samchain/econo-pairs-v1 huggingface dataset:
Andrew Bailey: The capital adequacy of banks – today’s issues and what we have learned from the past Speech by Mr Andrew Bailey, Deputy Governor of Prudential Regulation and Chief Executive Officer of the Prudential Regulation Authority at the Bank of England, at Bloomberg, London, 10 July 2014. *  *  *  I would like to thank David Curry, Hywel Dawes, Simon Dixon, Marc Farag, John Jackson, Duncan Mackinnon, Sasha Mills, Jitendra Patil, Rhys Phillips, David Rule and Vicky Saporta for their help in preparing this speech. The views expressed are my own and not necessarily those of any other members of the Bank of England. Good morning and thank you for giving me this opportunity to speak on the subject of bank capital adequacy. I am going to focus on the design of the capital adequacy regime. I am going to draw out the failings of the old regime and why those failings were so critical, comment on the major progress made over recent years, and use all of this to draw out design questions that remain to be settled. In doing so, I will examine a set of key objectives of the regime: first, that it creates good incentives for the behaviour of regulated firms; second, that it is appropriately forward-looking – at the risks in the future; and third, that it encourages and requires appropriate transparency which fosters market discipline.

In one sense, this should not matter if the regulatory capital calculation provides a robust floor below which the “economic” capital should not fall. But it was unclear how we could know this was so, and the lack of line of sight into how the firm managed risk was disturbing. The second weakness is generic to simple systems which conflate different levels of inherent risk, namely that they tend to create incentives for banks to increase the average level of riskiness of their assets. And, one thing we now know, incentives are hugely important in the capital regime. As I noted earlier, Basel II was not in place properly when the crisis broke, but the Market Risk Amendment was, and this introduced the use of banks’ own so-called “internal” models. As an aside, my experience suggests that the contribution of Basel II to the crisis was far more that it diverted the attention and effort of regulators and the industry away from broader risk management and into the implementation of a new and more detailed approach to regulation. This was especially so for large banks seeking approval to use their internal models. Moreover, this process was not well done. The Market Risk Amendment and Basel II dramatically increased the complexity of the capital framework, and whilst it intended to increase the scope of risk capture in the regulatory capital measure it ended up creating new opportunities for “optimising” regulatory capital.
BIS central bankers’ speeches

The only conclusion to be drawn is that with their operational reforms, strong communication, successful financing arrangements, building of liquidity and ongoing strong business performance, the banks have largely reclaimed their former position in the eyes of global investors. The authorities, and the Central Bank in particular, focused their efforts on communication about the character and structure of the economy, the current position and outlook, and other relevant information. The Central Bank’s regular Monetary Bulletin includes inflation and macroeconomic forecasts and a detailed analysis of economic developments. Once a year the Central Bank publishes a separate Financial Stability report and a more detailed and comprehensive edition than otherwise was produced in spring 2006 in response to prevailing conditions. It sought to address as many points as possible that had been raised by foreign analysts in the preceding months. The Bank’s financial stability analysis has been described by international reviewers as professional and transparent. It strove to fulfil such expectations a year ago in difficult circumstances. In the Bank’s view this aim was achieved and the report played an important role in explaining the position of the Icelandic financial sector at that time. Another crucial factor was that the Central Bank tightened the monetary stance sharply by raising its policy rate by 3.75 percentage points during the year and signalling clearly to the markets a firm commitment to bring inflation back to target after it had risen substantially as a result of the króna depreciation.
2  INTRODUCTION  NORGES BANK  From a not too distant future, let’s return to the present day. We can already see the contours of the digital tools used by Kristoffer and his digital assistant. Technology is advancing at a rapid pace. Every day we rely on new technology as we tap our payment cards on the reader. We also have to adapt to new developments on many other fronts. A shift in production methods and consumption is underway in response to global warming. The world economy is marked by densely interwoven trade flows, but also by uncertainty about the path ahead. ECONOMIC PERSPECTIVES 14 FEBRUARY 2019  INTERNATIONAL ECONOMIC COOPERATION IS CREAKING Throughout history, technological innovation and increased trade in goods and services have been important sources of growth and development. The two driving forces have functioned in tandem. Trade barriers have been reduced in recent decades. Faster transport and advanced communications systems have greatly facilitated access to ever bigger markets. Global value chains have emerged, and service providers can be located far from customers. With free-flowing capital, we can invest globally. Since the 1970s, world trade has grown rapidly (Chart 1). As a percentage of world GDP, international trade has almost doubled. Goods are still the dominant component, but trade in services has been on the rise. A host of new countries have also increased their share in world trade. Substantial technological and economic lags have been reduced. The world’s economic balance has shifted. Chart 1 World trade1) has grown markedly.

Norwegian businesses are part of global value chains. This means that protectionist measures can spill over into the Norwegian economy even if Norway is not targeted. The international framework and trade agreements we have with other countries are essential to the Norwegian economy. The EEA agreement is of particular importance. Thanks to the free flow of goods, services, labour and capital within the EEA area, Norway’s domestic market is about 100 times bigger than it would have been otherwise. A good half of our trade with other countries is with EU countries (Chart 5). Common regulations and product standardisation facilitate market access for Norwegian firms. 1 Based on GDP at market rates. 6  NORGES BANK  Chart 5 We trade mostly with the EU. Goods and services. In billions of NOK. 2017 EU  US  China  ECONOMIC PERSPECTIVES 14 FEBRUARY 2019  Other countries  Exports  Imports  0  200  400  600  800  1000  1200  Sources: Statistics Norway and Norges Bank  Norwegian business and industry may soon feel the consequences of Brexit. The UK is an important trading partner. The UK’s exit from the EU means it will also exit the EEA agreement, creating uncertainty for many firms. At the same time, international economic cooperation is creaking. In the years ahead, the multilateral trade system is at risk of being undermined, which may leave us with a more fragmented system. This may adversely affect small countries in particular.
Many Asian central banks have brought dollars that are invested in US government bonds in order to prevent their own currencies appreciating against the dollar, which would reduce their competitiveness. China, in particular, has been strongly dependent on exports to maintain a stable increase in employment and thereby to avoid even higher unemployment. This has meant that the foreign exchange reserves in Asia have increased dramatically in recent years. The consequences of the saving have been that household consumption has been kept down and the increase in welfare has not been as large as it could otherwise have been. 10  OECD, Economic Outlook, No. 78, December 2005. BIS Review 35/2006  5  In my opinion, all of these factors depend on one another and altogether they provide an explanation of the US deficits and the global imbalances. Are the imbalances sustainable in the long term? Although opinions are divided as to the seriousness of the US current account deficit and the main explanations behind it, most analysts agree that there must be a correction sooner or later. Some claim that the sustainability of the US current account deficit is greater than many have earlier believed. They point out that there has been no correction so far, despite the fact that the deficits have remained high over a long period of time and that the dollar has even appreciated over the past year.

This means that 100 million people have moved to "stage 3”, that is, marginally above the poverty line. There have also been major geographical changes in the spread of poverty. The number of poor people has declined in Asia, but increased in other developing countries. Africa South of the Sahara has fared the worst, with the number of poor people there doubling over the past 20 years. Over the past two years, Africa has enjoyed the highest GDP growth in more than 30 years. 2 So even there, globalisation may begin to have a positive impact. China – an important force in the change process China’s entry into the global market economy has been one of the driving forces in the change process that the world economy is currently undergoing. The country’s significance in the global world economy has increased at a rate and in a scope that few people considered possible a few decades ago. Since the reform policy began at the end of the 1970s, average growth has been 9 per cent a year. China has accounted for one third of the world’s real growth in recent years. The country has rapidly transformed into the second largest economy in the world, become the third largest trading nation and one of the largest recipients of foreign direct investment. 3 The strong growth in China has been driven by investment and exports. Investment comprises just over half of GDP, which is much higher than the shares in OECD countries or in other rapidly-growing economies.
Financial development has been important not only for firms but also for the country as a whole. A deeper and far-reaching financial system contributes to building financial and economic inclusion, and financial stability against external shocks. In this respect, the Chilean financial system shows better performance than other Latin American and Emerging economies, in dimensions like market capitalization, number of branches per inhabitant, use of derivatives, and participation in domestic credit to the private sector, to name a few. Nonetheless, increased development and complexity of financial markets also means that risks may be higher, and that a stronger and more sophisticated regulatory framework is required. Page 10 of 20  Central Bank of Chile September 2019  The Chilean financial crisis of the early eighties led not only to a radical bank regulation revision, but also to learning valuable lessons for the future. A deeper and properly regulated financial system contributes to financial stability, inclusion and increased welfare. Even though significant progress has been made in this regard, there are still challenges ahead that must be faced to further strengthen our financial system. Let me now address some of these regulatory challenges the CBC has been working on. Page 11 of 20  Central Bank of Chile September 2019  In order to have a deeper FX market and enhance resilience of the financial sector a number of measures are being taken by the Central Bank of Chile (CBC).

Loans to the private sector have stabilised at growth rates somewhat above 5%, a rate of expansion which, in real terms, is broadly in line with the long-term average. Considering all the evidence relating to the first pillar, from a medium-term perspective, more liquidity is available than would be needed to finance sustainable, non-inflationary growth. However, given the current economic environment, we do not see the risk of this translating into inflationary pressure in the near future. Concerning the second pillar, recent short-term conjunctural indicators and survey data suggest that real GDP in the euro area has continued to grow only moderately in the third quarter of this year. This is in contrast to earlier expectations that a more pronounced upswing would occur in the course of this year. Obviously, the hesitant pace of economic expansion and current, lacklustre confidence reflect the significant degree of uncertainty that has been building up over recent months. This uncertainty is associated with geopolitical tensions, the evolution of oil prices and developments in stock markets. However, for the time being, the main scenario for the euro area remains that economic growth is expected to return to rates close to potential in the course of 2003. In fact, this expectation is consistent with all forecasts published by international organisations. Private forecasters, on the whole, also seem to share the same view. Moreover, financial markets have shown signs of stabilisation in recent weeks following a period of considerable turbulence.
The disadvantage of this approach at the time of its rollout was that this policy decision coincided with a drop in the price of oil, triggering a surge in inflation, which in turn necessitated a rise in the rates. But you will recall that we saw a comparable drop in the price of oil in early 2016 which had almost no impact on inflation. These are signs of an economy which is becoming accustomed to a floating rate and how it works. In my opinion this is where the floating exchange rate demonstrated its positive role as an economic adjustment enabler. We are indeed scared of floating schemes in the economy, explained by the many decades of a fixed exchange rate which changes only during a crisis, such as a devaluation crisis, and aside from which remains permanent for a period of time. Admittedly, this volatility of the exchange rate is a concern. But I will remind you that when the exchange rate was permanent, our interest rates were very volatile, as were other prerequisites to business. Therefore, it will take some time for the economy to adjust to some volatility. This is number two. 8 / 14  BIS central bankers' speeches  Third. Volatility receded drastically following the introduction of the floating exchange rate. It was very high according to various measures: both realised volatility and implied volatility, monthly and three-monthly. It is now down to levels seen in other emerging markets, possibly even lower. Moreover, it is substantially lower than oil volatility.

Do you think this authority should remain independent, or should it once again be subordinated to the Ministry for Economic Development? Thank you. ELVIRA NABIULLINA: Many thanks for your questions. As for the guidance you mentioned – this is still in the works. It is not so simple, as we are all accustomed to comment on a variety of processes. This is common practice when experts, business representatives and governmental officials voice their opinions on the current economic and forex situation. In other countries these opinions are not usually referred to as verbal interventions – verbal interventions are normally understood as the statement of a central bank, and are taken as verbal interventions, as well, possibly, forward guidance, too. I think that markets will gradually adopt the right view of such communications, and become accustomed to them. At the same time, we are looking to develop some general rules in this area. The idea is to ensure a more careful approach. 5 / 14  BIS central bankers' speeches  On the subject of Rosstat, there are objective complexities. These are understood to arise when Rosstat makes estimates in the context of significant external changes, which causes structural shifts to take place. These changes have to be reflected in data series as they unfold – so as a result we are not immune to recalculations. While we do use the full set of Rosstat data, we have always drawn on additional data obtained through surveys.
While the Fed raised the fed funds rate by 25 basis points in June and has signaled two more increases this year and three the next—while continuing to 4  downsize of its balance sheet—the European Central Bank extended its asset purchasing program and signaled that the benchmark rates will stay put for a while. The trade dispute between the US and China has continued to escalate. So far, the tariffs applied by the US and the reprisals have been limited, but the conflict has not subsided, and the measures adopted are already having an impact on risk perceptions, and the markets are more sensitive to them. As detailed in a Box in this Report, the effects that these measures may have on the global economy are difficult to quantify, as they depend on the number of countries that would be directly and indirectly involved, the amounts levied, the sectors affected and the time during which the higher tariffs would be applied. However, there are some qualitative dimensions and certain transmission channels common to the different possible scenarios. For the economies directly involved, there would be a negative impact due to lower external demand and greater uncertainty, which would affect local consumption and investment decisions. The size of the impact is related to the importance of trade among those directly involved and their ability to divert it to other economies.

MONETARY POLICY REPORT PRESENTATION BEFORE THE HONORABLE SENATE OF THE REPUBLIC  Mario Marcel Governor Central Bank of Chile 5 September 2018    The September 2018 Monetary Policy Report can be downloaded at http://www.bcentral.cl. The Spanish original prevails. Introduction Mr. President of the Senate, senator Carlos Montes, honorable senators, ladies, gentlemen, On behalf of the Board of the Central Bank of Chile (CBC), I am grateful for your invitation to present the Monetary Policy Report (IPoM). As usually in September of each year, this coincides with the report that, according to the Organic Law of the CBC, we must submit annually to the Senate. In compliance with this obligation, the Monetary Policy Report that I will be summarizing in a moment contains our view of the recent macroeconomic and financial developments in the Chilean and international economy, as well as their prospects and implications for the conduct of monetary policy. It also includes the Bank’s financial results of the first half of 2018, the results of the management of international reserves and a summary of the main decisions adopted by the Board this year to date. The Monetary Policy Report Incoming data this year has been showing greater than expected economic growth, and inflation consolidating its prospects of convergence to the target, in a context of positive surprises in several areas, an upward revision of potential growth and a faster closing of the activity gap.
First, private partnerships such as that between Clearstream and SGX, allow customers to better  BIS central bankers’ speeches  3  allocate and optimise collateral resources in Asia by enabling collateral to be managed on a fully automated and real-time basis. Second, central banks have also stepped in with cross-border collateral arrangements to permit the deployment of head-office cash and government securities to support local currency liquidity requirements of their branches and subsidiaries overseas. b.  Futurisation. Even before most jurisdictions introduce trading mandates, some segments of the OTC derivatives markets are already coming together to create exchange traded products. One example lies in Asian currency futures contracts traded on exchanges like SGX. With the introduction of new listed contracts, market participants have chosen to futurise some of their rolling forward contracts. Compared with OTC markets, exchange-traded futures have more transparent pricing, and are faster to execute and more cost effective. 14. These developments demonstrate that commercial incentives can be brought into alignment with regulatory priorities, which aim to reduce aggregate risk in financial markets and promote greater financial soundness and stability. 15. We also see promise for integration in infrastructure finance and insurance to produce exciting outcomes. 16.

Jacqueline Loh: Integrating Asia’s capital markets Keynote address by Ms Jacqueline Loh, Deputy Managing Director of the Monetary Authority of Singapore, at the ASIFMA (Asia Securities Industry and Financial Markets) Annual Conference 2014 “Developing Asia’s Capital Market”, Singapore, 5 November 2014. *  *  *  Mark Austen – CEO, ASIFMA Ashley Alder – CEO, Hong Kong Securities and Futures Commission and my fellow keynote speaker Fellow regulators and central bankers Distinguished guests Ladies and gentlemen 1. It is my pleasure to join you this afternoon at the ASIFMA annual conference held in Singapore. 2. We have a very ambitious agenda ahead of us. The title of the conference, “Developing Asia’s Capital Markets”, certainly does not do full justice to the breadth of topics covered in the breakout sessions and roundtable discussions over these two days. These topics are very wide ranging indeed, from traditional equity and debt markets, to foreign exchange, investment banking, fund management, financing of Asia’s infrastructure needs, market infrastructures; as well as specific geographic markets China and India. Each segment not only aims to address opportunities and challenges in each market or asset class, but also opportunities and challenges across markets and asset classes. 3. Accordingly, I will focus my remarks on integrating Asia’s capital markets as a natural pairing to the conference theme on developing Asia’s capital markets. I. Economic dynamism and wealth creation in Asia  4.
One-fifth of world population is still living in poverty, with the majority of them in Asia. How to address the poverty issue and the uneven distribution of income amid globalisation has become your biggest challenge. Mr. President, I believe more wealth could be generated if savings in  BIS Review 32/2005  1  the region could be recycled to finance investments in the region, if intra-regional trade could grow faster, and if investors could move funds easily from one economy to another in the region. Mr. President, I am confident that under your leadership, the Bank will play an even greater role in the integration of trade, finance and investment in the region. You have our unremitting cooperation and support. Thank you. 2  BIS Review 32/2005

But there’s something wrong. Interest rates are on the wrong side of the argument! They are too low, not too high, even if we assume that the equilibrium real interest rate is zero. Chart 5  Chart 6  Neither does international comparison suggest that Iceland is off the charts. Chart 5 shows a comparison of the real policy rates in a number of countries, based on the most recent interest rate decisions and the most recent twelve-month inflation figures. Iceland is 4  BIS central bankers’ speeches  somewhere in the middle. In Chart 6 we see several industrialised countries. Iceland is at about the same level as Sweden. Interest rates are higher in countries that are further along in the business cycle and have less slack, and they are lower in countries where the slack is greater, monetary policy is more credible, and long-term inflation expectations are near target in spite of higher current inflation. Chart 7  Chart 8  Finally, I show charts that illustrate, on the one hand, nominal GDP growth as forecasted for 2011 and, on the other, the current nominal policy rate. Some have posited that monetary policy should aim at keeping nominal GDP growth as stable as possible at a level that, in equilibrium, would deliver a desirable inflation target. I have certain doubts about how this would work in practice, but that is beyond the scope of my speech today.