samchain/econo-pairs-v1 huggingface dataset:
First, with the help of a PRA robot they have for the first time been able to map all the barriers, and show how complex our rules are.1 And second, together with our credit union supervisors they have taken a fresh look at capital requirements for that sector and proposed some quite radical changes in order to promote the growth of successful firms.2 Barriers The first thing we’ve done is take a fresh look at the various thresholds which arise in our regulations. To date this debate has been massively dominated by two features of the regime: the ability of firms to model their capital requirements (using IRB) rather than use a standardised approach, and the need for firms to issue bail-in debt (MREL) once they reach a certain size. These are both very important issues. On credit risk, we have taken three very important steps in recent years: the introduction of our modular approach for IRB applications; the introduction of our “holistic” approach to P2A-setting for eligible firms on standardised; and our success in getting Basel to agree to lower the Standardised Approach risk-weight for low-LTV mortgages very substantially, from 35% to 20% for firms on standardised. MREL, set by the Bank as Resolution Authority, is set to ensure that a bank in resolution can meet going concern regulatory capital standards, so any change in regulatory capital standards will automatically be reflected in MREL.

But a simpler regime, perhaps borrowing from the philosophy of recent moves in Switzerland and the US, could make small firms stronger and more competitive at the same time. This is an area where we may have more room to manoeuvre following Brexit. 9  All speeches are available online at www.bankofengland.co.uk/news/speeches  9  Action I’m worried that this may all sound rather theoretical to some of you, and some distance from the front line of providing banking services. So let’s come right back down to ground level and look at credit unions. Credit unions provide a vital service for their members, often acting as a backstop by allowing those members to access services they might find more difficult to get from banks and building societies. The sector plays an important role in many communities – particularly in Northern Ireland. Now credit unions, including those in Northern Ireland, may be relieved to hear that the hard-working PRA competition robot is not about to be unleashed upon them. As an aside, they may not know that they have been living with another of our robots for some time. A few years back some of our economists from the wider Bank of England teamed up with our credit union supervisors and found out that by using some different analytical techniques to study regulatory returns we could do a better job of predicting which credit unions would get into trouble next.9 This is highly relevant given we oversee around 440 credit unions with a team of 9 staff.
Stable prices also facilitated firm investment and the creation of new jobs. Today, there are 20 million more Europeans in employment than 20 years ago in the 19 countries that currently make up the euro area. And since the creation of the euro, the labour force participation rate has risen from 59% to 67%, its highest level ever. The two decades in which the euro has existed have been exceptional. The first decade was the culmination of a 30-year period of macroeconomic stability, also known as the Great Moderation. Inflation averaged close to 2% and the ECB ensured price stability mainly by adjusting its key interest rates. The second decade produced the worst economic and financial crisis since the Great Depression. As I had the opportunity to discuss at length in my remarks at the Parliament’s plenary debate two weeks ago, as a response to the crisis we had to deploy new instruments to safeguard the effectiveness of our monetary policy and stabilise the euro area economy.1 Thanks to the collective efforts of all European citizens, the euro area has emerged from this crisis. The results of their and their representatives’ determination have been tangible: 22 consecutive quarters of economic growth, the unemployment rate at its lowest level since October 2008, and wages and incomes on the rise. However, over the past few months, incoming information has continued to be weaker than expected on account of softer external demand and some country and sector-specific factors.

We need to be clear about what we can do and what we cannot do; we need to operate consistently within our remit; and above all we must be sufficiently transparent to make proper accountability realistic. That is what trust requires, and we are in the business of trust – trust in the value of money. BIS central bankers’ speeches  5
Zeti Akhtar Aziz: Islamic finance – a global growth opportunity amidst a challenging environment Keynote address by Dr Zeti Akhtar Aziz, Governor of the Central Bank of Malaysia, at the State Street Islamic Finance Congress 2008 "Islamic Finance: A Global Growth Opportunity Amidst a Challenging Environment", Boston, 6 October 2008. *  *  *  This decade has witnessed the rapid evolution of Islamic finance. This has resulted in the dramatic transformation of the industry, from being focused on retail financing to providing an extensive spectrum of financial products and services, from being focused on the Muslim community to having an extended reach that serves the non-Muslim community, from being governed by conventional regulatory and accounting standards to having promulgated its own standards and finally from being domestic centric to becoming increasingly internationalised. The Islamic financial services industry has during this decade transitioned into a dynamic, fast growing and competitive form of financial intermediation servicing the global community. It is my honour and great pleasure to be here in Boston to participate in this inaugural State Street Islamic Finance Congress. With the recent evolution and expansion in Islamic finance, it has now emerged as a viable new asset class for investors and a competitive form of financing for businesses.

It is vital for the sustainability of our economies’ growth performance that this risk should be prevented from materialising. V.  Prospects and exit strategies  What are the prospects for the euro area economy? The latest data show that economic activity contracted sharply by 2.5% in the first quarter of 2009, following a 1.6% decline in the fourth quarter of 2008, and confirm that the pace of economic activity in the first half of 2009 will be much weaker than projected by the ECB staff in March. For the second quarter of this year, however, we expect that the contraction in GDP growth will be less pronounced than in the first quarter. Over the past few weeks, survey data, including indicators of consumer and business confidence, in the euro area and other parts of the world suggest that the pace of decline in economic activity is moderating and that the euro area economy is stabilising. Although economic activity is likely to remain very weak for the remainder of this year – and this is consistent with the level of survey indicators – overall the available information confirms our expectation that the euro area economy will gradually recover in the course of 2010. Needless to say, the emerging encouraging signs leave no room for complacency in view of several risks that lie ahead and the continued high uncertainty surrounding the economic outlook. As central bankers, our core concern is, of course, inflation.
In my view, the main responsibility for active business cycle stabilisation has lain with monetary policy since the crisis of the 1990s.8 However, this view is based on a flexible interpretation of our inflation target in the sense that the target comprises a stabilisation of the development of the real economy.9 Too little stimulation from monetary policy Monetary policy also became much more expansionary when demand in the Swedish economy fell rapidly in late 2008 and early 2009. Between October 2008 and July 2009, the repo rate was cut by a total of 4.5 percentage points to the record-low level of 0.25 per cent, and it remained at this level for a year (see Figure 7). Figure 7. Policy rates in Sweden, the euro area, the United States and the United Kingdom Per cent 6  6 UK Euro area USA  5  Sweden  5  4  4  3  3  2  2  1  1  0  0 07  08  09  10  11  12  13  Sources: The Riksbank and national sources. However, the Riksbank began to raise the repo rate in July 2010 and in July 2011 it was at 2.0 per cent. Since then, the repo rate has been cut again in a number of steps to 1.0 per cent as the weak development in the euro area has had a negative impact on the Swedish economy.

To ensure that our financial system serves our economy and society well in the VUCA world, I believe that there are three imperatives we must focus on. These are (1) productivity, (2) immunity, and (3) inclusivity. Allow me to highlight some initiatives that have been implemented to advance these objectives in Thailand. First, on the productivity front, we are committed to supporting the use of technology for greater productivity. Digitization will help enhance efficiency in financial services. There has been remarkable progress in the electronic payment ecosystem. For instance, our PromptPay, which was launched early this year, is among the most efficient faster payment systems in the region. Last week, we launched the standardised QR code for payment services. This was the world-first collaboration from the five major global credit card service providers. These payment platforms and standards will improve convenience and efficiency, and provide foundation for innovative financial services. On building immunity to safeguard financial system resilience, Thai commercial banks constantly maintain high level of capital and loan loss reserves. In addition, we place much emphasis on proper market conduct, good governance, and most importantly, fortifying trust. The Banking Industry Code of Conduct has recently been revised to promote a culture of good governance and ensure fairness in the industry. This year, the Bank of Thailand 5 World Population Ageing Report 2015 (page 2)  http://www.un.org/en/development/desa/population/publications/pdf/ageing/WPA2015_Report.pdf  4  embarks on a new initiative to enhance banks’ understanding of risks associated to their behaviour and culture.
Such an asymmetric reaction, all the more if it seems to be systematic, has actually a cost, pointed out in the literature, since it may generate some moral hazard problems: as long as economic agents believe the central bank will ultimately make use of its “safety net”, there is an incentive to invest on riskier projects in order to magnify expected returns, keeping in mind that potential losses are likely to be limited. Would then, a systematically symmetric reaction by a central bank to asset price changes solve this problem? I would not share that view, because central banks cannot accurately assess the deviation of asset prices from their highly hypothetical fundamental value. To illustrate my point, let us consider a situation in which the central bank fails to diagnose the presence of a bubble, and therefore does not react appropriately to the surge in asset prices, then agents may become involved in riskier projects without having consciously taken the decision to accept greater risk, but on the ground of what they  1  Cf. Martin LETTAU and Sydney LUDVIGSON (2001): “Understanding trend and cycle in asset values: bulls, bears and the wealth effect on consumption”, CEPR discussion paper, n° 3104, December. 2  BIS Review 28/2001  have interpreted as a sound financial and economic environment. As a result, we have shift to another 2 problem, which is close to the idea of “disaster myopia”.

Jean-Claude Trichet: Asset price bubbles and their implications for monetary policy and financial stability Keynote address by Mr Jean-Claude Trichet, Governor of the Bank of France, at the Asset Price Bubbles conference held at the Federal Reserve Bank of Chicago, Chicago, Illinois, 23 April 2002. *  *  *  Ladies and Gentlemen, It is a great honour and pleasure for me to talk today in Chicago at the invitation of the World Bank and the Federal Reserve Bank of Chicago in front of such a distinguished audience on the theme of asset price bubbles. As a central banker, my main focus will be on the implications of asset price developments and bubbles for both monetary policy and financial stability. The far-reaching changes observed over the last decade on financial markets, the growing role of these markets for the financing of the economy, and the evidence gathered over the recent period on the key role that financial factors may play in shaping and amplifying the business cycle, have drawn attention to the relative importance of asset prices and wealth effects on the real economy. There are at least two reasons why asset prices and wealth effects may have grown over the last decade: ·  first, changes in asset valuations, mainly driven by the rise in the new economy stock prices from the mid-1990s and their subsequent collapse in 2000, have been dramatic. This is well documented for the United States.
If cash is needed as a means of payment in a crisis, it must also be possible to use it in normal circumstances. The Riksbank will continue to work to reinforce the position of cash. E-krona can complement cash without major consequences for financial stability and monetary policy In addition, the Riksbank has also been investigating for a few years now whether it would be possible to offer the general public a safe electronic alternative that could function in largely the same way as cash; an e-krona. This could be a means of ensuring that the general public in Sweden, which has had access to central bank money since the 17th century, can continue to do so even in a digital age. 16 The model we have had, where the Riksbank's cash has co-exited with private means of payment, such as deposits in bank accounts, has functioned well. By introducing an e-krona, we can ensure that the function that cash has historically had as anchor for payments can live on in a new technical form. An e-krona can, like cash, contribute to increased competition and robustness on the market by offering an alternative to private sector payment services. If the Riksbank is present in the market with its own supply of money to the general public, it will also be easier for the Riksbank to ensure that basic payment services are made available to all, including the vulnerable groups I mentioned earlier.

53 If the central banks buy a sufficient amount of government bonds it will sooner or later lead to inflation soaring. There may be some truth in this, but it is not the most important explanation. Japan, for instance, has made large government bond purchases, corresponding to almost 100 per cent as a share of GDP, see Figure 13. The central banks in the euro area, the United States and the United Kingdom have purchased between 20 and 40 per cent as a share of GDP. The Riksbank has purchased less than 10 per cent as a share of GDP, which corresponds to around half of the total stock. Moreover, the volume of money the central banks govern has increased rapidly, see Figure 14. However, inflation has nevertheless shown no signs of soaring. The most important explanation instead concerns the monetary policy framework, that is, who decides on the purchases and what their purpose is. When government bond purchases lead to a rapid rise in inflation, it is almost always the government that has decided on the purchases, and the purpose has been to attain various fiscal policy objectives. The inflation target has been subordinate to the fiscal policy objectives and the central bank’s independence has been put out of action. In academic literature this is usually referred to as ‘fiscal policy dominance’.
Lorenzo Bini Smaghi: Looking beyond the euro's first decade Speech by Mr Lorenzo Bini Smaghi, Member of the Executive Board of the European Central Bank, at “The euro’s second decade: status quo and perspectives”, British Embassy, Berlin, 18 February 2009. *  *  *  It is a great pleasure to be here today. The publication of David Marsh’s new book, shortly after the euro’s tenth anniversary, is a good opportunity to review the status of the currency and its prospects in the coming decade. It’s a real “Marsh book” – a pleasure to read, even though some quotes and statements might sometimes be controversial. In any case, David Marsh seems to have taken to heart the main lesson of the current financial crisis: avoid excessive risk. Indeed, he is walking along a kind of tightrope, often quoting people or presenting views in such a way that they contradict or contrast with each other. That way, he is likely to come out on the right side of things, whatever happens. Let me give an example, by quoting the very last paragraph of the book, which looks forward to the next ten years: “The lesson of the first decade is there is no certainty that the single currency will survive the next one unscathed. Yet if the Euro overcomes its trials and becomes a durable success, that accomplishment, measured by all that has gone before, will truly be the richest of triumphs.” In other words, either it’s a real success, or…it’s a real disaster.

Is Germany imposing its conditions on the rest of Europe? The ECB has a range of tools to ensure price stability and the proper functioning of the market. It can remedy market disruptions. It has done so several times in recent years to avoid a “credit crunch” by greatly increasing its provision of liquidity to the banking system and by lengthening the maturity of refinancing operations. Still within our mandate, we are able to take quite significant non-standard measures and we have done this on several occasions. The mandate of the ECB is also to ensure the solidity of the euro. But the ECB cannot replace governments, nor spare them from making the necessary efforts to control their debt and restore the competitiveness of their economy. The credibility of  BIS central bankers’ speeches  1  governments cannot rest on the central bank. And yet, the former must demonstrate their determination to improve their fiscal position. But under Germany’s pressure, the ECB is not using all the instruments at its disposal. How is this justifiable when huge efforts are required of Spain and Italy? The ECB is being unfairly accused. No central bank in the world – neither the Fed nor the Bank of England – directly funds governments or purchases sovereign debt on the primary market to finance their deficits. However, it is possible on the secondary market. We have done so in the past. There are no differences of opinion between the French, the Germans and the European Commission.
We need strong commitment to combat climate change and take immediate actions to take charge of future economic growth. For corporations and businesses, over and above concerns on regulation and legal risks, is the need to commit to invest in doing the right thing for “people, profit and planet”. Corporations and businesses that align their policy and advocacy agenda to climate action have an important role in averting a path towards climate catastrophe. As we forge the path towards a climate conscious future, and for the whole system to change at the needed pace and scale, policy makers need to step up as well. For emerging economies such as Malaysia, there is a careful policy balance between transitioning to a low-carbon economy while addressing needs of society and businesses. This is meant to minimise unintended consequences of channelling financing towards non-green and non-sustainable practices and to minimise transition risk. As the central bank, Bank Negara Malaysia is cognisant of this in crafting our strategies to respond to climate risk. Our commitment stems from the direct relevance that climate change has to our mandates in preserving monetary stability and financial stability. Approximately 11.7% of Malaysian financial institutions assets are potentially exposed to climate change. Our aim is to ensure that financial institutions are adequately measuring, mitigating and building buffers against climate risk. Our target is for climate risk to be featured more visibly in the risk management practices of financial institutions by 2022.

(e) Payment systems The Governing Council endorsed a list of eligible securities settlement systems following an assessment of such systems against standards that had previously been laid down for their use in the credit operations of the ESCB. The list, which indicates those securities settlement systems that will be used by the ESCB and the conditions for their use, will be set out in the “General Documentation”, to which I have already referred. In addition, the Governing Council approved a report on the “Assessment of EU securities settlement systems against the standards for their use in ESCB credit operations”. It is intended to release this report during the next couple of weeks. BIS Review 72/1998
Here, we would have to look at the circumstances of each case – whether, for example, the offshore internet bank advertised its services in the local Hong Kong press or accepted Hong Kong dollar deposits or refused to take deposits from a number of specified jurisdictions, but did not include Hong Kong among these. If we come across such cases of illegal advertisements targeted at Hong Kong, how would we deal with them? The easiest case would be where the bank itself is respectable and is based in an overseas location which is properly supervised. We could then write to the bank itself and to its supervisors to notify them of the advertising rules in Hong Kong, and request the bank either to comply with these rules or to add Hong Kong to the list of the jurisdictions from which it was not prepared to take deposits. If necessary, we would seek the cooperation of the home supervisor to enforce this request. It might also be necessary to supplement this with a reminder to local Internet Service Providers about the advertising rules in the Banking Ordinance and to seek their cooperation to block offending websites. The problem with this, however, is that the website in question may not actually be posted on the local ISP’s server – in which case, there may be little that the ISP can do. If the bank concerned is not respectable and it is based in an uncooperative jurisdiction, the situation would be more difficult to handle.

Our position, put simply, is that we do not believe that customers should be responsible for any security breach or system problem that is not due to negligence on their part, and we have requested that this should be reflected in the contractual agreements for internet banking services. Reputational risk Risk of damage to the bank’s reputation goes along with the other risks I have mentioned. It can arise, for example, from operational risk even if customers suffer no actual damage. If a hacker successfully 3  BIS Review 108/1999  breaks into a bank’s website and makes alterations, the bank concerned can suffer substantial damage to its reputation although customers’ balances are safe and the hacker has not obtained any financial benefit. This does not only affect the individual bank concerned but may also undermine confidence in the security of e-banking more generally and therefore slow down development in this area. Systems breakdown, even if only temporary, is another example of how banks may be affected by bad publicity. Given the fact that the element of trust is so fundamental to banks’ business, banks will find it increasingly important to adopt measures to manage reputational risk and incorporate public relations strategies into their overall risk management framework. Banking risks As I have already mentioned, an internet-based bank is faced with the same types of banking risk as its traditional counterparties. In some ways, the internet may heighten these risks.