.1% of lending to households. By September, the amount of loans subject to moratoria started to decline, falling to 15.6% of resident lending, as some of these borrowers were in a position to resume their loan repayments, signalling a recovery in economic activity. At the same time, around € million loans were disbursed under the Malta Development Bank’s COVID-19 Guarantee Scheme, accounting for almost 4% of the resident corporate loan book to support working capital Page | 3 Document Classification: Public  requirements of businesses. A further € million have been sanctioned but not yet disbursed. Such loans were mainly granted to the wholesale and retail trade, accommodation and food service activities, and the transport and storage facilities, which were the sectors that were worst hit by the pandemic. Banks worked hard to activate such schemes within a relatively short period of time. The support provided by domestic banks was made possible because of their prudent business models coupled with the implementation of a stronger post-global financial crisis regulatory framework, which over the past years strengthened the overall resilience of the financial system. Although, as with other banks around the globe, domestic banks posted significantly lower profits – with a few registering losses in the first half of 2020 – their financial standing remains sound.

First, it requires the active involvement of many different stakeholders, in particular Government agencies and very often a variety of NGOs, as well as financial institutions with specialized skills and knowledge. Second, the state of economic and social development of a society is an  BIS Review 88/2010  1  important determinant on the level and quality of financial inclusion. Third, what constitutes acceptable level of inclusion, in terms of access to finance, protection of personal rights and liberties, or assurance of retirement and healthcare benefits varies from one jurisdiction to another. For the reasons that I mentioned, there is no uniform global benchmark that can be used as a successful model for financial inclusion programs. Success stories and experiences are dispersed and often go unrecorded and to further the cause we need to reveals this situation. The financial inclusion agenda requires a systematic and internationally-recognized set of financial inclusion indicators that is meaningful and capable of assisting us in formulating developmental policies. Furthermore, enormous efficiency gains from the availability of such indicators can both reduce the cost of research and implementation as well as increase the effectiveness of the delivery and execution of the policies. Lessons learned in using financial inclusion data in the Malaysian context Let me to briefly share some of the lessons we have learnt in terms of using data to improve the policy formulation process, and develop a more efficient and inclusive financial sector.
The decision was intended to streamline the UK regulatory framework and, recognising that the distinction between different types of financial firms had begun to blur, to bring together financial regulation in a single organisation and under a single piece of legislation, the Financial Services and Markets Act. In a world crowded with acronyms, this gave an opportunity for something of a cull, consigning the numerous self-regulatory organisations or SROs - like SFA, IMRO and PIA to history! However, while you may be able to take financial supervisors (quite literally) out of a central bank, you cannot remove all responsibility from a central bank for the safe-running of the financial 7 system. The Bank stands at the heart of the financial system not only in the implementation of monetary policy, monitoring the financial intermediaries that make up the transmission mechanism for policy changes, but also operationally, as a market participant: on a daily basis carrying out open market operations or providing final settlement for payment systems across accounts at the Bank; or, in more extreme circumstances, intervening in the market to support the currency or to provide liquidity to a bank in difficulty. Thus, while responsibility for supervision of individual banks has moved to Canary Wharf, the Bank has retained responsibility for maintaining the stability of the financial system as a whole.

Like public companies, and  BIS Review 102/2000  6  no doubt many of you here who are directors of public companies, we are working hard to ensure full compliance with the Turnbull report. Personnel policies Finally I would like to mention the changes we have made to our personnel policies. I have already indicated that the changes imposed by the 1997 proposals, together with the changes brought about by a changing environment, placed a heavy demand on the flexibility of our workforce. We have needed to increase the analytical capacity of the Bank, in part by additional recruitment of economists. Indeed we are among the largest employers of professional economists in the country. We have also substantially upgraded our programmes under which individuals are able to go back to full-time education supported by the Bank to obtain the Masters, and in some cases Doctorate degrees, that we need to keep us at the forefront of thinking on economic and financial issues. We have reorganised the rank structure within the Bank. For some time, we had two broad categories of staff: officers and officials. Counter-intuitively, the officials were senior to the officers, rather like the Civil Service of many years ago when Administrative Grades were senior to the Executive Grades. We have merged the officers and officials grading into one structure, taking out several layers while we were at it - although I would have to admit that the Bank remains a formidable hierarchy!
Lars Heikensten: The Riksbank and risks in the financial system Speech by Mr Lars Heikensten, Governor of the Sveriges Riksbank, at the Risk Management conference, Stockholm, 16 November 2004. *  *  *  Thank you for the invitation to speak at this conference on corporate risk management. I founded listed in the programme for this two-day conference concepts such as confidence, risk evaluation and communication of existing risks. These are concepts that regularly come up in the Riksbank’s work on financial stability - work that has been given increasing focus in recent years. This is no surprise. Let me take you back in time twelve years, to autumn 1992. All of the Swedish banks had suffered substantial loan losses. The international credit market had almost no confidence in them as a group, regardless of how great the losses the individual banks had suffered. They were facing severe financing problems. The Government and the Riksdag (the Swedish parliament) therefore faced a choice - to make a very rapid decision to provide the banks with support without actually knowing how extensive this support would have to be or to suffer a financial crisis with unforeseeable consequences for the Swedish economy. The decision made was the only reasonable solution - to save the Swedish banks. However, the Riksdag was forced to make a decision, without the necessary information on the extent and causes of the crisis, which could have cost the central government budget SEK 100 billion or more.

Thus at present, there are no consequences for the implementation of our monetary policy. Discussions are also currently underway at the international level on the meaning and structure of benchmark interest rates on money markets. The SNB, as member of a BIS working group, is also involved in these discussions. From the point of view of monetary policy and financial stability, the working group identifies core requirements for credible and robust reference rates. Central banks or banking oversight bodies could play a supportive role in reform efforts, inasmuch as the extensive use of benchmark rates affects the general public. However, since reference interest rates are primarily there to cover the needs of the financial markets, market participants are themselves ultimately under obligation. BIS central bankers’ speeches  3
Moreover, as loose or uneven fiscal moves or reckless legislative initiatives hindered the efficiency of the overall macroeconomic policy mix in Romania, the central bank openly voiced its concerns regarding the sustainability and impact on growth potential of such populist measures, triggering harsh criticism from their promoters. The global crisis proved once again that price stability cannot be achieved in the context of  financial instability, whose resolution calls for far more than monetary policy words and deeds and by far more knowledge and confidence. Austerity measures, the recession, slower-than-expected recovery, along with the view that the  banking sector alone is to be blamed for these misfortunes – even though in Romania, unlike elsewhere, no bail-outs were resorted to – created a mood that eroded the high prestige that the National Bank of Romania had enjoyed prior to the crisis. A reputation that had been earned thanks to a more transparent, flexible, effective policy and to a greater openness to the general public. We were not alone. That sentiment became mainstream across the globe, as well. Central bankers are nowadays cornered to deliver more in their countries, to actively punish the offenders of fiduciary and prove more empathic with debtors and, why not, more compliant and tolerant with populist measures that affect the financial sector and macroeconomic stability. Otherwise their independence would be put at risk, as it is already challenged by public representatives.

The National Bank Romania’s experience As regards the National Bank of Romania, one key challenge to policy communication effectiveness concerns the apparent divergence between actual inflation and that perceived by the public. In a country that saw annual inflation running at 300 percent back in the 1990s and succeeded to tame prices in the single-digit zone for over more than a decade, this divergence has gradually declined. This issue has steadily been in our focus. In 2005, two years before Romania’s EU accession, the shift to a flexible inflation targeting strategy and redenomination of the local currency brought about more discipline in communication and transparency. Thus, regular media briefings  (almost every six weeks), more specialised publications, as well as educational materials, conferences and seminars, livestreams and online tools, dedicated outreach projects which put at good use our territorial network, increased social media presence with tweeting, videos, tutorials and educational games or blogging (actually, we were among the pioneers in blogging) became part of the National Bank of Romania’s standard communication practice. The diversification of instruments and audiences came in swiftly. Some steps came only recently (2016) – amid fears of misleading or misunderstanding by the general public that was yet to grasp the very essence of the banking and financial business, not to mention central bank activities –, such as publishing the summary of accounts of monetary policy meetings and the pay thresholds or even regular parliamentary presence.
In particular, the fund provided fiscal leeway during the economic setback in 2008 and 2009. Fund governance Let me now turn to the actual management of the fund. Chart: A fund owned by the Norwegian people The Ministry of Finance holds the political responsibility for the oil fund. The overall management principles and strategy are anchored in the Norwegian parliament, to which the Ministry reports at regular intervals. The operational management of the fund is fully delegated to Norges Bank. Our task as manager of the fund is strictly commercial: to maximise returns within the guidelines defined 2  BIS central bankers’ speeches  by the government. This structure ensures that the fund is not used as a foreign policy instrument. Individual investment decisions are made by Norges Bank Investment Management, a separate division within the central bank. Norges Bank reports on risk and return to the Ministry, and we also provide advice to the government on the investment strategy. The investment strategy Our management objective is to achieve the highest possible long-term return, with an acceptable level of risk. The investment strategy is developed by keeping in mind the fund’s objective as well as its key characteristics: its size and its long-term horizon. Let me elaborate on some important aspects. The fund’s purpose is to support long-term considerations in the spending of government petroleum revenues. Both current and future generations should benefit from the petroleum resources. Hence, the fund itself has a long-term investment perspective. This has fundamental implications for the investment strategy.

However, in view of the risk exposures and the prevailing uncertainties in the economic environment, it is crucial that the big banks build up a sufficient base of loss-absorbing capital as swiftly as possible during this transition period. After adjusting for the not fully loss-absorbing components, the big banks’ remaining capital buffers are still thin in light of the aforementioned risks. Despite some improvement, leverage for both UBS and Credit Suisse is still high by international standards. Taking only fully loss-absorbing capital into account, the average capital ratio of both big banks amounted to less than 2% of total assets. Against this background, both big banks have already made major strides towards expanding their loss-absorbing capital base. To this end, Credit Suisse issued contingent convertible bonds (CoCos), while UBS retained its earnings. These important first steps have already significantly strengthened the big banks’ loss-absorbing capital base. They also show that the big banks should be in a good position to build up the necessary, additional capital buffer. Situation of domestically focused banks Allow me now to discuss the situation of banks with a domestic focus. The capitalisation of domestically focused banks was almost unchanged in comparison to 2009. The short but sharp recession in Switzerland in 2009 did not have any noticeable impact last year either. Write-downs and provisions were at a historical low. In a long-term comparison, profits remained at a high level overall.