samchain/econo-pairs-v1 huggingface dataset:
In view of the important role of boards, and the work on governance under way, today we have published for consultation a Supervisory Statement on the responsibilities of boards. We recognise that this is a hugely important issue, and so we thought it was sensible to set out our thinking for comment as a precursor to a statement of our expectations. The statement clarifies our expectations of boards and indicates some of the elements of good governance to which we expect to pay particular attention in assessing how well firms are run. It draws on our regulatory experience and the lessons of past firm failures – including building society ones – and will help boards to understand how we reach our judgments on governance. The statement is not intended to be a comprehensive statement of good practice. Boards have other sources for that, such as the Corporate Governance Code produced by the Financial Reporting Council or the Basel Corporate Governance Principles for banks. The statement underscores the collective responsibilities shared by board members. As such it complements the individual accountabilities which we are introducing through the Senior Managers and Senior Insurance Managers Regimes. Under these regimes all senior managers, including certain non-executive directors, will be held to a clear standard of behaviour.

Cyclically-adjusted net lending Percentage of potential GDP 0  0  -1  -1  -2  -2  -3  -3  -4  -4  -5  -5 2010 2011  -6  -6 Euro area  Germany  Advanced economies  Source: The IMF  The links that exist between the levels of debt, interest rates and growth also suggest that a high level of public debt entails risks. For example, a high level of debt tends to lead to higher long-term interest rates, as shown in Figure 3.3 A high level of debt may also lead to lower growth due to increased vulnerability to future crises, or because taxes may have to be increased to finance the debt.4 The higher the level of debt, the more the country must set aside to make the interest payments on its debts. These are a couple of the reasons why  2  The term cyclically-adjusted deficits here refers to public net lending adjusted for cyclical effects. The group advanced economies includes the United States, the euro area, Japan, the United Kingdom, Canada, South Korea, Australia, Taiwan, Sweden, Switzerland, Hong Kong, Singapore, the Czech Republic, Norway, Israel, Denmark, New Zealand and Iceland. 3  See also Baldacci, Emanuele and Kumar, Manmohan S. (2010), Fiscal Deficits, Public Debt and Sovereign Bond Yields. Working Paper no. 10/184. IMF. 4  For more details see Fiscal Monitor Update, November 2010. IMF or Kumar, Manmohan S. and Woo, Jaejoon (2010), Public Debt and Growth. Working Paper no. 10/174. IMF.
The IMF estimatesvii that without monetary stimulus in advanced economies, world growth would have been 0.5 percentage point lower in 2019 and 2020 respectively. In the euro area, there have been several convergent estimates as to the impact of monetary policy: viii between 2 and 2.5 percentage points for growth and a cumulative impact of around 1.5 percentage point over four years for inflation. Page 8 of 14  The effects are similar for France. More growth thanks to low rates also means less unemployment: the euro area has created more than 11 million jobs between 2013 and 2019, of which 2-3 million are estimated to stem directly from the effects of monetary policy, based on the latter’s contribution to growth. Source: Eurostat  The effect of low rates can also be analysed according to financial profile of economic agents. Households that need to borrow are winners thanks to the historically low level of borrowing rates, especially in France. Their real estate assets have risen in value, as have share prices. Households, including the least well-off, are benefiting from the pick-up in employment. In contrast, the returns on savings invested in fixed income products have naturally become less dynamic. There are even sometimes fears that we will see negative rates on deposits, a so-called “tax on savings”. In France, that remains and must remain an intellectual hypothesis.

Page 5 of 14  1.2 The cyclical causes The primary mission of central banks, and of the European Central Bank (ECB) in particular, is to ensure price stability, notably by “smoothing” fluctuations in the economic cycle. They do this by setting the level of shortterm interest rates. In 1998, the ECB established a quantitative definition of price stability that it went on to clarify in 2003: to maintain inflation rates below, but close to, 2% over the medium term. More recently, other central banks have adopted this 2% inflation target, for example the US Fed in 2012 or the Bank of Japan in 2013. Our monetary policy has pursued this inflation target since 1999, with tangible results: inflation has remained close to target at an average of 1.7%. Page 6 of 14 Source: Eurostat  In the past decade, however, euro area inflation has been too low: 1.3% on average between 2011 and 2019, and 1.3% today [Core inflationv is also at 1.3%]. This weakness in inflation, which can be observed in the majority of advanced economies, has reignited the debate over the 2% target. Some, such as one of my great predecessors, Jacques de Larosière, say we should be content with the current 1%. Others, on the contrary, such as Olivier Blanchard, former chief economist at the IMF, are arguing for a higher target of up to 4%, which would leave more room to lower interest rates at the bottom of the cycle. It is tempting simply to ignore these arguments.
These new entrants with distinct capabilities and strengths will not only participate in the growing domestic Islamic banking industry, but will also be able to tap new markets in the region. This initiative will also promote healthy competition, thereby contributing to elevate the domestic industry to new levels of dynamism. In addition to this initiative, up to 49% foreign interest is permitted in the Islamic subsidiaries of the conventional banking institutions and in the takaful companies. The increased international integration is also reinforced by our own institutions venturing beyond our domestic borders, in particular to the Asian region and to the Middle East. This international integration would contribute towards facilitating greater cross-border flows in terms of increased trade and investment transactions, thereby strengthening the global economic and financial inter-linkages. Apart from banking, Malaysia is also initiating efforts to promote takaful internationally. This is being done in close coordination with the Islamic Development Bank where a taskforce has been established to spearhead, among others, the development and promotion of trade, investment, Islamic banking as well as takaful and retakaful industries among OIC member countries. Among the main initiatives to be undertaken under a Memorandum of Understanding signed between Malaysia and the Islamic Development Bank is to specifically promote and expand takaful and retakaful businesses in the member countries. A further initiative by Malaysia was to access the international capital market with the issuance of global Islamic financial instruments. The Government of Malaysia made this inaugural primary issuance of a globally-accepted sovereign Islamic sukuk in 2002.

This has facilitated the smooth flow of funds in the Islamic financial system. With the development of the bond market in Malaysia which now accounts for 81% of GDP, the Islamic private debt securities account for about 44% of the total outstanding amount of private debt securities in the market, while the monthly traded volume of the Islamic money market is now about RM30 to RM40 billion. The money market also effectively serves as a channel for the conduct of liquidity operations by Bank Negara Malaysia as part of its monetary policy. The rapid expansion of the Islamic financial services industry in Malaysia is also supported by a conducive legal and Shariah framework. In terms of the legal infrastructure, the Islamic Banking Act 1983 and Takaful Act 1984 governs the conduct of the Islamic banking institutions and takaful operators respectively. There is also the Government Funding Act which governs the issuance of government Islamic instruments. A dedicated High Court judge has also been assigned to preside over cases relating to Islamic banking and finance. An arbitration centre is also available to deal with disputes. The Central Bank Act has also been amended to provide for the establishment of a Shariah Advisory Council at the Central Bank as the sole authority and reference on all Shariah matters. The treatment of tax neutrality has also been accorded to Islamic financial transactions.
Furthermore, the stress on household finances is likely to increase as around 4 million mortgage borrowers10 see their monthly mortgage payments increase, including as borrowers roll off the current fixed term of their mortgages over 2023. What does this mean for mutuals’ credit portfolios? What I have outlined so far are potential early indicators of pressures to come. The credit data that PRA regulated firms report to us have not yet shown a significant increase in levels of arrears or defaults. These have typically remained at or below pre-Covid levels and only in Q1 2023 have started to show an uptick in areas like ‘new to arrears’. This 4 Supply matters − speech by Andrew Bailey | Bank of England 5 As at 19 April 2022 6 Monetary Policy Report - February 2023 | Bank of England 7 UK consumer confidence index 2023 | Statista 8 Credit Conditions Survey - 2023 Q1 | Bank of England 9 Financial Policy Summary and Record - March 2023 | Bank of England 10 Financial Stability Report - December 2022 | Bank of England  Bank of England  Page 4  uptick is not yet at a level that indicates a material amount of credit risk is crystallising, but rather I take it as a clear warning that firms need to take action now to be prepared both to support their customers and preserve their resilience should the stress that we are observing result in a marked deterioration in their credit portfolios.

One thing that we have learned from this episode of financial turmoil is that, no matter how well maintained the domestic financial environment may be, problems remain in our increasingly liberalised international financial system that cannot be resolved by individual jurisdictions alone. There is a need for regional and international co-operation. Hong Kong has not, of course, been alone in this view. There is now international consensus that something needs to be done, if not on what exactly should be done, in reforming the international financial architecture. Financial Crisis: Local, Regional or International The financial crisis is basically an international one, and I think it is now generally accepted as such. But, when the financial crisis erupted nearly two years ago in Thailand, and even when it was already spreading rapidly throughout the region, the explanations put forward by the experts then were largely local ones: macro-economic imbalances in the crisis-hit countries, cronyism, poor regulation, policy errors, and so on. Consistent with these explanations, the assumption was that the International Monetary Fund (IMF) and the multilateral development banks would fix it country by country, as they had done before in other localised crises elsewhere in the world. We therefore saw a series of policy adjustment programmes and financing packages targeting specific economies. These international financial institutions deserve much credit - far more than they have received - for mobilising, sometimes in a matter of days, financing packages totalling $ billion.
Although national authorities must be at the frontline of macroprudential policy, it is important to stress that these efforts cannot be conducted in isolation, particularly in the European Union and the euro area where our economies and their financing are closely intertwined. II. The euro area needs to continue strengthening its financial integration Euro area countries are already closely integrated on an economic level, and their financial integration should not be left half-finished. However, deeper integration will not happen spontaneously – it requires strong and determined political action. It means completing the Banking Union, supplementing it with an action plan to develop other financing channels, and creating deeper and more integrated European financial markets. a. Why do we need to increase the euro area’s financial integration? We tend to talk of the euro, which has just celebrated its 20th anniversary, as an eminently political project. Clearly, this is true: the single currency stands as a daily reminder of our shared European identity. As with other “European successes” such as the free movement of people, we often forget that its achievement was not a foregone conclusion. But the euro is also an economic necessity: it was born in part from the obvious difficulties that emerged in the 1980s and 1990s in managing a single market with national currencies. Indeed economic union called for monetary union.

For more information, see the Bank of England’s response to the Future of Finance Review available at: https://www.bankofengland.co.uk/research/future-finance. 13 In recent years we have expanded access to our balance sheet to central counterparties and broker-dealers to recognise the important role played by these firms in the provision of critical financial services to the real economy. In providing these critical functions, both broker-dealers and CCPs are exposed to liquidity risk. As the supplier of the economy’s most liquid asset, central bank money, the Bank is able to be a ‘back-stop’ provider of liquidity, and can therefore provide liquidity insurance to the financial system, promoting financial stability. 14 Oliver Wyman: Fintech 2.0 Paper: rebooting financial services (June 2015) and McKinsey: Global Payments report (2016). 5  All speeches are available online at www.bankofengland.co.uk/news/speeches  5  retailers. As designed, Libra may substantially improve financial inclusion and dramatically lower the costs of domestic and cross border payments.15 The Bank of England approaches Libra with an open mind but not an open door. Unlike social media for which standards and regulations are being debated well after they have been adopted by billions of users, the terms of engagement for innovations such as Libra must be adopted in advance of any launch Libra, if it achieves its ambitions, would be systemically important. As such it would have to meet the highest standards of prudential regulation and consumer protection. It must address issues ranging from anti-money laundering to data protection to operational resilience.
A discussion of these kinds of central considerations is typically missing from the criticism put forward. In the international discussion, the central banks’ policy rates are currently seen as quite blunt tools when it comes to curbing the rise in household debt and housing prices. The reason for this is that the interest rate cannot be targeted at the problem area in question, but has a much broader impact on the economy, such as companies’ investments and, via exchange rate effects, their export opportunities. 11 It does not come as much of a surprise therefore that no central bank has so far used the interest rate weapon to any great extent for this purpose. There is currently a relatively high level of agreement that macroprudential policy and well-designed financial regulation should be the first line of defence in preventing financial imbalances from accumulating. 12 The tolerance band was not a target range As I mentioned, one proposal has been that the tolerance band for the inflation target should be reintroduced, as it is assumed this would make it easier for the Riksbank to raise the repo  11  The broad impact of the interest rate is occasionally highlighted as an advantage, however. Unlike macroprudential policy measures which can sometimes be circumvented, “the interest rate gets into all the cracks” (Stein, 2013). 12  See IMF (2015). BIS central bankers’ speeches  7  rate. It could be helpful to remind ourselves here why there was previously a band surrounding the inflation target.

Thirachai Phuvanatnaranubala: Prospects for the Thai economy Speech by Mr Thirachai Phuvanatnaranubala, Deputy Governor of the Bank of Thailand, at the German-Thai Chamber of Commerce Annual Meeting, Bangkok, 18 February 2003. *  *  *  Ambassador Andreas von Stechow , Distinguished guests, Ladies and gentlemen, It is a pleasure for me to be here. My task today is to assure you, as one of our most important groups of foreign investors, that the Thai economy is doing well. And for this year my task is quite easy. 2002 was a good year for the Thai economy. Despite much uncertainty in the global conditions, the Thai economy made a robust recovery with stability, both on the internal and external fronts. You may recall that 2 years after the crisis, we started to have positive growth in 1999. GDP growth rates for 1999 and 2000 were strong at 4.4 and 4.6%. But the year after that, in 2001, the global downturn adversely affected our export and made growth for 2001 dip to 1.9%. However, we recovered in 2002 when growth for the first three quarters climbed back up to 4.9%. For the final quarter, our initial estimate is just over 5%, which would result in growth for 2002 the whole year at 5% as well. This is a good performance in the midst of slow growth in many parts of the world. So what has caused this? First, there was an export recovery. Export contracted as much as -7% in 2001.
Also during this period, while it was accepted that the Bank of England exercised prudential supervision over the mainstream banking system, there was no effective oversight of the deposit-taking institutions that grew up outside the area of controls. It was only in 1979, after the fringe banking crisis of the early 1970’s, that the Bank was given formal supervisory authority, extending to all deposit-taking institutions, but even then with the specific purpose of providing greater protection to depositors. Our world changed, gradually but very markedly, from the 1970’s onwards in all of these respects. Direct methods of monetary control gave way to fully-fledged market-based techniques, encouraging but also encouraged by intensified financial competition, increasingly driven by the IT revolution. Crucially, a consensus gradually developed - with the Bank’s strong encouragement - across a broad political spectrum in the UK (as it had earlier elsewhere) which recognised that there is in reality no trade-off between growth and stability except possibly in the short term. It recognised in fact the nowadays near-universal central bankers’ mantra that stability is a necessary condition for sustainable growth. The consensus recognised, too, that, while overall fiscal policy had significant implications for macro-economic stability over the medium and longer-term it was not sufficiently flexible or adaptable to play the primary stabilising role in the shorter term. That task was specifically allocated to monetary policy.

And the likely public and financial market  5  BIS Review 66/2000  reaction is, in my view, the most effective protection against abuse of the Treasury’s emergency powers. What I have described up to this point relates solely to monetary policy. But the new legislation similarly deals with the Bank’s other key responsibility - maintaining financial stability. And at the risk of trying your patience let me say a few words about that. Less than a fortnight after announcing the Bank’s new independent responsibility for the operation of monetary policy, Chancellor Gordon Brown announced that the Bank’s responsibility for banking supervision would pass to a new institution - the Financial Services Authority, or FSA - which would assume responsibility for the regulation and supervision of all financial institutions in the UK. This was widely seen as the price we had to pay for our enhanced monetary policy role.
Another important consideration that needs to be taken into account is the ability of households to service their debt. With rising income levels, the household sector in Malaysia has continued to accumulate net financial savings as reflected in higher accumulation of deposits against accumulation in debts. Household deposits, as a percentage of GDP, remains high at 67%. Strong household debt servicing capacity is also reflected in the continued improvement in non-performing loans ratio of the household sector, which declined from a peak of 12.2% at end-1998 to 8.1% at end-November 2003. Amidst low and stable inflation, the cost of financing has been kept low to promote sustained consumption and, of greater importance, to stimulate stronger investment activities. The positive effects of increasing bank lending, especially to small businesses, have been an important factor in supporting the domestic economy. As at end-November 2003, bank lending to small and medium scale enterprises expanded by 9% year-on-year, accounting for one-third of the share of business loans. The growth of the small and medium scale enterprises is important in supporting a more balanced economic structure that will enhance Malaysia's potential for economic expansion and employment. The Merdeka Savings Bond will provide Malaysians with an additional avenue and incentive for savings. For retirees who spend out of their pensions and accumulated savings, returns on their  BIS Review 2/2004  1  savings is an important source of income to support their consumption.

31 The two strategies of ILS and public-private partnerships that I have highlighted earlier mark the metamorphosis of Singapore’s reinsurance industry as we transform from a mainstream traditional reinsurance hub, to a sophisticated full-fledged global capital for Asian risk transfer. 32 I invite you to be a part of this metamorphosis, as we chart new paths together in this journey that Singapore is embarking on. 33 Thank you very much. 4/4  BIS central bankers' speeches