samchain/econo-pairs-v1 huggingface dataset:
In Europe, market incentives seem sufficiently strong to favour use of CCPs, and we would not see a need at the current juncture to advocate regulatory action to impose central clearing of repos, as has been the case for OTC derivative transactions. At the same time, an expanded use of CCPs should be accompanied by effective supervision and oversight, which always needs to be kept up to date and in line with new market developments. The global Principles for Financial Market Infrastructures (PFMIs), developed jointly by CPSS and the International Organisation of Securities Commissions (IOSCO) and published last April, are a key pillar in this regard. Major jurisdictions around the world are now updating their supervisory and oversight requirements for CCPs in response to the new PFMIs, thereby leading to an even more robust set-up for CCPs. Another major strand of work currently underway at both international and EU level concerns the development of recovery and resolution regimes for CCPs. In the EU, the European Commission has recently consulted the public on a possible framework for the recovery and resolution of financial institutions other than banks, covering CCPs and other market infrastructures. We trust that the European framework will be closely aligned with the respective global work of the CPSS and IOSCO. Besides CCPs, another key infrastructure to be considered in relation to the repo market is the trade repository.

In addition to the use of CCPs, triparty repo 9 has become more important. Triparty repo accounted for 11% of all repo transactions in 2012 (up from 9% in 2010). I will come back to CCPs and triparty repo later on, but would first like to say some words on collateral and haircuts. Collateral of course is intended to hedge default risk, while haircuts are usually seen as being intended to hedge the risk on that collateral. In times of market stress however, large and sudden margin increases can create self-reinforcing, pro-cyclical spirals of increasing weakness, exacerbate market swings and oblige market dealers to provide collateral to  7  See ECB Money Market Survey: http://www.ecb.int/pub/pdf/other/euromoneymarketstudy201212en.pdf? 4261e943bbcfec98572319740bda877b  8  A CCP is an entity that interposes itself between the buyer and the seller of a repo, thereby reducing counterparty risk for both seller and buyer as long as the CCP itself is well diversified and well governed. 9  Under triparty repo, a central securities depository (CSD), an international CSD or a custodian bank, for example, acts as a facilitator between the buyer and the seller of a repo. The triparty agent handles the related collateral management, including valuation and substitution as well as re-use of the collateral with a central bank where possible. BIS central bankers’ speeches  3  support secured transactions just when it is most costly to do so. Two examples come to mind.
A variation on this theme, in essence adopted by the European Central Bank, is to provide unlimited financing to the banking system at the policy rate at longer maturities than usual. The other option involves the outright purchases of assets, rather than the normal repurchase agreements (i.e. collateralised lending) undertaken by central banks. This may involve the purchase of either government debt or a range of corporate assets. And they may be financed by the issuance of extra central bank reserves, raising the monetary base. Or they may be financed by the sale of other assets in which case there will be no effect on the monetary base. The Federal Reserve and the Bank of England have bought both government and private assets, though with different emphases, in part reflecting the different financial market structures. In particular, the Federal Reserve has bought significant quantities of a variety of corporate assets, whereas the Bank’s purchases have been more heavily concentrated on purchases of government debt. The aim of purchases of corporate assets is to enhance market liquidity by having the central bank stand ready to act as a backstop buyer. In so doing, it should bring down spreads over government bond yields by reducing liquidity premia, encourage issuance and generally improve the functioning of capital markets. Importantly, the central bank may not need to make a large volume of purchases to make a difference. The mere fact of credibly standing ready to buy may be enough to have the desired impact.

As a result, at times, such as during the “Little Panic” of August 2007, as well as the “Great Panic” of September-October 2008, the markets for a whole range of asset-backed securities closed completely and investors sought safety in liquid government assets. These pressures are reflected in the spread between measures of bank funding costs and equivalent maturity government debt (Fig. 13). Even when confidence has appeared to be improving, the markets for asset-backed securities have remained dysfunctional. Amplification and propagation While these incentive distortions and information problems help to explain why the crisis happened, they don’t explain why its impact has been so great. Back in 2007, the US Federal Reserve estimated the unexpected losses associated with the sub-prime mortgage market would be of the order of $ billion 7 . Since then, the IMF have progressively raised their estimate of the write-downs on US-originated assets to $ trillion (see Fig. 14), while their current estimate for write-downs across the United States, Europe and Japan stands at $ trillion. Alongside that we are witnessing a sharp and internationally synchronised slowdown in global growth that will probably turn out to have been the sharpest in the postwar period, together with an unprecedented contraction in world trade (Fig. 15). The shortfall in advanced country GDP, relative to potential, alone is projected by the Fund to reach around $ trillion by 2010. How could this come about?
15  Geographical distance and the presence of a common language have been shown to impact on international investment decisions of banks (see e.g. Buch (2000) and Brevoort and Wolken (2008)). 18  BIS Review 82/2010  One of the few things that can potentially mitigate anti-competitive behaviour in a concentrated industry is outside competition, or even the threat of outside competition. The entry of new players into local markets may lead to a more competitive environment, generating efficiency gains that can be passed on to consumers. In banking these efficiency gains probably take the form of a greater variety of financial services and lower prices. Other potential benefits of cross-border banking that deserve to be mentioned are transfers and spillovers of knowledge and know-how. In particular, host countries with weak local banks and a lack of experience with bank supervision might benefit from the transmission of knowledge from foreign banks and supervisory authorities to local counterparts. Moreover, cross-border banking has the potential to improve financial stability. In light of recent experience, I realise that such a claim is controversial. However, the empirical evidence on this issue is that cross-border banking on balance seems to improve rather than weaken financial stability. 16 First, unlike domestic financial institutions – particularly those in which the government is involved – foreign banks are typically less open to government pressure to lend to “preferred borrowers”. Consequently, foreign banks may contribute to an improvement in the overall quality of the loan portfolios.

10 But why do banks want to do business in a country where they are not completely familiar with the laws, local customs or business practices and where they typically would have to compete with well-established local banks? A bank that decides to enter a foreign market must believe that it can offer something new or better than what is already being provided by local banks. 11 The driving forces behind the geographical expansion of banks are likely to be in many ways similar to those of other types of business. A bank with a better business model or stronger brand name than the local banks can gain market shares if it gets access to customers, and in retail banking local presence is often necessary. In this sense, the reasons behind banks’ decisions to expand their business to foreign markets are not much different from those of goods-producing firms that establish foreign subsidiaries in order to gain better access to their foreign customers. 12 This type of driving force may have been particularly relevant for  9  Based on data on foreign claims by nationality of reporting banks, immediate borrower basis, at the end of September 2009 from the Bank for International Settlements. 10  Before the single market was introduced, European banks wanting to establish themselves in another member country had to obtain authorization from the supervisory body of each host country.
But credit cards are not common in Zambia as only a few banks issue them while most cards held by residents have been issued offshore. This initiative taken by Access Bank should directly contribute to an increase in the number of people holding such cards and taking advantage of the range of benefits that can be derived from their use. In countries where credit cards are used extensively, their benefits for users are commonly recognized and include: •  Elimination of the risk associated with carrying large amounts of cash as it may be lost or stolen. Credit card companies have over the years developed a variety of anti-theft practices which protect the cardholder in the event of theft of the card. In any case, the cardholder is protected from fraud on the card except in event of negligence on his/her part;  •  Cards make it easier to buy things as one can pay for a range of goods and services from small items to airline tickets, hotels, car-rentals etc.

However, cross-border payment  solutions are still costly for end users, slow and unsafe across the world, in particular in emerging countries. Regarding the wholesale infrastructures, they still present various shortcomings, as market infrastructures are not interoperable around the world. The correspondent banking model is often considered as the only solution to transfer money across borders, but it is also costly, and lacks traceability and efficiency. The perimeter of the AML/CTF and KYC checks is in some cases uncertain for the counterparties of a payment order. The tokenisation of financial assets combined with the recourse to blockchain-based solutions and more broadly Distributed Ledger Technologies to store and transfer those assets could help answering market’s demands. At the same time, they could help remedy the current limits of the existing wholesale market infrastructures by exploring new avenues. The implementation of those innovations could have an important impact on the financial industry in particular to facilitate gross and simultaneous Delivery-versus-Payment processes, crosscurrency settlement, resilience, and recovery from operational incidents. The risk there is that such developments lead to disorderly approaches and heterogeneous adaptations of market infrastructures, in particular when it comes to the modalities of settlement. Several initiatives or projects are in effect considered by the industry in the post-trade area, pointing to the role central banks could play in this regard, as they have done in the past.
Today, the euro area’s banks continue to grant more than 90% of credit to firms resident in the same country, with only 5% going to firms in other euro area countries. In the case of loans to households, the bias is even greater. Expanding this foreign activity is essential for the sound working of the euro area. In this respect, there is still a long way to go before we achieve a pan-European banking system and a more complete Banking Union. The need to complete Banking Union Since Banking Union was launched in 2012, substantial institutional progress has been made towards the creation of a new common supervisory and resolution framework. The aim has been to restore lost confidence and ensure protection for depositors, irrespective of their nationality. The first pillar of Banking Union – the Single Supervisory Mechanism (SSM) – has indeed been completed. Today, the European Central Bank (ECB) directly supervises significant credit institutions, which account for almost 82% of all banking assets in the euro area. Progress has also been made in the case of the second pillar, with the creation of the Single Resolution Mechanism (SRM). The SRM establishes uniform resolution criteria according to the principle of the lowest possible cost to the taxpayer. However, for completion of the Banking Union important institutional challenges remain. First, the creation of a common financial backstop for the Single Resolution Fund (SRF), to ensure that it has sufficient resources to withstand future banking crises without destabilising the public finances of the countries concerned.

4  BIS Review 53/2009  Governance model MINISTRY OF FINANCE ON BEHALF OF GOVERNMENT  STORTING (Norwegian parliament)  NORGES BANK’s EXECUTIVE BOARD  NORGES BANK’s SUPERVISORY COUNCIL  CENTRAL BANK AUDIT  2  Management structure of Norges Bank NORGES BANK’s EXECUTIVE BOARD and EXECUTIVE MANAGEMENT AUDIT COMMITTEE  Executive Board’s investment management advisory board NORGES BANK’s INVESTMENT MANAGEMENT  INTERNAL AUDIT UNIT  3  BIS Review 53/2009  5  Long-term o wnership 1.50%  1.50% Europe Americas  1.25%  1.25%  Asia and Oceania 1.00%  1.00%  0.75%  0.75%  0.50%  0.50%  0.25%  0.25%  0.00%  0.00% 98  99  00  01  02  03  04  05  06  07  08 Sources: FTSE and Norges Bank 4  Government assets Fall in market value in 2008. In billions of NOK  Government Pension Fund – Nor way  -30  Government direct o wnership1  -230  Government share of subsea petroleum reserves2 Government Pension Fund – Global3  -2 200 -130 (-630)  Household housing wealth 4  -400  1) Decrease in value adjusted for dividends. Companies listed on the stock exchange 2) Fall in value of the govern ment share of subsea petroleum reserves with a decline in the price of oil fro m NOK 500 to NOK 300 per barrel.
Jessica Chew Cheng Lian: Corporate governance at the Central Bank of Malaysia Opening speech by Ms Jessica Chew Cheng Lian, Assistant Governor of the Central Bank of Malaysia, at the Third Institute of Chartered Accountants in Australia-The Malaysian Institute of Certified Public Accountants (ICAA-MICPA) Audit Forum, Kuala Lumpur, 27 September 2012. *  *  *  It gives me great pleasure to be here this morning at the 3rd ICAA-MICPA Audit Forum. The theme for the Forum this year is the role of the audit committee within the context of corporate governance in insurance companies. It has been said that an audit committee is like a good insurance policy - it is better to have it and not need it, than to need it and not have it. I am certainly happy to know that we have established strong audit committee practice within our financial industry, and while admittedly, some institutions have moved further than others in improving the effectiveness of the audit committee, it represents without exception a core pillar of governance systems in our financial sector. I say this because as we speak, there are countries that are now debating the requirement for financial institutions to establish separate audit committees. There are a number of reasons why the theme chosen for this forum is particularly relevant in current times. Corporate governance problems have once again come under intense global scrutiny since the outbreak of the global financial crisis.

Bank Negara Malaysia is also particularly focused on corporate governance in the light of regulatory changes that are being pursued for the insurance industry. I am referring to the transition from a rules-based system which regulates a number of aspects of insurance operations, to a more principles-based system. This process has already started with the newer guidelines that we have introduced lately, but there continue to be a number of rules applied to the insurance sector which may have outlived their purpose. We are reviewing these. A precondition for this transition is a significant emphasis on a strong system of corporate governance, and one that is actually working effectively within financial institutions. Ultimately, corporate governance reforms are about improving accountability and control, especially where interests and incentives of stakeholders are not fully aligned. We believe that in Malaysia, we have laid strong foundations for sound governance practices within financial institutions. For the insurance industry, the prudential framework on corporate governance for insurance companies and various other guidelines that have been issued by the Bank establish standards that we expect insurers to operate against to ensure the sound and prudent management of insurers. Our supervisory approach has contributed to promoting better governance in practice. And in the last four years, we have focused on providing important support to directors in performing their roles through education initiatives. Forums such as this contribute to that effort. Our continuing work on corporate governance builds on and strengthens this foundation.
And for this reason they are quite different in nature from some of the riskier financial activities that banks undertake, such as proprietary trading. In other industries we separate those functions that are utility in nature – and are regulated – from those that can safely be left to the discipline of the market. The second approach adapts those insights to the regulation of banking. At one end of the spectrum is the proposal for “narrow banks”, recently revived by John Kay, which would separate totally the provision of payments services from the creation of risky assets. In that way deposits are guaranteed. At the other is the proposal in the G30 report by Paul Volcker, former Chairman of the Federal Reserve, to separate proprietary trading from retail banking. The common element is the aim of restricting government guarantees to utility banking. There are those who claim that such proposals are impractical. It is hard to see why. Existing prudential regulation makes distinctions between different types of banking activities when determining capital requirements. What does seem impractical, however, are the current arrangements. Anyone who proposed giving government guarantees to retail depositors and other creditors, and then suggested that such funding could be used to finance highly risky and speculative activities, would be thought rather unworldly. But that is where we now are.

•  Honduras is developing a land title registry system based on distributed ledgers  •  Other potential applications talked about include registry of intellectual property rights, supply chain management, electronic voting systems, medical records, etc. Fourth, cloud computing. Cloud computing is an innovative service and delivery model that enables on-demand access to a shared pool of computing resources. It provides economies of scale, potential cost-savings, as well as the flexibility to scale up or down computing resources as requirements change. There is a view among some quarters that “MAS does not like the cloud”. This is an urban myth, not true. •  Well, MAS did have concerns about cloud computing previously. •  This was because cloud services were at the time not sufficiently secure to safeguard the sensitive information that FIs held. •  But cloud technology has evolved considerably and there are now solutions available to address these concerns. •  –  For example, FIs can now implement strong authentication and data encryption to protect their data in the cloud. –  MAS has been in dialogue with both FIs and cloud service providers  –  Providers have now become more aware of our security considerations while we have gained a deeper understanding of the safeguards they have put in place. I am pleased to say that several FIs in Singapore have successfully rolled out cloud solutions in the past two years. Fifth, big data. The world is exploding with information.
This helps to ensure that the central bank is consistent over time. Monetary policy in recent years Has monetary policy been successful? Has it contributed to satisfying the preconditions for a stable krone exchange rate? Before I attempt to answer these questions, I will briefly review the actual conduct of monetary policy and the decision-making basis. The period between December 1992, when the fixed exchange rate regime was formally abandoned, and 1996 was characterised by balanced growth and a stable krone exchange rate. However, in 1996 the economy began to show signs of overheating. Coupled with an increase in oil prices, this contributed to appreciation pressures on the krone. Interest rates were kept at a low level to counter  BIS Review 7/2001  5  appreciation pressures, and fiscal policy was not sufficiently tight to curb pressures in the economy. Developments since the beginning of 1997 show that the exchange rate is no longer suitable as a short-term operational objective of monetary policy. Norges Bank cannot fine-tune the exchange rate. As mentioned, Norges Bank therefore places emphasis on satisfying the fundamental preconditions for stability in the krone exchange rate over time in its conduct of monetary policy. Instability increased further in 1998. In addition to domestic problems of overheating, which translated into strong cost inflation, 1998 was marked by financial crises in Asia, Russia and Brazil, falling commodity prices and general unrest in international financial markets.

I dare to sustain that nowadays, with the global economic crisis still ongoing and this fight for resources, the above-mentioned issues appear to be highlighted even more now than in 1972. Of course, today, being in recession, particularly we in Europe are in recession, we dislike considering limits to growth, except perhaps putting some limit to money supply growth. Not all the predictions of the Club of Rome came true. Nevertheless, it has initiated not only debates, but also radical changes in human behaviour, many of them still ongoing today – for example the environmental movement that started early in the ‘70s with the first Report to the Club of Rome; or the need to increase the efficiency of energy consumption (just recall how big and low efficient American cars were 40 years ago). But, above all, these debates have changed our way of thinking. Like Albert Einstein used to say, “The world we have created is a product of our thinking; it cannot be changed without changing our thinking”. Related to this issue, one of the central themes addressed by the Report to the Club looking to the future is education. Professor Mircea Maliţa, a Romanian veteran of the Club of Rome, identified the potential of education in his 1979 Report “No Limits to Learning”, which was like a mirror to the first Report. It is him who will reiterate today the topic of education, together with Richard Ernst, who will present an interesting paper, “An Inseparable Pair: Education and Ethics”.