samchain/econo-pairs-v1 huggingface dataset:
Jaime Caruana: What’s next for Basel? Remarks by Mr Jaime Caruana, Governor of the Bank of Spain and Chairman of the Basel Committee on Banking Supervision, at the “Basel II: Reality Check” Conference, sponsored by Financial Times Business and the Banker Magazine, London, 10 November 2004. * * * 1. Introduction and overview  I would like to thank the Banker magazine and the Financial Times Business for inviting me to join this important discussion today on the practical implications of the new capital framework for banking organisations. It is an honour to represent the Basel Committee on Banking Supervision at this event. The organisers have selected a provocative and highly appropriate title for this conference. As I will discuss this morning, the “real” reality checks for Basel II lie just ahead. Basel II’s effectiveness in encouraging improvements in risk management, and in motivating banks to hold adequate levels of capital, will depend principally on the degree to which it reflects the true risks and rewards facing banks. That is the focus for banks and supervisors now as we work toward the implementation of the new framework. Will Basel II be effective in promoting sound risk management? I am confident that the answer is yes on at least two levels. On the microeconomic level, I believe that Basel II will help to increase the rigour and comprehensiveness of an individual bank’s decision-making.

From a regulatory perspective, it is important to note that responsibility for ensuring that payment and settlement systems work smoothly and meet the requirements of the financial industry lies with the system operators and market participants. The role of regulatory authorities is to establish certain guidelines, especially for infrastructures that are of critical importance for the stability of the financial system, and to intervene rapidly in cases where market forces do not provide an adequate infrastructure. BIS Review 103/2009  1
But, despite our efforts, banks regularly lose money in the same old way: while pursuing profits, growth and market share without adequate heed to risk. Unfortunately, they often find clever new ways of doing this, so that it isn’t always easy to see how the same old habits will be repeated. While today’s Committee members are, I’m sure, looking for some respite from the ambitious work programme of post-crisis reforms, we also need to recognise that nobody can guarantee a crisis-free future. Therefore, we must remain vigilant against old risks reemerging in new shapes and forms. I will speak shortly about some of the key influences that have shaped the evolution of the Basel Committee over the years. Before I start, however, I would like to warmly welcome a number of special guests today: •  First let me welcome Peter Cooke. Having headed the Committee for more than a decade, Peter has been our longest-serving Chair – and, probably more than any other person, he was instrumental in laying the foundations for the Committee’s subsequent achievements. Indeed, his contribution is best highlighted by the fact that, for many years, people did not refer to the Basel Committee, but to the “Cooke Committee” and the “Cooke ratio” – although I know Peter is the first to acknowledge that the credit for the Accord is shared by many. Peter – we are very pleased that you and your wife Julia can be with us today.

Stefan Ingves: The evolution of the Basel Committee Welcome and keynote address by Mr Stefan Ingves, Governor of the Sveriges Riksbank and Chairman of the Basel Committee on Banking Supervision, at a symposium to mark 25 years of the Basel Capital Accord “25 years of international financial regulation: Challenges and opportunities”, Basel, 26 September 2013. *  *  *  Good morning everyone. On behalf of the Basel Committee, I would like to welcome you to today’s symposium, which the Committee is hosting to mark 25 years since the first Basel Accord on bank capital was established. And let me at the same time also acknowledge Jaime Caruana and the BIS, not only for hosting this event, but also for their unwavering support of the Committee over the past almost 40 years. As many of you know, the Basel Committee started out in 1974 as the Basel Committee on Banking Regulations and Supervisory Practices. In the aftermath of the Herstatt collapse, the G10 Governors of the day were seeking ways to preserve and promote the stability of the international financial system. It is worth reflecting during the morning, as we discuss the Committee’s achievements to date, that the basic problems we encounter today – poorly run institutions, interconnectedness and financial instability – are the same as those faced by the Committee when it was founded. This is not to imply that nothing has been achieved: on the contrary, a great deal has been done and the world has benefited greatly.
), Edquist, H. and Wallgren, A. (2007), Tillväxt i otakt (Growth out of time), SNS Förlag. Sveriges Riksbank, (2007), Box: ”The Riksbank’s company survey”, Monetary Policy Report 2007:3. Öller, L-E., (2007), “Revisions of Production Data in the Swedish National Accounts”, Background Facts on Economic Statistics, 2007:2, Economic Statistics Department, Statistics Sweden. BIS Review 12/2008  7  8  BIS Review 12/2008  BIS Review 12/2008  9  10  BIS Review 12/2008  BIS Review 12/2008  11

While listing the experiences of unconventional measures among the central banks, we can distinguish between: measures for increasing and changing the composition of the assets in the balance sheet of the central banks in different forms and with high heterogeneity across the countries, and measures for influencing agents’ expectations by strong commitment by the central banks for keeping low interest rate for a longer time horizon. In the public finances domain, the strengthening of fiscal discipline and the need of careful monitoring of fiscal sustainability can be taken as the core preventing arms against fiscal imbalances that highlight this crisis. The fiscal consolidation is already on the list of objectives within the EU and it will require serious efforts and internal adjustments for reaching this goal. In the midstream of the crisis, the need of fiscal adjustment imposed the confronting issue of the adverse impact over recovery and growth dynamics that was really  BIS central bankers’ speeches  1  one of the tight spot in the crisis management. The fiscal stimulus obviously supported the recovery in the countries where there was a room for it, but looking forward, the need for fiscal consolidation should be taken seriously. The financial stability, not only nationwide, but also in international framework, is quite often quoted as a common good. Attention should be paid to the risk distribution among financial institutions, as well as to the aggregate risk level evolution.
The figure shows the unrealised capital gains recorded by all insurance companies  (including mutual and provident insurers) on all asset classes. The unrealised gains on the bond holdings of insurers covered by the Insurance Code amounted to EUR 151 billion in 2015. Page 3 sur 7  inhabitant. The low interest rate environment is squeezing insurers’ profits: it is creating a situation where the returns on new securities added to investment portfolios are lower than the rates paid out on insurance policies. In response, insurers have already started to lower the rates paid to policyholders: in 2015, they fell by an average of 25 basis points compared with the previous year. However, this is still insufficient when compared, in particular, with the fall in 10-year OAT yields: a drop of 80 basis points over the same period. I would therefore urge insurers once again to show moderation and to be realistic when setting rates of return on euro-denominated life insurance policies for 2016. The low rate environment also raises a fundamental question about the diversification of savings products. 2015 was marked by a shift among savers towards unit-linked products: net inflows almost doubled compared with the previous year, to EUR 11.4 billion, while inflows into euro-denominated products declined by 25% to EUR 10.5 billion.2 However, unit-linked policies are almost certainly not the only answer, especially as their rise in popularity will need to be accompanied by a high standard of financial information, to ensure that policyholders are fully aware of the associated risks.

So far, this is very much the picture we are seeing. At end of March, the BIS ratio for capital adequacy for Thai banking system is 14.9 percent, of which the level for tier-one capital is 11.8 percent. On the issue of credit extension, to ensure adequate flows of credit to the economy, our approach has been to rely on market mechanism by encouraging greater competition amongst banks with regard to interest rates adjustment through a process of close consultation and dialogue. The recent round of bank’s lending rate adjustment following the last MPC meeting is a case in point. In addition, to help banks better manage the increased credit risk, a credit guarantee scheme backed by government funding has been set up to promote SME lending by banks. Also, to help resolve problems related to bank lending, the Bank of Thailand has set up a customer-call center to look into problems related to loans application and approval between customers and banks. Going forward, the slowing economy will continue to put pressure on the asset quality of banks. Therefore, managing credit risk will continue to be an overriding focus of Thai banks this year. To do this effectively, banks need to have in place both a strong capital base and a good risk management system, both of which have been strengthened significantly in the past years in line with Basel II and international best practices. Therefore, this should enable our banks to manage risk adequately going forward while supporting the economy.
Factors such as indirect taxes have effects on consumer prices that are transitory; they normally disappear after a time unless long-term inflation expectations have been affected. Conclusion The CPI is the target variable for monetary policy. Measured with the CPI, inflation is to be 2 per cent in a longer, annual perspective. There are grounds, however, for sometimes departing from this target. Short-run deviations from the target should not be attributed automatically to a faulty formulation of monetary policy. This presupposes, however, that clearly identifiable, transitory price movements are involved that monetary policy neither can nor should aim to counter. It is therefore important to look at the factors behind the CPI figures when appraising monetary policy. 7KHUHDVRQIRUOHWWLQJGHYLDWLRQVRFFXULVWKDWRWKHUZLVHWKHHFRQRP\ZRXOGEHGHVWDELOLVHG OHDGLQJVRRQHURUODWHUWRXQQHFHVVDU\HFRQRPLFFRVWVWKDWLVWRVD\H[DJJHUDWHGIOXFWXDWLRQV LQERWKWKHUHDOHFRQRP\DQGWKHILQDQFLDOPDUNHWV  11  BIS Review 61/1999

A study by the Asian Institute of Finance in 2015 found a majority of youth to be living on high borrowing costs – 38% of youths rely on personal loans, while another 47% engage in expensive credit card borrowings. Often, they will soon find these debts to be burdensome and result in financial problems. From January to August this year, AKPK’s data indicated that above 3,400 borrowers between the ages of 20– 30 years have sought AKPK’s assistance, as compared to 3,450 borrowers for the entire of 2016. Third, majority of Malaysians do not practice long term financial planning. Only 40% of Malaysians consider themselves financially ready for retirement, despite the steadily increasing life expectancy of Malaysians. The poverty line in Malaysia is currently at RM950 per month, and based on the Employee Provident Fund (EPF), a retiree would need an estimate of RM228,000 upon retirement to generate sufficient investment income to live above the poverty line for the 1/4  BIS central bankers' speeches  next 20 years. However, according to Khazanah Research Institute, the average EPF savings of those in the 51–55 age group is only approximately RM160,000. Lack of awareness on the importance of having sufficient saving for retirement can lead to profound results, including the struggle to meet post-retirement standard of living. Fourth, Malaysians still lack understanding on risk and return and are not able to make rational financial decisions. We remain prone to financial fraud and abuse.
Of course, whether the FOMC decides to take such a step will be determined by its assessment of whether the benefits of additional policy stimulus outweigh the perceived costs of expanding the balance sheet. 9  Some flexibility was incorporated into the program because the directives from the FOMC specified the amount of purchases “up to” the stated thresholds. That flexibility was used to stop the agency debt purchases at around $ billion instead of the originally stated maximum of $ billion. However, this flexibility was not used more broadly. BIS Review 128/2010  7

Thomas Jordan: No end to the debt society without a culture of stability Summary of a speech by Mr Thomas Jordan, Vice-Chairman of the Governing Board of the Swiss National Bank, held at an “NZZ Podium” event, Zurich, 28 February 2012. *  *  *  The complete speech can be found in German on the Swiss National Bank’s website. The most recent financial and economic crisis has resulted in an unprecedented rise in public debt. However, a chronic tendency towards deficits and higher indebtedness has already been observed in a number of countries for the past few decades. Excessive public debt has a negative impact on long-term economic growth, and deprives a country of its freedom of action during a crisis. Sound state finances are thus essential for ensuring an economy's competitiveness and maintaining its social security system, and hence also for social solidarity. Last but not least, excessive public debt also poses a serious threat to price stability and monetary policy independence. Yet how can state budgets be consolidated over the long term? There are limitations on how far fiscal policy powers can be delegated to independent groups of experts. Because fundamental decisions on taxation or expenditure – unlike monetary policy – are aimed at redistribution, they have to be taken at the political level. Even fiscal rules such as a deficit cap or debt ceiling can only achieve a lasting improvement of budgetary discipline if they are supported by a broad political consensus on the advantages of sound finances.
1 There are four types of qualifying local intermediaries: Selected Registered and  Exempt charities with a valid Fundraising for Foreign Charitable Purpose Permit; Charitable Institutions and Not-For Profit Organisations established by Financial Institutions in Singapore, as specified by MAS; Selected Grantmakers under the Ministry of Culture, Community & Youth's Grantmaker Scheme; and, Other selected entities, as approved by MAS. 16/16  BIS - Central bankers' speeches

Furthermore, there is a risk of increases in indirect taxes and administered prices that may be greater than currently assumed, owing to the need for fiscal consolidation in the coming years. Finally, upside risks may come from stronger than expected domestic price pressures in the context of increasing capacity utilisation in the euro area. Turning to the monetary analysis, the annual growth rate of M3 was 2.0% in April 2011, after 2.3% in March. Looking through the recent volatility in broad money growth, M3 growth has continued to edge up over recent months. The annual growth rate of loans to the private sector strengthened slightly to 2.6% in April, after 2.5% in March. Overall, the underlying pace of monetary expansion is gradually recovering. At the same time, monetary liquidity accumulated prior to the period of financial market tensions remains ample, with the potential to accommodate price pressures in the euro area. 2  BIS central bankers’ speeches  Looking at M3 components, the annual growth rate of M1 decreased in April, while that of other short-term deposits increased. The development partly reflects the gradual increase in the remuneration of these deposits over recent months. At the same time, the steep yield curve implies a dampening impact on overall M3 growth, as it reduces the attractiveness of monetary assets compared with more highly remunerated longer-term instruments outside M3. However, available information suggests that this impact may be waning.
In my opinion, however, this could have been counteracted by a more expansionary monetary policy. Today I intend to describe the factors that in my view indicate that aggregate demand has been too low in recent years, and to explain why, as I see it, monetary policy and fiscal policy have not been used to a greater extent to counteract low demand. My explanation is by and large that the possibility to use monetary policy and fiscal policy to stabilise aggregate demand has been limited by concerns about financial stability. Even though Sweden has coped well with the financial crisis, I believe that it has left decision-makers with the feeling that they have just had a near-death experience. Financial stability has therefore come to seem far more important that standard business cycle stabilisation. This prioritisation may well be reasonable. However, I believe that it is important to the Swedish economy that we have an effective policy for business cycle stabilisation at the same time as we conduct a policy to promote financial stability. I will discuss how this should be done towards the end of my speech. Low aggregate demand since the financial crisis When Sweden was hit by a collapse in the demand for Swedish export products at the end of 2008, GDP fell heavily. However, it did not take long for GDP to rise again and in 2010 growth figures reached almost record levels.

As can be seen in Figure 7, policy rates in the United States and the United Kingdom have remained close to zero throughout this period. The ECB began to raise the policy rate in the euro area in 2011, but quickly had to begin cutting it again. 8  The spring budget bill for 2008 describes situations in which discretionary fiscal policy is justified as “crisis situations or in connection with supply shocks where fiscal policy may need to support monetary policy”. The Swedish Fiscal Policy Council interprets this to mean that, in the government’s view, the Riksbank has the main responsibility for business cycle stabilisation. See Chapter 1 of the 2011 report of the Swedish Fiscal Policy Council, “Swedish Fiscal Policy”. 9  The publication “Monetary Policy in Sweden” describes the Riksbank’s flexible inflation targeting regime (Sveriges Riksbank 2010). 8  BIS central bankers’ speeches  Many central banks have also conducted so-called unconventional monetary policy by purchasing assets or providing liquidity at longer maturities than normal in other ways.10 All in all, this has led to a more expansionary monetary policy in large parts of the rest of the world than in Sweden, despite the fact that the repo rate is at an historically low level. The fact the Swedish monetary policy has been less expansionary than in many other countries may seem reasonable considering that the Swedish economy has also performed much better than that of many other countries.
For that part of the economy producing internationally tradable, not just traded, goods and services, output is falling while consumer spending is buoyant. As a result, there is a "tale of two cities" in which some industries are experiencing the worst of times, with declining manufacturing output, and others the best of times, with the latest retail sales figures showing an increase in the volume of sales over the past twelve months of 6.4%. Such imbalances are not uncommon. Indeed, I first used the phrase "tale of two cities" in early 1995 to describe the contrast between strong demand for manufacturing output and weak retail sales, the opposite of the position today. Since then the economic see-saw has lurched from external to domestic demand, partly as a result of the continuing weakness of the euro which has led to a large and persistent rise in the sterling effective exchange rate. The scale of the imbalances at home can be seen in figures for domestic and external demand. Whereas aggregate demand and output have risen at a fairly steady rate of around 2¾% over the past five years, domestic demand, supported by rapid money and credit growth, has risen much more rapidly than net external demand. Indeed, private final domestic demand grew at an average rate of nearly 5% over this period, and its growth was in excess of 4% a year in four of the last five years. This imbalance between domestic demand and output has resulted in a rising trade deficit.

Returns on shares are usually negatively skewed; that is, there is a greater chance of a return below rather than above its expected value. During the course of this year, the degree of negative skew has fallen in the US, suggesting that market expectations of further sharp falls is share prices have diminished. Of course a reappraisal of the future growth of productivity could yet occur. The recent fall in IT spending will, at least in the short run, reduce the contribution to higher productivity growth from capital deepening. It is never easy to detect changes in underlying productivity growth because a large quantity of data is needed to distinguish clearly between changes in trend and cyclical movements. Nevertheless, there is no evidence to suggest that the rate at which computing processing power is increasing – doubling every eighteen months according to Moore's Law – has diminished. Indeed, there have been suggestions that the pace of doubling of processing power is now closer to twelve months. But there is one reason for caution about estimates of higher future productivity growth, and that is the conventions used to measure output and hence productivity. It might seem obvious that a higher level of gross domestic product, produced by the same number of person-hours, is an improvement in productivity. But gross domestic product, GDP, is not value added.