samchain/econo-pairs-v1 huggingface dataset:
Another shortcoming was that no authority had taken on the responsibility to oversee the financial sector as a whole, to promote overall financial stability, which is different from the supervision of individual institutions and markets. If we had had such an authority, the events and developments outside the financial sector that eventually undermined its stability might have been detected earlier. Corrections might have been implemented that could have prevented or at least reduced the impact of the crisis. Monitoring overall financial stability has now become one of the primary tasks of the central bank, the Riksbank. Let me stress this again: The fact that deregulation in some countries, also in South East Asia, was followed by banking problems does not imply that you should not deregulate. The conclusion is rather that deregulation must be carefully planned, succeeded by other and more modern types of regulation and monitoring, and supported by a sound macro economic policy. I will speak more about this in the following. The development of the banking sector in Sweden For many years there has been consolidation in the banking sector in Sweden as well as in other countries; this development was accelerated by the crisis. Banks merged and larger banks acquired smaller banks. For instance, the large network of co-operative banks merged into a single bank which later merged with the bank that emanated from the network of the major savings banks – forming one large bank. In this way, several hundred banks became one very large bank.

In order to avoid excessive regulation you should always ask yourself if the benefits from introducing a new regulation are greater than the costs of implementation. Here I include both financial and non-financial costs and benefits in a broad sense. Admittedly, this is often very difficult to measure with any degree of precision. Regulations should also conform to the way financial institutions and markets operate in practice. Hence, regulation should have a functional rather than an institutional approach. This implies that the same financial function should receive similar treatment, whether it is conducted in a bank or in another institution or market. Market-oriented regulations will cause the least interference to the regulatees and to the development of financial instruments and activities. As an example of modern regulation, the new framework for banks’ management of risks and capital from the Basel Committee, the so called Basel II, allows the banks to apply their own risk measurement methods and other internal bank processes. But the rules also grant strong powers to the supervisors to take remedial action if the banks step outside the boundaries of the allowed framework. BIS Review 111/2006  7  Obviously, regulations must be transparent. There are still many examples of legislation where the institutions and even the authorities themselves must frequently call on legal advice to interpret their meaning. This causes uncertainty and undermines efficiency. Speaking about transparency, there should also be consultations between the authorities and other involved parties when drafting the regulations.
Lars E O Svensson: Inflation targeting after the financial crisis Speech by Prof Lars E O Svensson, Deputy Governor of the Sveriges Riksbank, at the International Research Conference “Challenges to Central Banking in the Context of Financial Crisis”, Mumbai, 12 February 2010. *  *  *  I thank Charles Bean, Claes Berg, Alan Blinder, Stephen Cecchetti, Chuck Freedman, Charles Goodhart, Lars Nyberg, Irma Rosenberg, Hyun Shin, Frank Smets and Staffan Viotti for discussions of these issues. The views expressed here are my own and not necessarily those of other members of the Riksbank’s executive board or of the Riksbank’s staff. Hanna Armelius and Hans Dellmo of the Riksbank’s staff contributed to this speech. As the world economy begins to recover from the financial crisis and the resulting deep recession of the global economy, there is a lively debate about what caused the crisis and how the risks of future crises can be reduced. Some blame loose monetary policy for laying the foundation for the crisis and there is a lively debate about the future of monetary policy and its relation to financial stability. Here I will discuss the lessons for inflation targeting after the crisis. My view is that the crisis was not caused by monetary policy but mainly by regulatory and supervisory failures in combination with some special circumstances.

Donald Joshua Jaganathan: Digitization of remittances for migrant workers in Malaysia Welcoming remarks by Mr Donald Joshua Jaganathan, Assistant Governor of the Central Bank of Malaysia (Bank Negara Malaysia), at the Project Greenback 2.0 Kota Kinabalu Dinner, Kota Kinabalu, 3 November 2018. * * * Yang Berbahagia Datuk Yeo Boon Hai, Datuk Bandar, Dewan Bandaraya Kota Kinabalu, Dr. Firas Raad, Country Manager for Malaysia, World Bank Group, It is a pleasure for me to be here this evening. On behalf of Bank Negara Malaysia, I would like to express my appreciation to Dewan Bandaraya Kota Kinabalu for hosting Project Greenback 2.0 in this beautiful city; our Project partner, the World Bank, for your continued support and commitment to this important initiative; and to all of you who are gathered here today, for your hard work and dedication to ensure the Project achieves its objectives. I am also delighted that we have representatives from Bangko Sentral ng Pilipinas and Bank Indonesia with us tonight. Migrant remittances and Project Greenback 2.0 Mr. Juan Somavia, the former Director General of the International Labour Organization based in Switzerland once said “migrants are an asset to every country, where they bring their labour. Let us give them the dignity they deserve as human beings and the respect they deserve as workers”. Malaysia is a land of opportunity for many. Close to 1.8 million foreign workers, men and women, have left their loved ones behind to earn better income here. For many, they are simply chasing the “Malaysian dream”.
Increasing corporate sector leverage in the euro area has also begun to raise questions about the likelihood of an adverse turn in the credit cycle and its possible consequences for the financial system. BIS Review 69/2007  3  Although closely related to business cycles, credit cycles are also driven by the criteria applied by banks and other investors when extending credit. By this yardstick, a long period of inertia in bank lending standards since mid-2004 and the persistent tightness of credit spreads suggest that euro area firms have not been facing financing constraints (as shown in the chart on the right of slide 8). On the contrary, as banks placed greater emphasis on the so-called “originate and distribute” business model, new opportunities have emerged for other financial institutions to acquire exposures to credit. This development has further improved firms’ access to bank credit. Euro area household sector Turning to the euro area household sector, the pace of net borrowing by the household sector has slowed since spring 2006, but has remained at high levels (see the chart on the left of slide 9). There have also been signs of moderation of house price inflation in a number of euro area housing markets. The risk of potentially disruptive property price declines in the future appears limited in the euro area as a whole, although differences continue to exist among individual Member States.

In this context, the “triangle of vulnerability”, identified in the December 2006 FSR, connecting the state of the credit cycle, credit derivatives and highly leveraged institutions, could have grown in relevance in the recent period. A shock involving any element of this triangle could have implications for the other two. For example, a sharp turn in the credit cycle could mean that credit risk protectionsellers, such as hedge funds, would have to make payments to banks which are protection-buyers, but hedge funds might not be capable of paying. Although many hedge funds have attempted to extend their investor lock-up periods, their positions are typically marked-to-market, implying that their funding remains vulnerable to any losses suffered because it could significantly impact on the willingness of banks to continue to grant credit. At the same time, a turn in the credit cycle could represent a challenging test for the functioning of the credit derivatives markets. Similarly, if widespread problems were to emerge in hedge funds active in credit risk transfer markets, this could spark a downturn in the credit cycle itself, as it could impair the “originate and distribute” business model upon which large banks have become reliant. 6. Overall assessment of the financial stability outlook  Let me now conclude with the overall assessment of the financial stability outlook.
In 2016, according to the draft State Budget, the planned reduction in the deficit will stem firstly from lower public spending, whose ceiling for the year as a whole, excluding that derived from local and regional government financing arrangements, will entail a reduction of 4.4% in relation to that set for 2015. The key expenditure-side measures are the 1% increase in the remuneration of public sector employees and the refund in 2016 of the remaining 50% of the extra salary payment eliminated in 2012. With regard to public employment, a standard 50% replacement rate has been established for public-sector vacancies, rising to 100% in priority sectors. Overall, these measures would lead to growth of 2.7% in wage expenses in the State Budget relative to the 2015 Budget outturn projection. The restrictions on current expenditure on goods and services are maintained, with a 14% reduction. Notable with regard to the Social Security system is the 0.25% revaluation of pensions, in keeping with the provisions of the 2013 reform. The projected growth in spending on contributory pensions in relation to the initial 2015 budget is rather higher, at 2.8%. This is as a result of the foreseeable increase in the number of pensions and of the substitution effect in terms of new pension claimants as opposed to deregistered pensioners, meaning that the weight of pensions spending relative to total consolidated spending of the State and Social Security system rises to 38.5% (37.8% in 2015).

The uncertainty habitually surrounding estimates of the impact of tax changes, which peaks at times of marked cyclical swings, will call over the rest of 2015 and in 2016 for a monitoring of revenue that enables risks of slippage to be identified and pre-emptive action to prevent such risks materialising. Notably, in a country as decentralised as Spain where more than 40% of public spending is by local and regional government, the Budget affecting central government and the Social Security system offers a partial view of the budgetary policy for next year. We must wait until October for the 2016 budgetary plan for the overall general government sector, including the regional and local governments. It is that document which will allow a full analysis of the budgetary forecasts for next year and which is, indeed, the draft on which basis the European Commission will deliver judgement in autumn, under the new European governance arrangements. Meeting our fiscal consolidation commitments remains the best anchor for preserving credibility and for ensuring, first, the stabilisation of the level of public debt and, subsequently, its reduction. In this respect, the different tiers of government (central, regional and local) must fulfil these commitments to the same degree of stringency. The Budgetary Stability Law has instruments at its disposal to achieve this aim. Conclusions I shall now sum up.
Lower inflation rates would not only favour the competitiveness of our economy, which is so vital at a time when national spending is slowing, but would also improve household purchasing power against a background of declining household income on account of the oil price shock and the slowdown in employment. There are many other fields (such as the postal service, railway transport, ports, airports, energy, etc.) in which structural reforms giving a greater role to the private sector and competition need to be adopted as soon as possible. As I have already mentioned, the residential sector clearly needs to slim down and it has been doing so quite rapidly in recent months. The rise in uncertainty regarding both the economic outlook and house prices is inhibiting residential demand, even though household creation, due to the increase in the population and the observed tendency for average household size to decline, is still growing at significant rates. Improving the regulation of rented housing, to make it more flexible, profitable and attractive, would enable the demand for residential services from those who do not wish (or are unable) to buy to be met and would reactivate that part of the demand to purchase housing that basically stems from the investment motive, thus reducing the current excess supply in the market. In particular, providing legal certainty to home owners and deregulating the rental periods that may be agreed by tenants and landlords would boost the rental market.

For all these reasons, it is clear that there is no room for complacency and that institutions must act to achieve tighter cost control and to rationalise their procedures. Against a background of rising doubtful assets it seems essential to build up both the amount and quality of capital and to establish sound risk control mechanisms. Lastly, institutions should continuously carry out stress testing and develop contingency plans to anticipate what line of action to take in the face of different market situations. Regarding the supervisor, I believe there has been widespread recognition of the reliability and quality of Spanish banking supervision. Therefore this work should continue to cultivate a close relationship and permanent contact with institutions, but without relaxing the demands made of them. The last agent to which I wish to devote attention is households. In the current circumstances it is inevitable that households should regard the future with greater uncertainty and restrict their spending, stepping up their saving and reducing their level of indebtedness. The behaviour of households will be influenced by whether or not they are indebted and, if so, the weight of this debt burden on their current income. In the case of the more heavily indebted households (in proportion to income), the picture is more complicated since, to the prevailing uncertainty about the economic outlook may be added the tightening of financing conditions, which is largely a result of the financial turmoil.
The other quality that helped make our things turn out well, aside from being very proactive, is that we were also practical and flexible regarding the policy response. We adjusted our response when things did not work as we would like them to be. An example is when the initial soft loan facility went out. It had very low interest rates to ease the burden on the borrowers, but it was not very attractive because the interest rates were not high enough to compensate banks for the credit risk. As a result, the credit was not flowing through that channel. We responded and adjusted by launching the additional measures I have discussed previously. I think that flexibility of response is another thing that helped get us to where we are today. Page 2 of 8  Aside from expanding credit, another important measure that we put out recently is to address the existing debt burden that the borrowers face. One important measure that we announced last year was on long-term debt restructuring to encourage banks to restructure their debt on a more sustainable basis. We had recognized our initial take on Covid-19 that the crisis would be very severe but short. Therefore, the measures we came out with were blanket, broad-based, and very large. We then realized later that Covid-19 would be staying with us for a very long time, and thus, the measures must be more targeted and longer in terms of their response.

For example, Thailand is the largest source of imports for seven of the nine ASEAN countries, excluding Thailand. The only two countries, where it is not Thailand, are Brunei, where it is Malaysia, and Singapore, where it is Malaysia, but if you are talking about links from a trade standpoint with other countries, it turns out it is Thailand. In terms of investment, the largest source of direct investment to the region is Singapore contributing about 60 percent of total intra-ASEAN FDI flows in 2020. However, a large share of that is not from Singapore itself, for example, when Taiwan firms invest in other countries through their Page 7 of 8  subsidiary in Singapore. Excluding Singapore, the next country on the rankings is Thailand contributing about 24 percent of total intra-ASEAN FDI flows (about one-fourth). We can see that both trade and investment linkages are very strong in Thailand. Furthermore, if we think about a country as a good production base, one thing we might think about is the degree of labor access. A place where labor from different places can move has the potential to act as a centralized production hub. Again, the country with the highest number of ASEAN migrants, not surprisingly, is Thailand because we have a lot of workers from Myanmar, Laos, and Cambodia. According to the United Nations in 2019, the number of intra-ASEAN migrants in Thailand is about 3.5 million compared to Malaysia, the second place, which is around 2 million.
It is estimated that the share of foreign trade of the Euro area will be only about 10% of GNP in comparison to about 30% for Germany today. And over the long term, the Euro should become almost as widely used as the US dollar is today. One conclusion to be inferred from this is the following: since Turkey has close trade, service and financial links with Europe, and as the only country connected to Europe in a Customs Union (CU), which I hope will evolve over time towards full membership, the EMU will create completely new conditions in Turkey’s international and European relations. Therefore what will happen in Europe will be decisive for Turkey in the years ahead. It will be a challenge for the Turkish authorities, as well as for bankers and businessmen. One of the most important prerequisites for a successful monetary union is a sufficient degree of economic convergence among the potential members. From that standpoint the degree of convergence among the EU countries is remarkable, particularly as regards the convergence criteria; stable prices, stable exchange rates, low long-term interest rates and healthy public finances. In addition to these criteria, the Maastricht Treaty requires that all member countries in the EU must grant independence to their central banks before the Monetary Union and the establishment of the European System of Central Banks (ESCB). The reason behind the requirement of independent national central banks is that fixing exchange rates and unifying currencies requires a common monetary policy.

I have noticed that although real growth is evident in the region, it is accompanied by some important risks and vulnerabilities. One of the challenges attached is related to the sustainability of this growth. The National Bank of Romania shares your 1/2  BIS central bankers' speeches  view. We should not forget the saying “easy come, easy go”. Loose economic policies, unbalanced budgets and wage-price spirals could cost us much when the economic downturn check is due. This problem hit us severely in the recent past, but we have hardly learned the lesson. Because I have mentioned the economic laws, I will turn now to the legal environment: the report covers extensively the rule of law, the role of institutions and the judiciary. In the report, Central and Eastern Europe is presented as an example of effective measures and progress in this respect, which is of no small importance. Romania finds itself in an upright moment when economic performance is associated with strong achievements in the reform of institutions. We should not waste this moment. In the long run, the economy’s, the institutions’ and the society’s progress goes hand-in-hand, and, conversely, so does their regress. Therefore, we have to be careful not to reverse the current trend. Banks in Europe seem to ride better on the economic tide, also thanks to wide-ranging reforms brought by the Banking and Capital markets Union. Credit is still below its potential and the needs of the economy.
Often these barriers are consistent across firms. Perhaps most notable is the requirement for loss absorbency – establishing a liability structure for G-SIBs that is consistent with bail-in, not bail-out. Again, there has been significant progress here. The Financial Stability Board (FSB) issued a consultation document 2 on a minimum standard for Total Loss Absorbing Capacity (TLAC) last November and is committed to producing a final standard ahead of the G20 summit next month in Antalya. This will be a major step on the road to ending “Too Big to Fail.” Additionally, we need to pursue the same TBTF agenda for other types of G-SIFIs, in particular central counterparties (CCPs). I want to spend some time today talking to what – if anything – can be taken from the resolution of banks that is relevant for CCPs. Context for CCP resolution CCPs form a key part of the global financial landscape. They have become ever more important since the crisis. This will continue as mandatory central clearing is introduced around the world. Addressing the systemic risks associated with over-the-counter (OTC) derivatives markets is one of the reasons why G20 leaders introduced mandatory central clearing. People tell us that we have thus created in CCPs concentration risk and critical nodes. This is true in part, but we did this on the basis that in CCPs risks could be better recognised and identified, better managed and reduced via better netting.

These  4  FSB, (October 2014) Key Attributes of Effective Resolution Regimes http://www.financialstabilityboard.org/2014/10/r_141015/?page_moved=1  5  http://www.financialstabilityboard.org/wp-content/uploads/Joint-CCP-Workplan-for-2015-For-Publication.pdf  2  for  Financial  Institutions  BIS central bankers’ speeches  issues around continuity and portability will be the subject of work within the FSB over the course of the coming year. Together, these initiatives to improve the resilience and recovery arrangements for CCPs and their members will help to reduce the probability of CCP default. But while improvements to resilience are necessary they may not by themselves be sufficient. No institution is “fail sfe”. Ultimately, we need to have a credible resolution approach for CCPs. If we do, resolution should offer a continuing benefit in helping to incentivise recovery by removing expectations that the taxpayer will be compelled to step in. By contrast, if we do not have a credible regime in resolution, we run the risk of weakening the incentives both to manage a CCP prudently, as well as incentives for clearing members to contribute to a CCP’s recovery should it get into trouble. The benefits of resolution to market discipline and recovery are common to all financial institutions. But that is not the only insight from banks that is relevant to CCPs. Before going too far in talking up the similarities, I should note – although it should go without saying – that CCPs are very different from their bank clearing members in many important respects, including their business models, legal structures and balance sheets.