samchain/econo-pairs-v1 huggingface dataset:
We, as supervisor and central banker, will try to stay out of the way as much as possible, unless because of criminal activities or systemic risk concerns we have to jump in. The private sector seems to have done fairly well so far. To this end, I point out a recent creation of the Banker’s Roundtable, an organization composed of some of the largest United States banks, in organizing the Banking Industry Technology Secretariat (“BITS”). BIS Review 17/1997  -9-  BITS, as I understand it, is in the process of designing and implementing common technological standards for the inter-operability of systems linking banks and their customers, and is also hoping to act as a certification authority for its member banks for third-party system and software providers, to ensure that when an electronic or Internet banking transaction takes place, the bank’s name is the only name the customer ever sees. Similarly, a certified software or systems provider would agree that the customer’s payment information would stay with the bank and not the provider. I mention this not as an endorsement of BITS, but as an example of the type of innovation and cooperative or collaborative effort that can occur when the banking community realizes the enormous challenge and opportunity it has in the next few years. Central banks and bank supervisors must also be equal to these challenges. In order for us to fulfill our responsibilities, it will be necessary for the private sector financial institutions to keep educating and challenging us.

And today I am pleased to announce a launch date, June 2021. The exercise will explore three different climate scenarios, testing different combinations of physical and transition risks over a 30-year period. We expect to use the exercise as a tool to size the risks faced in these scenarios, to understand how different bank and insurance business models will be affected and how they might respond, and finally as a way of improving firms’ risk management practices through the process of carrying out the exercise. We set out our proposed approach to this exercise in a discussion paper at the end of last year. Building on feedback we received in response to that paper, ahead of the launch, we will share with participants more detail on some key aspects of the exercise – for example around data requirements and scenario variables. This active engagement with participants, which we will map out this week, will help build their assessment capabilities and prepare for the exercise. We will not use the results to size firms’ capital buffers. But that does not mean firms should not be thinking about near-term capital requirements. As we have set out in our supervisory expectations, firms must assess how climate risks could impact their business and review whether additional capital needs to be held against this. Investments that look safe on a backward look may be existentially risky given climate risks.
The way forward We have made some progress on the TBTF problem, particularly in reducing the likelihood that a large complex firm will reach the point of distress at which society faces serious costs. But we have a considerable ways to go to finish the job and reduce to tolerable levels the social costs associated with such failures. Further international coordination is almost certainly going to be necessary to ensure that bankruptcy regimes interact in ways that minimize negative externalities. At home we also need to ensure that different authorities and resolution regimes operate in a mutually consistent manner. In particular, we may need to revisit the SIPC regime that governs securities firms in bankruptcy. At present, the bankruptcy of a securities firm is very disruptive because the claims of all counterparties are typically frozen for a considerable period and the value of these claims is not easy to ascertain or monetize quickly. As I have argued above, we shouldn’t focus on solving TBTF exclusively at the level of the individual firm. We need significant changes in market structures and practices as well in order to have a financial system in which the key players can fail without big social costs. We also must continue to ask ourselves the question of whether the steps in train go far enough. For example, one could make a good case that the capital surcharge for systemically important firms should be higher than that contemplated by the Basel Committee.

But his view, which I share, is that there would be a “a strong, though not irrebuttable, presumption of denial [of a merger or acquisition] by any firm that falls in the higher end of the list of global systemically important banks…”5,6 Another step for dealing with the firms that might be viewed by some as already TBTF is to understand better the interconnections and pathways through which the distress or failure of one firm impairs the larger system and causes harm to society. We have made progress through the supervisory process in mapping out critical activities performed by firms. Also, we have identified a number of areas, such as collateral management, where better practices could both improve the safety and soundness of the individual firm and reduce the negative externalities generated by a firm’s failure. Work is also underway to evaluate what changes would be required to make the future bankruptcy of large complex firms less disruptive, while also developing an alternative means for the orderly resolution of such firms outside the normal bankruptcy process. The costs to society of large complex financial firms failing can be reduced at least to some degree by having firms, working in conjunction with their regulators, “pre-plan” their own failure through the so-called “living will” process. The largest and most systemically important  5  See Governor Daniel K. Tarullo, “Financial Stability Regulation”, October 10, 2012.
Whereas the interest rates were increased by 50 basis points in November 1999, on the past two occasions the main refinancing rate and the rates on the marginal lending facility and on the deposit facility were each increased by 25 basis points, so that they now stand at 3.50%, 4.50% and 2.50% respectively. All three decisions were taken in the context of the monetary policy strategy of the Eurosystem to address upside risks to future price stability in the euro area. Both pillars of the monetary policy strategy indicated that the balance of risks to price stability in the medium term had been shifting upward in late 1999 and early 2000. Starting with monetary developments in the context of the first pillar, the three-month average of annual M3 growth exceeded the reference value throughout 1999 and in January 2000. Together with the continued strong expansion, at annual rates of around 10%, of credit granted to the private sector, this signalled that liquidity in the euro area is ample, contributing to upside risks to price stability in the medium term. In the context of the first pillar, let me briefly take up the issue of the reference value for monetary growth. As you know, the reference value is an expression of the prominent role of money in the first pillar of the monetary policy strategy of the Eurosystem. Following its meeting on 2 December 1999, the Governing Council confirmed the reference value for the growth of the broad monetary aggregate M3 at 4½% per annum.

Being wholly-owned, the incorporation of the Islamic subsidiary will provide an opportunity to the group to enlarge the Islamic banking market to potential institutional investors, both domestic and foreign, who wish to participate in the Islamic financial activities through direct equity participation. The divestment of shares in the Islamic subsidiary allowable up to 49%, is subject to the condition that the Islamic subsidiary will remain as a subsidiary of the commercial bank. This option will provide the banking group with the opportunities to find a strategic partner for the Islamic subsidiary, thus diversifying the range of players available in the Islamic financial market. Indeed, foreign participation in the Islamic subsidiary would enable the group to tap on the regional and international business opportunities. In going forward, the move to issue new licences and accord legal status to the existing Islamic banking operations of the conventional banks is expected to accelerate the positioning of Malaysia as an attractive Islamic financial hub to the international financial community. In this regard, the Islamic financial players of other banking groups that have achieved the critical mass and strength are encouraged to explore the strategic advantage of the incorporation of an Islamic subsidiary, and in elevating the industry to a more dynamic and advanced phase of development including ventures abroad. There is a large business potential to be tapped in an environment of strong and rapid economic and financial development in the country and the region.
Going forward, the changes in the global economy and international financial landscape will continue to accelerate beyond expectations. The ability of financial institutions to remain relevant in the future will depend on the actions that are taken now in the current environment. The leadership of the industry will be instrumental in charting the future growth path and cultivating a performance culture that will steer financial institutions towards continued success. There therefore needs to be an awareness of the emerging cyclical and structural forces that will impact the economy as well as their linkages with the banking industry , to anticipate new developments and opportunities, and most importantly, to be equipped to respond to the new opportunities and to remain competitive and relevant. The challenge for banking institutions is in being able to balance between demands of the immediate term with a longer term outlook and how this would feed into the organisation's continuous renewal and transformation process. On that note, I wish you a successful Seminar. 6  BIS Review 83/2007

It is a lot easier to ensure that our streets are clean when people don’t think it is morally right to litter rather than having thousands of street cleaners sweeping the streets day and night, or having thousands of health inspectors giving out penalty tickets to those who litter. (III) Appropriate Incentives System – it refers mostly to financial incentives but there could be non-financial incentives, that accrue to the staff members at different levels within a bank. It is crucial that the incentive system aligns with the letter and spirit of the rules, codes and culture statement of the bank in order to induce the appropriate staff behaviour to produce the desired outcomes consistently over time. It is not possible to achieve sound banking without all the three components, as they tend to support and reinforce each other. Quoting the famous words of Mencius, supplemented by a modern economics overlay, I would like to conclude today’s Conference with the following phrases: 徒善不足以為政 徒法不能以自行 1/2  BIS central bankers' speeches  徒利不可以為繼  which, using my interpretation in the context of sound banking, basically mean that it is neither possible to depend solely on good laws or solely on high moral principles or ethical values to produce the desired policy outcomes nor sustainable in the long run if one solely pursues profit maximisation. We will need the trilogy to produce sound banking and I hope that you, the INEDs of banks in Hong Kong, will join hands and work together to accomplish this important common goal.
Of course at the Banque de France we are all the more impressed by the reactions and the demonstrations since we suffered a loss ourselves … … Bernard Maris, the economist and journalist, was one of your board members. C.N. Yes, it was a horrible shock for us. Bernard Maris was a man of culture and tolerance, a free spirit and he was murdered because of his ideas. It is a huge loss for all of us. Do you see any economic consequences from these attacks? C.N. I do not think they will have significant economic consequences. Before the attacks everybody was looking towards Greece. Could the elections of the 25th trigger a new round of crises in the euro area? C.N. In my view the risks of a crisis for the euro area are much lower than a few years ago. Greece has clearly taken a path of reforms and restoration of its competitiveness. It is in the interest of Greece to continue following that path and to benefit from an accelerated improvement in their recovery. The second point is that we have built many significant defences against the risk of crisis and destabilisation in Europe. What is the scope for a more lenient policy in Greece or even for debt restructuring? C.N. We all know that the debt level of Greece is very high. The programme of the Troika foresaw a decrease in the debt ratio in the years to come.

Now I wish to update on the progress of the MIFC. Malaysia is still the largest sukuk market commanding over 60% of the global sukuk market. For the year ended 2008, new sukuk issuance in Malaysia was the highest globally at over 36 percent. Currently there are 9 Islamic fund management companies that have been approved by SC to set up business. Within the MIFC community, there are also 14 Islamic banks with international currency business units (ICBU) and three international Islamic banks (IIB). To further entrench the Islamic financial market, the government has recently announced a number of liberalisation policies to enhance global linkages and accelerate the realisation of the MIFC agenda. The announcement includes the offering of two mega Islamic banks licences, where they will predominantly be wholesale Islamic banks undertaking to a large extent international Islamic financial business. Furthermore, two family Takaful licences are being offered. For the existing Islamic banks, the government is giving flexibility to increase the foreign equity participation to 70% of shareholding. Furthermore, 5 foreign legal firms will also be allowed to set-up operation in Malaysia. Today, with signing of the memorandum of participation marks the beginning of a new chapter in Islamic finance. I would encourage each stakeholder, particularly Bursa, to exploit the vast potentials of this new entity and take this opportunity to enhance research and product development capacities.
However, a wellfunctioning money market requires not only that the central bank possess a set of effective instruments. It also requires a sound infrastructure on which financial market participants – the SNB included – may conduct their trades in a reliable, efficient and transparent manner. Thus, as we arrive at the end of this talk, let us say a few words about the money market infrastructure in Switzerland. The role of a sound money market infrastructure To function smoothly, the money market requires a sound and efficient infrastructure. As we have argued, the money market is important for implementing monetary policy, for redistributing liquidity between banks, and for determining reference rates; it is clearly one of the cornerstones of the Swiss financial system. It is therefore vital that the associated market infrastructure is secure and robust. This has been the case for more than 20 years thanks to the highly efficient Swiss Money Market Value Chain. This system seamlessly covers the entire life cycle of secured transactions, i.e., the whole value chain from trading to settlement, both on the cash side and on the collateral side. The Swiss Money Market Value Chain, which is a joint enterprise of Swiss financial institutions, is operated by SIX Group, and the SNB has been involved in shaping its development since its inception. The design of the Swiss Money Market Value Chain is unique internationally and has proved its worth.

When making any such adjustments, we will naturally continue to safeguard the foundations on which the Swiss Money Market Value Chain is built – most notably: the spirit of joint enterprise; close cooperation between SIX, the banks and the SNB; and the fact that interbank trades and monetary policy operations are conducted on the same platform and according to a common set of rules. We at the SNB look forward to continuing to play our part, and we remain committed to supporting the ongoing development of Switzerland’s money market infrastructure. Closing remarks Ladies and gentlemen, we hope we have succeeded in showing you how exciting and varied interest rate steering in the money markets can be. The SNB’s core task is to ensure price stability while taking due account of economic developments. Since the beginning of 2015, our main monetary policy instruments have been the negative interest rate on banks’ sight deposits and our willingness to intervene in the foreign exchange market as necessary. Both instruments remain essential in the current environment to ensure appropriate monetary conditions. This afternoon, we have also discussed some of the developments that occurred in the Swiss franc money market in response to several adjustments we have made over the past 17 Page 12/13  months. Specifically, in our monetary policy strategy we switched to the SNB policy rate and, in the calculation of the negative interest charges, we have twice raised the aggregate exemption thresholds and have thereby significantly reduced the interest rate burden on the banking system.
As prepared for delivery  Good afternoon, everyone. When I give a closing keynote I try to bear in mind that you’ve been listening for hours to complex and technical material. I wish I could say that I’m here to offer some light relief, but, alas, no. The topic I’m going to address this afternoon is both complex and technical. It’s the recent turmoil in the repo markets and the Fed’s actions to address it. I’m going to start by laying out the Fed’s operating framework for carrying out monetary policy. This will take me into aspects of the “plumbing” of the financial system, which may seem like an esoteric topic to many, but it’s one of critical importance, so please bear with me. I will then go over the money market turmoil from a month ago that led the New York Fed to conduct open market operations to stabilize short-term interest rates. I’ll conclude by describing the path forward as laid out in the Fed announcements this past Friday.1 Before I go any further, I should give the standard Fed disclaimer that the views I express today are mine alone and do not necessarily reflect those of the Federal Open Market Committee or others in the Federal Reserve System. Monetary Policy, Interest Rates, and Ample Reserves As a prelude, it’s worthwhile to step back and remember how this all connects to the Fed’s overarching monetary policy goals. The Federal Reserve has two goals set by Congress: maximum employment and price stability.

And so it is my pleasure to welcome you to this ceremony today, formally to witness the appointment of Standard Chartered Bank as the Settlement Institution for the new euro clearing system. This system will enable a wide range of financial transactions in euro to be settled on a real-time basis here in Hong Kong. Not only should this be useful to those involved with trade and remittances in euro, but it should also facilitate financial institutions to manage international liquidity and investment portfolios in Hong Kong. The system will encompass not only the best, internationally agreed, principles of payment system design but also state-of-the-art technology. It will provide RTGS settlement for euro denominated fund transfers; a linkage with the US dollar payment system to provide real-time PvP settlement for EUR/USD transactions; and linkages with the CMU to provide DvP settlement for euro-denominated debt securities, in readiness for the potential development of that market. We expect to see all these features implemented by the second quarter of 2003. For the moment there will be no cheque clearing capability, but this is something which could be added later if there was sufficient demand. As in the case of the US dollar clearing, we have adopted a private sector solution, with a commercial bank as the Settlement Institution. This is not only consistent with the tradition in Hong Kong, but is also in line with international practice and with the recommendations of the Bank for International Settlements.
Achieving the appropriate balance between these objectives can often be challenging, and different countries have approached this in different ways, with varying degrees of success. Intervention needs to be consistent with competitiveness, stability and sustainability of the financial system. The third role for policymakers is to provide the enabling infrastructure that includes the mechanisms, systems, technology and institutional arrangements that will enhance the access to financial services. While technological advances have transformed the banking industry from a traditional “bricks-and-mortar” infrastructure to a system supplemented by electronic channels, the potential for greater use of technology to promote wider access to financial services still remains largely untapped. While mobile phone banking has been successful in enhancing outreach, the further use of IT can substantially reduce the costs of extending the outreach of financial services. The other infrastructure that is important to support financial inclusion is having in place a sound payment and credit information system. The fourth is to evolve a comprehensive approach to consumer protection as an important complementary role to prudential regulation in mitigating risks. This includes putting in place a conducive regulatory environment in terms of the laws and regulations that protect consumers and undertaking surveillance and supervision to ensure the responsible behaviour by financial institutions. The international community is giving greater attention to consumer protection issues given the potential for high charges for such financial services and for borrowers to become over-indebted.

I would also like to thank representatives from Aflatoun and CentiQ in the Netherlands and all the policymakers who are participating as speakers and experts at this forum. On that note, I wish all of you a productive forum over the next two days. BIS central bankers’ speeches  3