samchain/econo-pairs-v1 huggingface dataset:
What this implies for the monetary stance and the level of interest rates will inevitably vary between countries and regions as different monetary authorities make their own judgements about the pace and extent of tightening appropriate to their own circumstances. Indeed, some monetary authorities in the Asia-Pacific region, where growth has been stronger and inflationary worries greater, have already begun to tighten policy. Elsewhere, in the UK and many other major economies, the current settings of monetary policy still reflect the aggressive loosening of policy to counter the severe downside risks of the recession a year ago. As these downside risks recede and recovery becomes more firmly established, it will be important to reassess how much of that stimulus is still needed to keep the economy on a steady course consistent with low inflation. Conclusion The turnaround in the global economy over the last year has been quite impressive, given the scale of the shocks from the financial crisis. That should give us grounds for encouragement that continued growth in the global economy will provide a supportive backdrop for recovery in the UK – even if some of our important markets, such as the economies of the euro area, may be turning around more slowly. Indeed, the IMF’s mediumterm forecasts for the world economy over the next five years point to stronger global growth than we experienced in previous recoveries from the major recessions in the 1980s and 1990s, as Chart 8 shows.

From the Bank’s perspective, we believe that the way forward to propel the Islamic finance industry to the next level of growth ─ if I may, a ‘game changer’ ─ should give equal weight to both economic value creation and upholding ethical values. That is why we have embarked on VBI, which is a holistic approach for our industry players to deliver the intended outcomes of Shariah that generate positive and sustainable impact to the economy, community and environment. While VBI shares similarities with concepts such as Ethical Finance, ESG (Environmental, Social and Corporate Governance) and SRI, the distinguishing factor is the central position of Shariah in determining Islamic finance’s underlying values, moral compass and priorities. There are four underpinning thrusts of VBI ─ entrepreneurial mindset; community empowerment; good self-governance; and best conduct. Through the embodiment of these principles in the business strategies of Islamic banks, there would be greater appreciation on the need to create a positive impact on stakeholders, as called for by Shariah and Islam itself. The adoption of VBI is expected to further strengthen the element of self-discipline within Islamic banks. A common moral outlook for the ultimate good leads to greater accountability and integrity, resulting in strong consideration on the impact of any decisions made. Islamic banks would be driven to continuously improve their offerings and treatments toward customers and employees, which include fair and transparent disclosure.
As banks grow in complexity and sophistication, I believe that it will be necessary for supervisors to place a greater emphasis on understanding banks’ own risk assessments. It is therefore vital that we complement the traditional accounting-based approach to supervision with a greater emphasis on analysis of the risks affecting banks and the control systems  BIS Review 38/2005  3  that banks have in place to mitigate such risks. This cultural shift may not be easy, but I believe it will be beneficial not only for us as supervisors, but also for banks and for the stability of our financial systems. Clarity The third “C” is clarity. I believe that Basel II will provide greater clarity regarding banks’ measurement and management of risk. This will be achieved first of all through the third pillar – market discipline – which aims at ensuring that the market provides an additional layer of oversight. The third pillar is intended to focus the board and senior management on heightening disclosure, which should strengthen incentives for prudent risk management. Greater transparency in banks’ financial reporting should allow majority and minority shareholders, depositors, debt-holders, and other market participants to evaluate banks and reward or penalise them according to how prudently they are managed. This should provide a window on how the bank is governed, and should serve to curb excessive risk-taking in advance. Basel II will enhance clarity in other ways as well.

A bank can use the most sophisticated measurement tools in the world, but if it is poorly governed, it will be vulnerable to financial and operational weaknesses. The Basel Committee recognised this when it developed the qualifications that banks must meet in order to adopt the most advanced approaches under the first pillar of Basel II. The first pillar aligns minimum capital requirements more closely with banks’ actual underlying risks. Qualifying banks may also rely partly on their own measures of those risks, which will help to create economic incentives to improve those measures. This presumes, of course, that qualifying banks meet rigorous criteria related to the governance of their risk management frameworks. While much attention has been focused on the more complex quantitative aspects of the new framework, I believe the most important qualifying criteria are those that address how the bank’s risk management framework is governed. Effective risk controls are essential to the successful implementation of the new capital framework. Under Basel II, the board of directors is expected to establish the institution’s risk tolerances, policies, and code of conduct, and to ensure that a sufficiently strong risk control framework is in place. Senior management, in turn, is responsible for implementing the risk control framework set forth by the board. In addition, the framework sets out clear responsibilities for auditors and other quality control functions to ensure that a bank’s risk control framework is subject to effective independent review, oversight and validation.
These impulses, as always, are administered under the conditions of an expected inflation performance close to the threepercent target of the Bank of Albania, and stabilized expectations of economic agents for it. The key interest rate cut by 0.5 percentage point by the Bank of Albania at end-October aimed at strengthening the domestic demand and reviving the lending activity. Its effect on the economy is not fully reflected yet, due to the short period of time and the time lags in transmitting the monetary policy. However, its pass-through to the money market, which constitutes the first link in the transmission chain, is a premise for its reflection to credit cost in a second round. In the meantime, our liquidity injecting operations have been successful in guaranteeing the backup of economy with funds, mainly short-term ones. Allow me to make a more detailed description of the economic and monetary developments during this period. *** At global level, the economic activity has been supported by improved overall economic climate, impacting on the improvement of the global economic activity, reduction of risk premiums and stability of global financial markets. However, the global economy and the European one continue to reflect economic vulnerabilities, which are transmitted to low inflationary pressures. This situation conditions also the pursuit of a stimulating monetary and fiscal policy by keeping interest rates at the historical low and by high liquidity injections. Back to the domestic economy, we should state that the new economic data were insufficient during October.

•  Thailand is therefore poised to assume the role of a connector – by acting as a link or point of reference for the entry of global banks into the subregion. This is underpinned by our established financial platform, familiarity with the local business practices, as well as close cultural ties among our people. •  Of equal importance is our own inherent understanding of the challenges of developments faced by GMS, through our own experience. This is particularly important in two aspects. •  First, Thai financial institutions are still focused on core financial intermediary functions such as payments services, deposit, and loans which serve the basic needs of the real sector. Thai banks are inclined to serve the needs of the real economy rather than in speculative types of businesses such as proprietary trading. For these reasons, Thai banks are also less complex, with good risk management  2  BIS central bankers’ speeches  and strong capital base. Regulators in Thailand and GMS neighbours can understand fairly well the business model of our banks and their risk. We believe that given the lesson of the current global crisis, this type of bank model makes good sense for home and host regulators. •  Secondly, both regulator and the banks in Thailand could well remember the bitter experience of our own economic and financial crisis in 1997. We understand that financial liberalization needs to be properly sequenced.
At the same time, we also need to remove the remaining obstacles to further integration within our banking union. Such obstacles are often due to regulatory fragmentation and ring-fencing of national markets. For example, a number of national options and discretions, such as diverging large exposure rules, are hindering the free flow of liquidity and capital in the banking union and should be harmonised further. Turning to other parts of the financial system, we can expect that the CMU will provide further impetus to the growth of market-based finance and may present new challenges to financial stability. Additional steps should be taken to strengthen the ability of European regulators and supervisors to address systemic risks stemming from the non-banking part of the financial sector. This could be achieved by expanding the mandate of relevant authorities and, in the medium run, by creating a single supervisor for the capital markets. Adequate macroprudential instruments need to be envisaged as well, including instruments targeted at market-based finance. Macroprudential tools for this area either still need to be provided to authorities or need to be further clarified in respect of their application. For Securities Financing Transactions (SFT) and derivative markets, macroprudential margins and haircuts have been identified as potentially powerful tools for reducing the excessive build-up of leverage and procyclicality in these markets.10 For alternative investment funds, the existing macroprudential leverage limit needs to be operationalised.

This should not be mistaken for setting goals for asset prices. In fact, the empirical evidence, particularly on stock prices, suggests that once the effects of asset prices have been internalized in inflation forecasts, they should have no further effects on the monetary policy reaction function, let alone be a monetary policy objective. 3 Something similar occurs with the effect of a house price boom. Where special care must be taken is in the relationship between a real-estate boom and financial crises, which makes it particularly important to monitor property prices and the expansion of mortgage credit, as I will review in a moment. 4 Implications on the exchange rate in the inflation-targeting context are similar to those just discussed for asset prices, since monetary policy should have a stabilizing effect. If the exchange rate appreciates persistently, this should reduce inflationary pressures and thus  2  See, for example, De Gregorio (2003). 3  This means that they should not be an argument in the Taylor rule. See, for example, Bernanke and Gertler (2001). In any case, they note that this prescription does not remove the possibility of short-term reactions to preserve financial stability. 4  In an interesting exercise, Taylor (2008) argues that monetary policy during 2003-2006 was more expansionary than what a Taylor rule would have suggested, and that if it had been more in line with it, the real-estate boom would have been milder.
I have every confidence that the European Banking Authority – which is moving to Paris on 13 June this year – will encourage effective cooperation and the useful exchange of information between national supervisors. Edouard Fernandez-Bollo also chairs the EBA’s internal AML/CTF committee. The ACPR conference on 21 June, which will focus on AML/CTF in its morning session, will be an opportunity to remind ourselves of the efforts we all need to keep making in this field. The ACPR and Banque de France are at the frontline of efforts to increase cyber-security in the financial sector, which is one of the priorities of France’s G7 presidency. Let me remind you that there is no more certain threat to the financial sector than that of cyber-risks. Given this urgency, we will be implementing concrete measures in the near future. The main ones are the shared “categorisation” of cyber-incidents, and the lessons to be drawn from the G7 cyber stress-test that will be organised by the Banque de France at the start of June. ** The French economy has the advantage of having a solid financial system, the most solid in the euro area: France is a leader in essential activities such as life and non-life insurance, and asset management, and is home to four of the euro area’s eight global systemically important banks. The European supervisor can also rely on the expertise and experience of the ACPR, which are recognised both in Frankfurt and in Europe.

Preference biases Public policy involves making choices on society’s behalf. Society typically delegates these choices to an individual or set of individuals, often either politicians or bureaucrats. That act of delegated authority means that policy decisions usually involve both a principal (society) and an agent (such as government). The nature of that principal/agent relationship then becomes crucial for effective policy. 8 Yet history suggests that this relationship is not always entirely harmonious. One potential source of friction is that the agent may have preferences which are not perfectly aligned with society at large. This is human nature. For example, it might arise from the agent putting personal objectives over societal ones, such as personal power or wealth. 9 These problems have been widely studied in political and management science. In their extreme form, this preference misalignment can manifest itself as autocracy (the pursuit of personal power at society’s expense) or corruption (the pursuit of personal wealth at society’s expense). Historically, such “extractive regimes” have had dire consequences for societal welfare. Indeed, they may explain “Why Nations Fail”. 10 Historically at least, the antidote to these preference problems is typically found in institutions – property rights, the rule of law, democratic processes. Strong institutions have often laid the foundation on which nations have been built. Typically, these institutional structures comprise an ex-ante mandate (agreed by society) and ex-post accountability mechanisms (assessed by society). Colloquially, these are often called checks and balances.
For alternative views on this topic, see “Higher Bank Capital Requirements Would Come at a Price,” Douglas Elliott, Brookings Report, February 20, 2013 and “The Miss Opportunity and Challenge of Capital Regulation,” Anat Amati, National Institute Economic Review, February 2016. 6 Federal Reserve, OCC, and FDIC Release Results of the Supervisory Capital Assessment Program, May 7  2009. 7 "The Theory and Practice of Supervision,” Kevin J. Stiroh, April 11 2016, describes the role of externalities in  supervision in the broader context of market frictions. 8 "Have Big Banks Gotten Safer,” Summers, Lawrence H. and Natasha Sarin, Brookings Papers on Economic  Activity, Fall 2016. 9 Net liquid assets are defined to include cash, central bank reserves, federal funds, net reverse repos, and  certain U.S. treasury and agency securities. 10 Of course, one could look at a broader range of financial services such as market-making activities, provision of  payment services, or risk transfer activities. 11 "Small Business Economic Trends,” National Federation of Independent Businesses, December 2016. 12 "Senior Loan Officer Opinion Survey on Bank Lending Practices,” Federal Reserve Board of Governors, October  2016. 13 Level 3 assets are defined as fair-value assets whose value has to be estimated without benefit of observable  inputs 14 ”Agencies Issue Advanced Notice of Proposed Rulemaking on Enhanced Cyber Risk Management Standards,”  Federal Reserve Board of Governors, October 19 2016. 15 "The Opportunities and Challenges of FinTech,” Governor Lael Brainard, December 2, 2016.

If the global economy recovers further and growth in the euro area increases again more robustly, this unsatisfactory situation will change as well. Until then, negative interest in Switzerland will fulfil a very important role – that of reducing upward pressure on the Swiss franc, thereby supporting the Swiss economy. Thus, eight years after the beginning of the financial crisis, the SNB is still facing considerable challenges. In order to do our job well, we still require the full commitment of our staff, whom I would like to thank – also in the name of my colleagues, Jean-Pierre Danthine and Fritz Zurbrügg – for their hard work and support. We thank our shareholders for their solidarity with the SNB. And I thank everyone, including in particular our young guests, for taking such a great interest in the activities of the SNB. Thank you for your attention. 6  BIS central bankers’ speeches
But one thing is clear to me: unless the degree of diversity in the Euro area is smaller, unless economic divergence (that is illustrated by dynamics after the introduction of the euro) is reduced, further troubles will arise. Jacques de Larosiere, one of our doyens and a former president of EUROFI, never tires of pointing out this fact. Economic convergence is badly needed in the monetary union, where policy space for undertaking the correction of large external imbalances (deficits) is much diminished. I think that proposals made by the EC, by various governments, offer hope that better policies will be articulated in the not too distant future. Romania and other New Member States are bound (by the treaties of accession) to join the Euro area. And we care enormously that the Euro area, through its policy arrangements and tools, will enable economic convergence. 1/4  BIS central bankers' speeches  Coming from Romania, speaking today in Bulgaria, let me take this opportunity to share with you some of the challenges faced by non-euro Member States, in particular the ones in Central and Eastern Europe. Much has been said about growth and inflation in the euro-area, as well as about stage of the banking union. Less attention has been paid to Member States which want to join the banking union and the euro-area in the foreseeable future, but still need to implement structural reforms to get there.

This takes me to the issue of integrated financial markets in Europe, not only in the euro-area. As Peter Praet mentioned in last year’s Eurofi held in Malta, “private risk-sharing was the general principle of the new European rules such as the Bank Recovery and Resolution Directive (…) making banks equally liable across countries for the amount of risk they want to take into their respective balance sheet”. A pending issue for the completion of the Banking Union rests with the home-host approach in the resolution process. One of the main tasks within the resolution planning process for groups is to identify the most suitable resolution strategy and ensure its viability. Most of the resolution authorities and banking groups have embarked in a Single Point of Entry (SPE) resolution strategy at European level, acting according to their declared standing and European structure. The Single Point of Entry (SPE) resolution strategy is, by definition, the reflection of the idea of unity and cohesion, the purpose of the European Union. When an MPE strategy is preferred, authorities must ensure the separability of the subsidiaries from the parent bank not only as a gone concern, but also as a going concern. If the local subsidiary does not act independently in its daily activities, it is unlikely that it will be able to do so in case of turmoil.
On the one hand, the objective has been to provide in the new Accord a significant expansion, within a menu approach, to the recognition of collateral, credit derivatives and guarantees. But this is balanced on the other hand by specifying legal and operational standards that must be met before relief is granted and setting capital requirements against residual risks. This may - indeed is intended to - lead to much greater incentives to acquire good quality collateral and other credit insurance. This will be positive, provided the necessary operational standards including legal robustness are observed, and provided, as I said on another recent occasion, that the processes, volumes, and end results of transfers of credit risk are reasonably transparent. I am aware, however, that some initial comment from the banking industry is that the Committee has not afforded enough recognition to physical collateral, particularly under the standard and 'foundation IRB' approaches. In this respect they think the Committee achieved too little risk sensitivity. The idea of a consultation paper is to elicit comment, but there are problems with the recognition of physical collateral that need to be considered. One is the difficulty of pinpointing accurate valuations for such collateral - much of it does not have anything by way of a valuation history. And values for physical collateral are also likely to be cyclical. When manufacturing companies are in recession, the values of related assets - plant and machinery or inventories - are likely to suffer too.

Increasing productivity is the key to securing our welfare and the stability of our social security systems. BIS Review 63/2004  1