samchain/econo-pairs-v1 huggingface dataset:
Zeti Akhtar Aziz: The development of Islamic finance Welcoming remarks by Dr Zeti Akhtar Aziz, Governor of the Central Bank of Malaysia, at the Royal Award for Islamic Finance gala dinner, Kuala Lumpur, 25 October 2010. *  *  *  It is my very great honour to welcome this distinguished audience to this special gala dinner organised by Bank Negara Malaysia and the Securities Commission to commemorate the presentation of the inaugural Royal Award for Islamic Finance. This gala dinner is also held in conjunction with the Global Islamic Finance Forum 2010 that is taking place this week, and which commenced this morning. Tonight, in commemorating this prestigious Royal Award for Islamic Finance, we are blessed and honoured to have Kebawah Duli Yang Maha Mulia Tuanku Haji Abdul Halim Mu’adzam Shah who will graciously confer the winner with the award. Bank Negara Malaysia and the Securities Commission are proud to jointly sponsor this award under the auspices of the Malaysia International Islamic Financial Centre initiative (MIFC). Allow me to take this opportunity, as Chairman of the MIFC Executive Council, to record our utmost gratitude to the Rulers’ Council of Malaysia for bestowing the Royal title to the award, giving it the highest distinction and recognition. Earlier this year, Malaysia launched a global search for the winner of this auspicious award which seeks to honour the exceptional individual who has made the most outstanding contribution to Islamic finance.

Indeed, we have seen numerous individuals who have made significant efforts and contribution to make Islamic finance what it is today. In creating such an award which will be given once every two years, it is our fervent hope that the conferment of this award will be inspirational to such involvement and contribution to Islamic finance. Malaysia’s experience in Islamic finance officially began with the establishment of the Pilgrimage Fund or the Tabung Haji in 1969 as an Islamic savings institution. Then, the first Islamic bank was set up in 1983 and in the following year, the first Takaful operator was established. Today, we have a comprehensive Islamic financial system that operates in parallel with the conventional financial system. Following liberalisation initiatives in this decade, there has been an increased foreign presence in our Islamic financial system. In particular, there has been greater foreign participation in Malaysia’s Islamic financial markets. The diversity of market players has contributed to increased competitiveness of the Malaysian Islamic financial services industry. To ensure the sustainability of our Islamic financial system, it is also supported by a robust regulatory and supervisory regime, legal and Shariah framework, and payment and settlement systems. In this decade, greater focus was particularly given to the institutional arrangements to develop the sukuk market. The sukuk market now accounts for more than fifty percent of our bond market. The market has drawn the participation from a wide range of international corporations and multilateral agencies in raising funds and investing in the sukuk issuances out of Malaysia.
23  Societies  have two ways of doing this: (1) legislation, regulation or guidance that set standards often accompanied by requirements to check compliance and (2) providing information that empowers individuals to assess trustworthiness for themselves. 24  What could this look like? In this final section I will sketch out the elements of an agenda that could enhance the trustworthiness of experts. 1. Experts should embrace uncertainty As was once so eloquently put by Mervyn King, experts must resist the pressure for “an illusion of certainty”. 25  Bertrand Russell once said, “The whole problem of the world is that fools and fanatics are  always so certain of themselves, but wiser people so full of doubts.” So much of public debate today is painted in black and white when the reality is normally multicoloured. In most fields of scientific enquiry from economics, to medicine, to climate change - we make progress by making progressively better guesses. We are uncertain not only about whether our models are calibrated correctly, but even about whether our models are the right ones to be using at all. Rather than pretending to be certain and risk frequently getting it wrong, being candid about uncertainty will over the long term build the credibility of experts.

Fact checkers have also developed a code of conduct to enable users to assess the veracity of their work. 34  There have also been examples of new institutions being created to enhance trustworthiness in areas where trust has been eroded. In the wake of the series of misconduct scandals around misselling of financial products, LIBOR and foreign exchange rigging, two institutions were established. The first, the Banking Standards Board, is focused on improving conduct standards in banks. The second, the FICC Markets Standards Board, seeks to pre-empt future problems by establishing acceptable standards of practice in wholesale financial markets. These initiatives will take time to bear fruit, but are illustrative of trying to rebuild trustworthiness when it has lapsed. Schools and universities will have to do more to educate students to be more discerning consumers of information, and public awareness campaigns on media literacy may be warranted. 35  In a striking piece of  research based on testing of thousands of students across the United States, the Stanford History Education Group concluded that young people’s ability to reason about information on the internet could be summed up as “bleak.” They tested students on whether they could distinguish an ad from a news story or whether they noticed that data came from a political lobbying group. “At every case and at every level, we were taken aback by students’ lack of preparation.
The popular media sometimes calls Singapore the “Switzerland of Asia”. We have always taken the comparison as a great compliment. Switzerland is known the world over for its stability, prudence, efficiency, and diligence – all attributes that we in Singapore also aspire to. Both Switzerland and Singapore are small trading nations with a shared interest in promoting free trade and maintaining an open, rulesbased global economy. Switzerland is an important economic partner to Singapore. Many Swiss multinationals have a strong presence in Singapore and they are a source of high value-added investments. Similarly, Singapore companies are actively making direct investments in Switzerland. Today, Switzerland is our 5th largest trading partner in Europe while Singapore is Switzerland’s 4th largest trading partner in Asia. As central banks, SNB and MAS share some common challenges. Since the financial crisis, the openness, financial soundness, and strong fundamentals of our two countries have made us highly attractive to global capital, with implications for monetary and exchange rate policies, on which we exchange views. Our two institutions also have to manage a growing pool of official foreign reserves in a global market that is increasingly uncertain. The opening of SNB’s Singapore branch is an important milestone in the strong friendship and good relations between Singapore and Switzerland, and between MAS and SNB. Through this branch, our two institutions will come even closer together and I look forward to new areas of cooperation. BIS central bankers’ speeches  1  We value highly our relationship with SNB.

Ravi Menon: Inauguration of Swiss National Bank’s Singapore branch Congratulatory remarks by Mr Ravi Menon, Managing Director of the Monetary Authority of Singapore, at the inauguration of Swiss National Bank’s Singapore branch, Singapore, 11 July 2013. *  *  *  Mr Thomas Jordan, Chairman of the Governing Board, Swiss National Bank Ambassador Thomas Kupfer Ladies and Gentlemen, Good afternoon. I am delighted to be here to celebrate the opening of Swiss National Bank’s first overseas branch office, right here in Singapore. The opening of SNB’s Singapore branch is significant. It reflects the growing importance of Asian markets in the portfolios of many long-term investors such as the SNB. Currently, there are over 500 players in the asset management industry operating in Singapore with total assets under management of around USD 1.1 trillion. If Asia is the heart of the global economy, then it is in Singapore that you feel the heartbeat. From Singapore, you will get a good feel of not just the well-established markets in Northeast Asia, but also the rapidly emerging ones in South and Southeast Asia. This new branch office will help SNB form closer and stronger ties with partners in this fast-growing part of the world. In particular, SNB will have the opportunity to exchange views with the vibrant asset management community in Singapore, including many Asia-focused managers and investment professionals. We are doubly pleased that SNB has chosen to come to Singapore, because our two countries are like kindred spirits.
The latest Banque de France survey shows that the capacity utilisation rate has reached a record high. This state of affairs makes the recommendation issued by the Council over the past four years more appropriate than ever: “Now is the time to invest”. •  lastly, actively seek improvements in productivity, which lie at the very heart of economic growth by embracing technical progress, the digital revolution, the new information and communication technologies, biotechnology and material sciences and by promoting a high level of research and development in the productive sector in France as well as Europe. This openness to technical progress and rapid productivity enhancement is one of the keys to maintaining low inflation and a long-lasting growth, which is vibrant, sustainable and creates jobs. *  *  *  This, Ladies and Gentlemen, is what I wished to say about monetary policy and the French and European economies as we stand on the verge of the year 2001. May I draw your attention to the press kit that will be handed out to you. It contains documents that should prove very useful to a sound understanding of the economic and monetary situation, in particular the charts on production bottlenecks and recruitment difficulties. I would also like to point out the one hundred questions-andanswers on the changeover to the euro. These should provide individuals, professionals and the specialised press with clear and accurate information on any questions that may arise regarding the challenging events that await us in the years 2001 and 2002.

Given the prevailing wage moderation, this acceleration in activity has been particularly propitious for job creation: the euro-area unemployment rate has declined by one percentage point since October 1999 and stood at 8.9% in October 2000. Surging oil prices and the depreciation in the euro’s effective exchange rate have fuelled a marked rise in inflationary pressure since the autumn of 1999. Inflation as measured by the Harmonised Index of Consumer Prices (HICP) thus rose above the 2% threshold in the twelve months to February 2000. In November 2000, the year-on-year increase amounted to 2.9%. There have also been increasing signs of pressure on the productive system, with the appearance of production bottlenecks and rising capacity utilisation rates throughout the euro area. The latter work out to 84.7% for the fourth quarter of 2000, i.e. almost three points above their long-term average of 81.8%. In addition, the value of imports rose substantially under the combined impact of buoyant economic activity, an almost two-fold increase in oil prices and the euro’s depreciation. As a result, the current account, which had shown a surplus, shrank to a slight deficit. Robust growth for the French economy Following the trend initiated in 1999, the French economy enjoyed robust growth. Although the growth rate levelled off somewhat in the third quarter, it should remain sustained given the renewed confidence expressed by households and the business prospects of the industrial sector, where our surveys indicate that order books are well-filled.
Under these conditions, a revision in inflation targets has become a technical necessity. Therefore, the Central Bank of Turkey proposed the government to revise the targets for 2009 and 2010 to 7.5 and 6.5 percent, respectively; and to set the target for 2011 at 5.5 percent, and the government accepted our proposal. I would like to re-emphasize that, we will not treat the revised targets symmetrically. Monetary policy will aim to keep inflation below the revised target path. Dear Guests, We stick to our price stability objective. At the same time, we are aware of challenges we have to face. First of all, the rapid rise in food prices may be more permanent than expected due to rapid economic growth, slowdown in agricultural productivity and employment shift from agriculture to industries. Considering the fact that food has a higher share in the consumption basket of developing economies, including Turkey, this would lead to a decoupling in inflation rates between industrialized world and developing countries for years to come. 2  BIS Review 79/2008  Similarly, commodity prices may remain elevated for the foreseeable future, which may prove to be a challenge for Turkey in particular. Note that Turkey is a net commodity importer in contrast to many other developing countries. Last, but not least, price stability necessitates stability in financial markets. We need to put our house in order to attract foreign capital with long-term horizon, rather than highly mobile short-term capital.

More than half of Turkey’s population is under the age of 30. However, unemployment rate for the young population stands at 21.2%. In order to unleash our potential, we need to keep investments at high levels and utilize human capital effectively. Since domestic savings rate in Turkey is not high enough to finance investments, we need to attract foreign savings, which implies having  BIS Review 79/2008  1  current account deficit. But the good news is that the quality of financing has improved significantly in recent years. The FDI inflows were more than USD 20 billion in each of the last two years. Nevertheless, I should say that ratio of greenfield FDI to the total FDI is relatively low yet. I believe that the greenfield FDI will also increase in the following years as we keep the macroeconomic and political stability in place and continue to improve the business environment. The second comparative advantage that I would like to underline is the convergence story of Turkey to European Union. Steps taken during the negotiation process will undoubtedly increase the momentum of Turkey and help unlock the growth potential of the country. European Union membership is our medium-term anchor and all parties in Turkey should adhere to this aim decisively. Dear Guests, The best way that a central bank could support sustainable growth is reaching and maintaining price stability, especially in a country that experienced high and chronic inflation for decades. As you may know, Turkey has adopted the full-fledged inflation-targeting regime in 2006.
8  BIS Review 1/2007  As long as the excess liquidity in the market remains at reasonable levels, as foreseen in the main scenario, the Central Bank will continue to withdraw the excess liquidity in the market, on an overnight basis, via New Turkish Lira deposit operations in the Interbank Money Market within the CBRT and Repo transactions in the Repo and Reverse Repo Market of Istanbul Stock Exchange. Accordingly, overnight interest rates will continue to realize at the level of the borrowing rate of the Central Bank. Thus, the overnight borrowing rate of the Central Bank will continue to be the benchmark interest rate with respect to monetary policy. In case of a permanent liquidity shortage in the market, the benchmark short-term interest rate will be the average interest rate of the repo auction, not the daily borrowing interest rate of the Central Bank. Therefore, in case of liquidity shortage, the interest rate taken as a benchmark by the market would have become higher merely due to the decline in liquidity. In order to avoid any negative impacts, the Central Bank could revise its interest rates – provided that the inflation outlook is stable – so as to encounter the pressure created by the liquidity shortage. However, such an interest rate cut would only mean a technical arrangement stemming from the change in liquidity conditions. Therefore, such a move should not be perceived as a loosening or tightening of monetary policy.

Considering the fact that the relationship between macroeconomic variables changed remarkably along with the structural transformation in the economy after the 2001 crisis, it is assessed that the mentioned uncertainty in Turkey is at least as high as those in other countries. However, in light of the recent normalization experience, it is possible to produce forecasts about the period required for monetary policy to influence inflation. The latest observations indicate that the period needed for monetary policy measures to affect domestic demand varies between 3 to 9 months, while the change in demand influences inflation in a period between 3 months and 1 year. This leads us to the conclusion that the impacts of monetary policy on inflation spread over a period of one and a half years on average. In this context, taking into account the lagged impacts of monetary policy, the Central Bank defined the policy horizon as approximately one and a half years in the main policy statement published last year. Although it is forecasted that the impact of monetary policy on inflation will show itself in a more lagged manner and that the control horizon may be extended as the normalization process of the economy continues, the control horizon is maintained as one and a half years at this stage. There is no doubt that this period may be extended or shortened depending on the extent of shocks and the period needed for their influence to reflect on prices.
The shift to advanced models for calibrating economic capital has not arrested this trend. More likely, it has intensified it. The quest for precision may have come at the expense of robustness. Hayek titled his 1974 Nobel address “The Pretence of Knowledge”.7 In it, he highlighted the pitfalls of seeking precisely measurable answers to questions about the dynamics of complex systems. Subsequent research on complex systems has confirmed Hayek’s hunch. Policy predicated on over-precision risks catastrophic error. Complexity in risk models may have perpetuated Hayek’s pretence in the minds of risk managers and regulators. (c)  Timeliness  One of the purported benefits of model-based calibration is that it increases the sensitivity of capital requirements to changes in risk. Reported regulatory capital ratios should better reflect risk and thus should in principle offer timely advance warnings of impending bank stress. The data tell a somewhat different story. To see that, consider the experience of a panel of 33 large international banks during the crisis. This panel conveniently partitions itself into banks subject to government intervention in the form of capital or guarantees (“crisis banks”) and those free from such intervention (“no crisis banks”). Chart 5 plots the reported Tier 1 capital ratio of these two sets of banks in the run-up to the Lehman Brothers crisis in September 2008. Two observations are striking. First, the reported capital ratios of the two sets of banks are largely indistinguishable. If anything, the crisis banks looked slightly stronger pre-crisis on regulatory solvency measures.

Given the large dividends and bonuses paid out by banks historically, distributing in CoCos could increase banks’ capital base materially. Consider UK banks. Imagine that 50% of bonuses had been paid in CoCos rather than cash from 2000 to 2006. By 2007 at the start of the crisis, UK banks’ capital ratios would have been around 1 percentage point higher (Chart 11). Had 50% of dividends in addition been CoCoed, and assuming CoCos counted as Tier 1 capital, capital ratios would have been 3 percentage points higher. That is roughly £ billion, or around the amount of external capital UK banks raised during the crisis. Second, CoCo payouts potentially better align risk-taking incentives among staff and shareholders than cash or even equity payouts. The crisis demonstrated all too visibly some of the downsides of equity-based remuneration. One is the temptation to gamble for resurrection when poised on the brink, given the gambler’s option embedded in equity. A second is the perverse incentive not to seek external equity because of the dilutive impact it might have on managerial wealth. Both of these adverse side-effects were evident at Bear Stearns and Lehman Brothers. Remunerating management in CoCos removes this temptation, in much the same way as would credibly loss-absorbing sub-ordinated debt.21 In peacetime, management is no longer offered the upside of equity, only the downside. The asymmetry of payoffs embedded in peacetime bonus packages – “heads I win, tails society loses” – is neutralised somewhat by paying in CoCos.
At this point, I would like to briefly touch another obstacle that hinders access to capital: Fiscal dominance. Due to high level of public sector borrowing requirements in many emerging market countries, fiscal policy ultimately governs price determination in financial markets. Fiscal dominance reduces the amount of loanable funds available to private sector and disrupts effective credit allocation in the economy. Turkey can be seen as a case study. Years of high real interest rates and budget deficits in the 1990s forced the Turkish banking sector to credit rationing. Banks were not able to perform their intermediary function effectively. Instead, they mostly financed public sector deficits. Fiscal dominance has gradually eased following the reform program enacted after the 2001 crisis. The declining public debt burden and the diminishing fiscal dominance in Turkey put an end to the crowding-out of the real sector. That boosted the supply of loanable funds. Banks have returned to their traditional role of financial intermediation instead of financing government expenditures. Share of public securities in Turkish banking sector assets declined by onethird to 28% in the last 5 years; while share of credits to private sector more than doubled and reached to 49% during the same period. The credits extended to the small and medium enterprises by Turkish banking sector have also increased significantly to USD 95 billion as of 2007. This corresponded to almost 20% of the GDP. As a further note, 32% of these credits were in the category of credits extended to micro enterprises.

The ratio of private sector credit used by households and firms to GDP has also rapidly increased, though it is still low in international standards. Of course, raising the share of private credits in the financial system does not necessarily mean that each and every segment of the population would gain access to financial services. The low-income segment of the society, in particular, may not have access to capital and that would have two principal adverse effects. First, they may not be able to raise the expected value of their income and therefore of consumption and future investment and asset accumulation. Second, due to lack of access to credit, the poor would face high variation in their income and consumption, and the downward risk on income threatens their ability to satisfy basic consumption needs. Increasing the funds available for entrepreneurs that have micro-scale business plans but do not have access to credit, have merits such as contributing to the production level and unemployment ratio while also strengthening the social structure of a country. Of course, it should be noted here that while the benefits from financing these activities are more or less common, selection of main business areas where these funds should be used obviously depends on country specific circumstances and needs. Dear Guests, In the last part of my speech, I would like to share with you my thoughts on the external sources of “access to finance”.