samchain/econo-pairs-v1 huggingface dataset:
I also think there’s an additional justification for separation in many of these cases, and for monetary and macro-prudential policies in particular. It’s essentially a matter of accountability11. I think there’s little doubt that, over any limited period of time, monetary stability is more easily measured than financial stability. The MPC’s primary target is inflation, as measured by the rate of change of the Consumer Prices Index. We get to see the CPI every month, it’s never revised, and it’s therefore reasonably clear over time whether the target has been reached. Judging the MPC’s performance is in reality a little more complex than this. Policy takes time to work, so it’s inevitable that intervening shocks will prevent inflation from being exactly at the 2% target all the time, even if that were the sole objective of policy. In addition, the MPC’s remit involves a secondary objective, subject to the primary inflation target, to stabilise the real economy. If they occur, the MPC is asked to identify tradeoffs between the two. However, when that has happened – for example, following the sharp fall in sterling that accompanied the result of the UK’s EU referendum – I don’t think it’s been insuperably difficult to explain the policy approach. People can then monitor how the economy is performing, relative to our earlier projections. We on the MPC, for our part, can use surveys and market prices to gauge very regularly, in “real time”, what’s happening to inflation expectations.

The risk of a rare event is not an easy thing to judge and, having gone so long without a serious problem in the financial system, our attention was distracted by the more easily monitored task of stabilising the economic cycle. Maybe people were too beguiled by the “Great Stability”, if only because data confirming it arrived with such regularity, to notice what was going on within the financial system. 13  All speeches are available online at www.bankofengland.co.uk/speeches  13  One obvious lesson has been that the stability of inflation is no guarantee of financial stability – hence the (re-)creation of macro-prudential policymaking. I think another lesson is that it’s better to grant these powers to a single, accountable body, “ring-fenced” from the other functions of the central bank. I don’t want to overstate the case and I’m certainly not suggesting any sort of “Chinese wall” between the two functions. There are clear advantages in having them housed in the same institution. Many economic issues are relevant for both and, in the Bank of England, the MPC and FPC regularly receive joint briefings on such matters. Even if the two hands are separate, it is important that the one should know what the other is doing, and in that respect it helps that some people sit on both committees.
Besides the Institute of Banking and Finance (“IBF”), certification providers like the International Compliance Training Academy and the Association of Certified Anti-Money Laundering Specialists (“ACAMS”) offer a suite of AML/CFT courses and training programmes. Such courses, where they are accredited by the IBF, are available for funding from the MAS’ Financial Sector Development Fund. So I would strongly encourage industry professionals to tap on the many resources and training avenues in order to increase knowledge and awareness of risks. 4  BIS central bankers’ speeches  Conclusion 27. Returning to the history of the origins of trusts. Such arrangements could well have been phased out at that time if the law did not recognise them. When the Crusaders returned, they often faced refusal for the return of their estate. Such disputes had to be brought before the Lord Chancellor, who found in favour of the returning Crusaders, and recognised such claims. 28. Fortunately, trusts today are built on stronger foundations than the changeable favours of Lord Chancellors. The trust industry is based on and built on reliability and professionalism. MAS partners with the industry, and will continue to do so, to further strengthen its reliability and resilience, by building a robust regime that is well-regulated, stable and trusted. This will continue to instil confidence in clients, and in our financial system. And this will keep us on the path of sustainable growth. 29. On this note, I wish all of you an engaging session and fruitful conference. Thank you. BIS central bankers’ speeches  5

For its part, the ECB has established a practise of making its policy transparent and in setting new benchmarks in the area of central banking communication. That being said, on each occasion, a central bank has to carefully assess the relevance, clarity and timeliness of the information. Transparency is a key ingredient of an effective monetary policy. Communication is an ongoing challenge and effective communication will always be characterised by a degree of flexibility and adaptability in order to respond swiftly to a rapidly changing economic environment. Thank you very much for your attention. BIS Review 160/2008  3
I will argue that the new set of liquidity requirements is expected to have an impact on how monetary policy is implemented in normal times. It is important to understand how this new requirement may impact the current operational framework, especially for the Eurosystem, and the functioning of money markets. The second issue regards lending of last resort. It is commonly accepted that central banks have to act as lenders of last resort (LOLR) towards banks during a crisis period, when liquidity can dry up. But it is also well known that such intervention can generate moral hazard in the banking system, lead central banks to take unwarranted credit risk and, in some extreme cases, interfere with their primary mandate – price stability. Are the new liquidity ratios, in combination with the revised capital ratios, sufficient to prevent the central bank from becoming the lender of first resort? Based on recent academic research, to which researchers of this university have significantly contributed, I will argue that liquidity regulation can ensure that central bank intervention remains exceptional, and be designed in a way that is compatible with sound incentives in the banking system. Rationale for liquidity regulation I would like to begin by briefly highlighting the micro- and macro-prudential benefits that will derive from a new set of liquidity standards. In particular, they should lead to an increase in individual credit institutions’ liquidity buffers, and reduce the risks posed by maturity transformation. The recent financial crisis provided a dramatic illustration of how liquidity risk materialises.

David Rule: PRA Solvency II Conference – countdown to implementation Speech by Mr David Rule, Executive Director for Prudential Policy of the Bank of England, at the PRA Solvency II Conference, London, 17 October 2014. *  *  *  I would also like to extend my welcome and thanks to you for taking the time to attend this conference today. I want to take this opportunity to formally introduce myself. I was appointed Executive Director of Prudential Policy at the Bank of England in June having held a variety of different roles across the Bank and FSA, most recently as a supervisor of large UK banks. This conference is entitled “countdown to implementation”. We have reached a level of stability in the policy making process for Solvency II, and the purpose of today is to share our thinking and provide clarity where possible on those last remaining issues ahead of implementation. You’ll be hearing from experts across the technical areas and Victoria Saporta, Director of Financial Policy will give you an overview of the policy areas where work is still being finalised along with the timeline for completion. I would like to take a step back from this and reflect more widely on what Solvency II is about for the Bank.
On the heels of this a different dialogue began to emerge between the Bank and those institutions it supervised, with the Bank pointing out deficiencies to the firm, the firm coming up with a remedial action plan and subsequent close monitoring by 24  the Bank to ensure delivery . By this point, the Bank was supervising almost 600 institutions: 291 recognised banks and an equal number of licensed deposit-taking institutions – all serviced by an 80-strong division within the Bank. This resulted in a two-tier system in which recognised banks enjoyed a superior status and a lighter supervisory touch. Whilst this did not rub especially well with the licensed deposit-takers, there was scope for them to progress to the lofty heights of “bank” status, and at least the new set-up had the advantage that all deposit-taking institutions were now subject to Bank oversight. It is fair to say that the new focus on supervision was not solely driven by domestic developments. Indeed, the importance of supervision was enhanced by the increasingly international flavour of the City, following the Big Bang and a wave of overseas investment (particularly from the US). The Basel Committee was established in 1975 and the US and UK were the first to cooperate on the ‘US/UK Accord’, which laid the 25  foundation for a common assessment of firm capital in both countries .

These should support at least four key objectives, to enhance access to insurance; increase efficiencies in claims processing; promote fair competition and provide additional choice for consumers as well as provide a strong mechanism to prevent frauds and 3/5  BIS central bankers' speeches  cheats. This is important not only to deliver a superior customer experience, but also to control leakages, manage costs and ensure sustainability over a long term. It will also position the industry to compete and position itself more effectively as we move forward as the disruptive forces of competition, including from non-traditional players, continue to gain traction. It will also prevent leakages arising from abuses, misrepresentation and fraudulent claims. In the immediate term, the industry needs to set its sights on creating a convenient and seamless first-loss-notification process that leverages on shared infrastructure. Such a process should eliminate intermediate processes that are currently adding costs and enabling abuse and fraud to take place. Certain infrastructure should not be considered as a competitive edge. We have raised this issue many times. Sharing infrastructure and information among industry players is very important, but efforts towards this have been quite disappointing. The establishment of the ISM Fraud Intelligence System marks a significant first step in this direction. Deploying the latest data analytics and network analyses, the Fraud Intelligence System is a milestone in the industry’s efforts to combat fraud, especially in the motor business.
It is common knowledge that a mortgage loan with a low down payment is risky, which means that people might lose their homes. The banking system would in turn have to deal with more underperforming loans, ultimately leading to a rise in interest rates for all. That is why it is in our interest to stem growth in this lending segment, in line with global practices. Therefore, we are discouraging banks from issuing such loans. Also, a housing savings project is in the works and will hopefully gain support. This is when savings for housing become a down payment. They would be kept in a special account, with the terms of a future mortgage loan to be fixed when opening this account. We have had a discussion on this subject, so hopefully this arrangement will become standard practice. Focus should also be turning to the issue of long-term housing rent, an item that should possibly be higher up on our agenda. This is in fact an alternative to mortgage loans, which enables those who cannot afford to take out a mortgage loan, but do need better housing conditions. Now let me say a few words about financial resources for the real sector. Corporates have indeed been more active borrowers this year and credit portfolios have been on the rise. Having said this, we realise that this growth has occurred on the back of the need to plug holes — to fight the consequences of the pandemic and lost revenue.

Now, the last point I would like to comment on in a little more detail is an issue the Speaker 2/4  BIS central bankers' speeches  has already raised, and one we are very concerned about. This is the issue of stock market development. This market is undergoing drastic and rapid changes. Retail investment is becoming a mass phenomenon, with the numbers of retail investors growing very rapidly. In two years alone, the number of individuals who opened brokerage accounts rose more than fourfold to 8.5 million people (equalling the number of accounts). This is a positive development, which we all acknowledge, and the real sector is poised to benefit from it. Still, our concern is about people. Do they really understand the risks of the stock market? Is there enough transparency in the operations of financial institutions and their offerings? It was only deposits that consumers dealt with until recently. The deposit is a fairly simple and reliable product with up to 1.4m insurance coverage. At this juncture, however, deposit interest rates are in decline, as are other interest rates in the economy, including loan rates, which makes people try their hand at the stock market. With many of them being inexperienced, we can ill afford a stock market that has deceived their expectations. We have passed a non-qualified investor protection law, which we previously had a thorough discussion about at the Federation Council.
In sum, initiatives such as the register of certain crypto-asset service providers are a step forward. But they should not be interpreted as authorisation comparable to that granted to banks, nor do they mean that the Banco de España performs any supervision of their activities. These examples are a sample of the initiatives which are under way. In any event, beyond the difficulties inherent to any work involving international coordination, the task at hand is, for different reasons, particularly complex. First, the buoyancy of this market makes it difficult to provide a regulatory response. Second, the decentralised nature of the initiatives sometimes makes it difficult to identify a contact to whom the measures may be addressed to or who can be designated as a counterparty. This problem is exacerbated by the absence of a clear jurisdictional framework. Third, given the complexity of these assets and their associated risks, it is difficult to identify and coordinate the different relevant (not only financial) regulators and supervisors, even within each country. Finally, there are important information shortcomings, not only in quantitative terms, but also in terms of reliability and consistency. 34  See  President’s  Working  Group  on  Financial  Markets  (2021),  “Report  on  Stablecoins”,  available  at:  https://home.treasury.gov/system/files/136/StableCoinReport_Nov1_508.pdf. 35  https://www.congress.gov/bill/117th-congress/senate-bill/3970/text?r=7&s=1. 36  CNMV Circular 1/2022 of 10 January 2022.

While acknowledging the role of the microfinance as an important tool for ensuring development opportunities to small businesses that otherwise may never access financial resources, one should keep in mind that microfinance is sound if it is provided by sound institutions. There is not much benefit if such institutions fail because of lenience of their internal rules and procedures, and/or because the supervisory authority has closed an eye on them because of their social role. This will also make other institutions become hesitant in engaging in microfinance. The relationship between the microfinance institutions and the banking sector regarding their interaction in the economy financing, is a delicate issue. Their coexistence is certainly “peaceful” at the early development stage of at least one of these groups of institutions, but as the economy grows and competition increases, they tend to move toward each-other. At that stage, it is important to pay special attention for ensuring clear “rules of the game” for their activity and to provide adequate policies that allow for structural reforms of these institutions and of their market influence. In conclusion, microfinance is a very important mean to achieve a balanced economic growth, by providing financial support to small and medium businesses which are vital for the medium and long term economic growth. Compared to some other countries in the region, microfinance in Albania have shown higher growth rates with good quality. However, there is ample room for enhancing it further.
For these first six channels, one can argue that it is the expected stock of security holdings to be purchased by a central bank that chiefly determines the amount of accommodation—that is, the impact the central bank’s purchases are expected to have on the size and duration of assets available to the public. Alternatively, for the market function channel, the “flow” effects are most important, in that the transactions associated with a central bank’s asset purchases can also affect an asset price by altering market liquidity and functioning, although such effects may dissipate quickly. This channel could achieve monetary accommodation through the purchase of any security type in which market functioning has become stressed. One example is the European Central Bank’s Securities Markets Programme, which was designed “to address the malfunctioning of securities markets".10 The purchase of non-sovereign assets can be helpful by providing additional channels for 2 / 10  BIS central bankers' speeches  monetary accommodation to be realized. Further, having additional markets to operate in can help central banks overcome functional limitations that could exist if they were restricted to LSAPs in only one market. For example, the stock of assets held by the private sector in a given market might be too small to meet the monetary policy goal. Or, the purchase of a large amount of the existing stock of a given market might result in impaired market functioning, which, in the extreme, could impair the effectiveness of the LSAP and other monetary policy tools.

If this is the case, then indeed the rules are just ‘burdens’, rather than instruments to assist banks’ operations and safeguard confidence in the financial system. Compliance therefore, is merely a means to an end. It is a process that enables us to achieve certain outcomes. Having the right controls in place merely gets us to the starting line. The real race is in creating and sustaining an environment where everyone in the organisation is involved 1/4  BIS central bankers' speeches  in preventing the systematic abuse of the financial system. This process is not a sprint, but a marathon of endurance and perseverance. To drive the point, someone once asked, “How many compliance officers does it take to change a lightbulb?” The answer is three, one to change it, one to check it and one to check it again, and file a report. This illustrates how compliance can often be seen as an end to itself, forgetting that it should be focusing on the end game, the quality of light emitted. From the regulator’s perspective, rules have progressively evolved from detailed prescriptions in the past, to standards and best practices today. This is due to the rapid pace of innovation, increasing complexity of financial services and the realisation, that a ‘one-size-fits-all’, micromanaging and prescription-based approach is not an optimal approach in regulation. Thus, institutions have more latitude in implementing these standards at the micro level.
Three reforms top my list. The first concerns regulation of banks. Next year, the responsibility for regulating banks will return to the Bank of England. Next time we find ourselves with steady growth and low inflation, but with risks building in the financial sector, we shall be able to do something about it. The Bank’s new Financial Policy Committee will have the power to step in and prevent a hangover by taking away the punchbowl just as the party in the financial system is getting going. We believe that successful regulation means understanding and guarding against the big risks, not compliance with ever more detailed rules. That means focussing on the wood not the trees, looking not just at individual banks but also at how their fortunes are tied together with other banks and with the rest of the economy. For example, the biggest risk to banks at present stems from the troubles in the euro area. These are far from over. That’s why we’ve been pushing banks to pay out less to their shareholders and employees and instead retain profits as a cushion against possible losses. In future, to protect the rest of the economy from failures in the banking system, we need to ensure that more of banks’ shareholders’ own money is on the line, and banks rely correspondingly less on debt. If banks and their shareholders have more to lose, they will be more careful in choosing to whom they lend.

Fundamental to building and maintaining this trust is the need for every staff of the Bank to perform at our utmost and positively shape the Bank’s reputation in the eyes of the public. In this, Governor Ismail Ali led by example. There are two principles – trust and integrity – which were amongst the key principles that guided Governor Ismail Ali, and with which he formed the pillars of Bank Negara Malaysia. Governor Ismail Ali was strict, sharp, and straightforward. Meticulous in his duties, he was respected for his sound knowledge of central banking and rule of law. These virtues led him to set the highest standards of professionalism and excellence for himself, his staff and the people he dealt with. By his own admission, this made him a difficult leader to work for – but to create the able talent to build this fledgling nation, he demanded nothing less. Bank Negara Malaysia is proud to continue this tradition of fostering talent such as through the establishment of the Tun Ismail Ali Chair on Monetary and Financial Economics at the University of Malaya. This year, in conjunction with our celebration today, the Bank has awarded the Tun Ismail Ali scholarship to Miss Thulaja Thessa Vasudhevan who is pursuing her master’s degree in Nature, Society and Environmental Governance at Oxford University. Beneath Governor Ismail Ali’s reserved appearance, lies a warm soul.