samchain/econo-pairs-v1 huggingface dataset:
This better aligns risk for shareholders and staff with the risks for society at large. There is an old lesson, here, about eating your own cooking. This ought to help discipline the chefs, reducing the temptation to pursue risky recipes in the first place. Encouragingly, banking practice may already be beginning to match the theory. Several banks have recently announced they will in future consider remunerating shareholders and staff in CoCos. 20  Standard & Poor’s (2010). 21  Calomiris (2010) and Gordon (2010). BIS central bankers’ speeches  9  Conclusion Tackling complex banking through complex regulation is to fight fire with fire. This is unlikely to work in theory. Crisis experience suggests it has not worked in practice. A regulatory framework is needed in which the state is neither omniscient Walrasian auctioneer (shouting out hundreds of millions of risk prices) nor deep-pocketed financier (doling out hundreds of billions of taxpayers’ money). A regulatory Gosplan will work no better for bankers than it did for tractors. The role of regulation is instead to set the overarching rules of the game. In tackling banking stress, that means the framework for banks’ capital structure. As far as possible, that framework should aim to leave the pricing of risk ex-ante, and the consequences of risk expost, to the market. The framework outlined here could be one simple, robust and timely way to help achieve that. It is different. But it is far from radical. Nothing could be less radical than returning banks, and banking risk, to the market.

Bandid Nijathaworn: Financial developments and the Thai banking sector Keynote address by Dr Bandid Nijathaworn, Deputy Governor of the Bank of Thailand, at the Third Euromoney Thailand Investment Forum, Bangkok, 10 June 2009. *  *  *  Thank you and Good morning First let me thank Euromoney for the invitation. It is an honour to be speaking to you today. For the last few years that I have been coming to this forum to speak, I find the session to be very useful as it provides an excellent opportunity for us at the Bank of Thailand to interact and share our views with investors on Thailand’s current issues, including our policies. So, it is a pleasure to be here this morning. My topic today is about financial developments and the Thai banking sector. Given the limitations of time, I want to focus my remark today on two issues. The first is the short-term issue about the current economic and financial conditions, and the policy response that we have had in trying to strengthen the process of recovery. Next, I will speak on the mediumterm issue of financial sector reform, beginning with how we see the new or the post-crisis financial landscape emerging and our plan to respond to these changes in the context of our financial sector Master Plan. First, the current conditions. Latest economic data in Thailand continues to show deterioration in economic activities as evidenced by the estimated decline of 7.1 percent in this year’s first quarter GDP growth.
As for the European System of Central Banks, I can assure you that we stand ready to act as forcefully as necessary to ensure price stability and preserve the integrity of the euro, which is, today, our most precious common good. BIS central bankers’ speeches  5

As I said earlier, MA portfolios already include many types of debt instrument, and where assets are not MA eligible firms may consider – if appropriate – holding them outside the MA portfolio to back other liabilities. And the PRA has taken, as far as possible, a pragmatic approach to fixity – for example for floating rate bonds and for assets with inadequate modified Spens clauses. Over 2020, we saw very few applications for asset classes not already held in peer MA portfolios, instead seeing firms applying to invest in less liquid asset classes such as ground rents and ERMs. While the asset classes may not be new to us, firms can expect to be challenged when investing in asset classes that are new to them. We have published supervisory expectations in Supervisory Statement 1/20 “Solvency II: Prudent Person Principle”5 and Supervisory Statement 8/18: “Solvency II: Internal models – modelling of the matching adjustment”6. These cover risk management aspects including the consistency of investments with the prudent person principle, the ability to manage the assets – including in stress or in default – and the ability to model the solvency capital requirement appropriately. Next I would like to touch on the future direction for new asset classes in MA portfolios. As Sam Woods, the Deputy Governor for Prudential Regulation, and PRA’s Chief Executive said in his March speech7 at the ABI, we are wary of calls to encourage specific forms of investment with prudential regulatory incentives.
Part of the consensus is that Basel III should be seen as a set of minimum requirements. Hence, countries are free to impose more stringent rules if they wish. But we should not underestimate how Basel III strengthens bank-capital adequacy rules. A fundamental feature of the new framework is the significant increase in required minimum capital levels. All banks must hold common-equity capital of at least 7% of their risk-based assets, compared with only 2% previously. In the event of a credit boom, banks under Basel III would potentially need to hold a further 2.5% in common equity, bringing the total to 9.5%. Finally, the most systemically important banks must hold up to 2.5% in additional common equity. That is a total of 12%, a sixfold increase from pre-crisis levels for these institutions. The Basel Committee supports a regulatory framework that is both prudent and as simple as possible. Hence the Basel III agreement introduces several simplifying changes to the regulatory framework. For instance, the definition of capital now focuses on tangible common equity, the truest form of loss-absorbing capital. Moreover, all components of the capital base and associated deductions such as goodwill or deferred tax assets must be disclosed in a fully comparable manner. By standardising and simplifying the measure of capital, Basel III makes the regulatory framework easier to understand, and will enable market discipline to work better. Another important step has been the introduction of a non-risk based leverage ratio as a supplement to the risk-based requirement.

Stefan Ingves: Basel III is simpler and stronger Op-ed by Mr Stefan Ingves, Governor of the Sveriges Riksbank and Chairman of the Basel Committee on Banking Supervision, published in the Wall Street Journal, 15 October 2012. *  *  *  The economic cost of the global financial crisis during the past five years has been frighteningly large. One clear lesson from the crisis is that regulatory capital requirements for the banking system were too low. Or in other words, leverage was too high. Under the pre-crisis rules, banks were allowed to increase their leverage to unprecedented levels. This increased risk in the financial system and when the crisis hit, the implicit guarantees resulted in massive public bailouts around the globe. The Basel Committee’s capital reforms, known as Basel III, substantially raise capital requirements from pre-crisis levels to reduce the probability of bank failures and the associated risks to taxpayers and to financial stability. Recently, much has been made of the perceived shortcomings of Basel III. Some argue that Basel III, which comes into effect next year, is not enough. Others argue that Basel III is too complex and should be replaced by a simple leverage ratio, calculated as tangible equity to non-risk weighted assets. In my view, the Basel III agreement fundamentally enhances national and global financial stability by both raising the level of capital required by banks, and by simplifying the regulatory framework. It is no small task to reach a global consensus on these often quite technical matters.
And, of course, our interest in low and stable inflation is not just to create Monetary Stability but more widely to create a stable macroeconomic environment in which firms of all sizes have the confidence to plan ahead with some certainty. Thus there is a strong overlap between our monetary role and our second core purpose, which is to ensure that the financial system remains stable and sound. Our MOU with the Treasury and the FSA provides us with a responsibility for the financial system as a whole, requiring us to look for possible shocks, emanating internally or from overseas, that might disrupt the stability of financial markets. The third of our core purposes is to ensure that the UK financial system works as efficiently and effectively as possible in meeting the needs of the wider economy. One dimension of this is to try to ensure that small and medium-sized businesses in the UK can obtain funding on a competitive basis. In creating an entrepreneurial economy, small companies continue to be one of the vital engines of innovation and growth. The background environment Today you will have heard a great deal about what underpins an entrepreneurial economy. It involves both the public and private sectors, and most importantly successful partnership between the two. A prime example of this is the nurturing of an enterprise culture through an alliance of the higher education system with initiatives, like business incubation, which often involve the private sector.

Alexandre A Tombini: Central banking – the next 50 years Introductory remarks by Mr Alexandre A Tombini, Governor of the Central Bank of Brazil, at a panel discussion to celebrate the 50th anniversary of the Central Bank of Brazil, Rio de Janeiro, 10 June 2015. *  *  *  Today’s panel discussion is part of a series of events to celebrate the 50th anniversary of the Banco Central do Brasil. Other events in the series have looked backward. Today we’d like to take advantage of the collective wisdom and experience of our distinguished guests to look forward: what can we expect in the next 50 years of central banking? This is an ambitious question, but an appropriate one as the art and science of central banking is currently in flux, and the outcomes of today’s policy debates and institutional innovations will shape central banking for many years to come. The global financial crisis has had a major impact on how we think about central banking. Before the crisis, there were, naturally, a number of unanswered questions and challenging issues for central banking, but the prevalent view was that the major pillars of the field were largely settled. In a growing number of countries, the operational regime for monetary policy was inflation targeting; monetary and financial stability objectives could be safely addressed separately; and floating exchange rates, coupled with robust international reserves and access to multilateral funding facilities, were often seen as sufficient to protect financial stability from excessive international capital flow volatility.
Funds and investors in Europe, Australia and Asia started reporting higher losses. The turbulence also spread to other financial market segments, for example stock markets which have declined sharply since mid-July. The contagion to other markets was caused by uncertainty about the risk associated with securities backed by subprime mortgages, and a lack of information about the investors in this market. As a result, financial institutions became highly reluctant to provide credit. This had a considerable impact on money market rates and gave rise to liquidity problems. On 9 August and in the days ensuing, many central banks offered extra liquidity to the banking system to ensure the functioning of the money market. Norges Bank supplied liquidity to the Norwegian banking system through ordinary market operations on 9 August. A few days later, the US Federal Reserve lowered its discount rate by 50 basis points. The turbulence led to a marked increase in risk premia in financial markets as investors fled to safer havens. The price of credit risk in terms of the price of credit default swaps (CDS) rose sharply for both banks and other companies, also in Norway. As shown in the chart, the increase in the CDS price for DnB NOR was appreciably smaller than for an index of European banks, however. 4  BIS Review 97/2007  Such an increase in the price of risk in some financial market segments is not necessarily negative.

The current reforms in the motor insurance sector will introduce far-reaching changes in a key segment of the industry, with significant implications for the business strategies of insurers and their approaches to risk management. With the introduction of a new scheme for basic motor insurance cover, pricing for non-statutory motor insurance will be gradually liberalised, thus removing price distortions. This will allow rates to adjust to underlying risk factors. This will also be accompanied by a holistic review of motor insurance practices and the supporting infrastructure to enable more scientific underwriting and improve claims management. Industry groups have been formed to study these issues and make recommendations for the smooth transition to this new and more competitive  environment, while at the same time improving practices across the entire value chain of the motor insurance sector. The groups have made good progress and the recommendations are expected to be finalised for implementation in the second half of 2010. A new blueprint for the financial sector Beyond this international financial crisis and economic recovery, a global shift is taking place that is resulting in an increasingly multi-polar world. In this new phase of globalisation, the concentration of economic power in the global economy will become more dispersed. Asia will be very much part of this new future that is emerging. As Asia’s importance as a growth centre in the world economy increases, three major trends can be expected to intensify going forward.
The Riksbank considered at the meeting that the amortisation culture needs to improve with regard to both new and old  10  6  See the article “Stricter capital requirements for Swedish banks – effects on the macroeconomy”, Monetary Policy Report, July 2014, Sveriges Riksbank. BIS central bankers’ speeches  loans, and that the Financial Stability Council should discuss a proposal for an amortisation requirement at its meeting in November. Such requirements can be formulated in different ways and affect all borrowers or a particular group, such as new borrowers or borrowers with a high loan-to-value ratio. It is therefore important to closely analyse different types of amortisation requirement and how they affect household indebtedness and the macro economy in general. It is also important to take into account the experiences of other countries. Prior to the meeting in November, the Council will make an overall analysis of the household situation and discuss the need for further measures with regard to household indebtedness. My assessment is that a package of complementary macroprudential policy measures are probably needed to help manage various aspects of the risks linked to household debt, and that such a package could be more effective than individual measures.

During the year, apart from enhancing the regulatory environment, MAS worked with other government agencies to improve the tax and legal environment for financial institutions involved in the wealth management business. The new Trustees Act is expected to come into force later this year. MAS will also be introducing a framework to regulate trust companies. The proposed framework will ensure high standards of business conduct, professionalism and competence in the trust services industry in Singapore. The Singapore dollar bond market has developed beyond serving the needs of just local borrowers and has attracted a diversified base of foreign issuers as an alternative venue for cost-effective funding. Large issuers, including Freddie Mac, Fannie Mae and Asian Development Bank have found cost-effective opportunities to tap our bond market. In five years, the market has grown significantly in breadth and depth. Product range has also increased significantly. Structured products now account for more than half of the Singapore dollar bond market. The asset securitisation market has also gained traction, recording a fivefold increase since 1999. To further enhance the attractiveness of Asian capital markets, MAS has, over the past year, worked with various governments in the region to encourage investor demand, and to address market access and market infrastructure issues. The Asian Bond Fund or ABF is one such initiative. After the successful launch of ABF 1, the Executives’ Meeting of East Asia-Pacific Central Bankers or EMEAP is making good progress on ABF2 to invest in local currency-denominated Asian bonds.
This committee will provide direction and address any impediments in a speedy and cohesive manner. It will function as a one-stop body and will leverage on all the Government machineries and apparatus to facilitate the smooth implementation of the MIFC initiatives. The secretariat to this MIFC Executive Committee is Bank Negara Malaysia. I like to share with you some of the initiatives that we are going to take to address and confront the issues on converging Shariah interpretations. All of us must endeavour to promote the harmonisation of Shariah interpretations as this will greatly enhance the markets, products and liquidity. Continuous dialogues need to be stepped up, and Bank Negara Malaysia stands ready to provide leadership in this area. We have convened strategic dialogues among scholars within this region and globally. The next international dialogue will be held in November this year. To further promote talent, depth of research in emerging issues and greater product innovation, scholarships and research grants will be awarded. In this regard, the RM200 million Shariah Scholars Fund that was established last year will be capitalised. On convergence of Shariah interpretation, let me reiterate what the Governor has said at the keynote address yesterday. The MIFC will adopt a stance of mutual recognition and appreciate the differences in ijtihad or reasoning based on analysis and logical inference so long as it is approved by recognised Shariah advisers. Convergence should not be taken as a single step towards harmonisation of interpretation.

Furthermore, the most recent data confirm the positive underlying momentum of economic activity in the euro area, while uncertainty remains elevated. Overall, our monetary policy stance remains accommodative, lending support to economic activity. On balance, risks to the outlook for price stability are on the upside. Accordingly, strong vigilance is warranted. On the basis of our assessment, we will act in a firm and timely manner. We will do all that is needed to prevent recent price developments giving rise to broad-based inflationary pressures. We remain strongly determined to secure a firm anchoring of inflation expectations in the euro area in line with our aim of maintaining inflation rates below, but close to, 2% over the medium term. This is a prerequisite for monetary policy to make an ongoing contribution towards supporting growth and job creation in the euro area. Turning to fiscal policies, all parties involved in the preparation of the 2012 national budgets must ensure that they are fully in line with the requirement to support confidence in fiscal policies. A comparison between the latest economic forecasts by the European Commission and the fiscal plans embodied in the stability programmes points to the need for many countries to underpin their budget targets with concrete consolidation measures in order to correct their excessive deficits by the commonly agreed deadlines. The implementation of credible fiscal adjustment strategies is crucial in view of ongoing financial market pressures.
Changes are also needed in the collective bargaining framework and in labour hiring, in order to facilitate the adjustment of wages to the new cyclical situation and to smooth the adjustment in employment. Obviously, however, these measures need to be complemented by resolute reforms to the competitive environment in which firms and agents take their decisions through liberalisation and deregulation policies that help reduce the constant growth in profit margins in less competitive sectors and to boost efficiency and productivity. From the viewpoint of the longterm needs of the Spanish economy, all this should be accompanied by improvements in education and in training in order to adapt workers’ skills to the new requirements and to boost their inter-sectoral mobility. Allow me one final reflection not so much on what should be done as on what should not. It is true that the global slowdown is leading many governments to embark on different forms of protectionism, responding to the calls of those economic agents who are demanding help against foreign competitors. It is a mistake to succumb to such calls. Spain should not follow this bad example, since any measures in favour of specific agents solely on the basis of their nationality would ultimately harm other Spanish companies and all Spanish citizens.

As you know, Spanish credit institutions have based a substantial portion of their business in the recent upturn on the granting of loans for housing development and purchases. And a large number of these loans have ultimately been repackaged as negotiable financial instruments by means of securitisation. These two phenomena are, as you all know, at the root of the problems experienced by certain credit institutions in other regions. But before drawing any insufficiently founded conclusions from this, we must bear in mind the differences between Spanish institutions and those beyond our borders that have been more severely impacted by the effects of the turbulence. As I shall explain, these differences are substantial and place Spanish financial institutions in a sound position to withstand these effects. The first and certainly one of the most significant differences lies in the fact that Spanish banks have kept the risks of the loans they have securitised on their balance sheets. The "originate-to-distribute" model followed elsewhere has not been developed at all in Spain and, consequently, credit institutions' incentives to value loan risks in a cautious and rigorous manner have not been weakened. Under these conditions, it is perfectly understandable why products like the US subprime mortgages, which triggered the current situation, have not emerged.