samchain/econo-pairs-v1 huggingface dataset:
The latter, on the other hand, focuses on strengthening the institutional framework for monetary policy and financial supervision as well as fostering financial sector development that improves the ability of the system to absorb shocks by itself, in a way that minimizes the impact on the real economy without the need for policy intervention. Given the significant gap that emerging market economies have in this respect relative to developed economies, it becomes more crucial that the pursuit of monetary and financial stability in emerging markets be accompanied by a vigilant focus on making progress on structural reforms. In what follows, I will discuss some specific challenges to monetary and financial stability in emerging markets from both the short and the longer run perspectives. Let’s begin first with the short run stabilization challenge. As we have seen in past years, the search for yield among international investors has resulted in a resurgence of capital inflow into emerging markets, leading to a pick-up in asset price volatility. 3 Given the high degree of dependence on foreign trade, and the inadequate experience with modern financial risk-management tools particularly at the firm level, these asset price fluctuations have become an important policy issue in emerging markets. Typically, when large capital flows into financially shallow markets, it puts pressure on emerging market central banks to lower interest rates or to increase sterilized intervention in  3  This global liquidity glut may have stemmed from various factors, both structural and cyclical.

For instance, the simple approach of Basel II ties the amount of required capital to ratings by External Credit Assessment Institutions (ECAIs) because they have the strength in both the wealth of data and expertise in credit risk assessment. Unfortunately, only a few large companies in emerging countries are rated. Therefore, the challenge for regulators lies in the process of ECAI recognitions and risk-weight mapping processes as they must ensure the stability of the banking system while at the same time, foster the development of local ECAIs and the bond market. These efforts will undoubtedly take considerable time and patience, but it is a road that has to be taken. Financial development and the strengthening of policy institutions and framework, therefore, are the two most important structural features of emerging markets that need to be promoted, developed, and strengthened in the pursuance of monetary and financial stability. In my view, this is the most important reform issue that need to be effectively carried out. For the remaining part of my lecture, let me now turn to my last topic, that is the challenge of implementing structural reforms. While the two facets of monetary and financial stability discussed above are present in all economies, the interaction between them and the tensions that arise in terms of where the policy emphasis is placed are arguably more varied and more complex with greater welfare implications in the emerging market context, not least because the gains to be had from structural reforms are much higher in these countries.
However, we do have problems with high housing prices that lead to high household indebtedness and risks associated with this. But it is difficult to use monetary policy to influence household indebtedness without this having very negative consequences in the form of poorer target attainment for inflation and poorer stability in the real economy in the coming years. Poorer target attainment over a long period of time also entails costs and risks in itself which must be taken into account. The framework in which monetary policy is conducted in Sweden and in many other countries is based on the mandate of maintaining price stability, often specified as a target for inflation, as we have in Sweden. And it is this mandate that is the reason why central banks in general have been allocated a greater degree of independence than other public  BIS central bankers’ speeches  1  authorities. Over the past two decades, the clear objectives for monetary policy and the independent work by central banks to attain them, have proved effective in anchoring inflation expectations and creating stability in the economy. However, the framework is based on the central bank actually delivering. If inflation is allowed to deviate from an established target over a long period of time it can affect the general public’s understanding of the policy conducted and their confidence in the inflation target. The more the central bank stretches its task of delivering the set objective, the more difficult it will be to understand and evaluate the policy conducted.

It allowed supervisors to ensure that the collective results of the individual banks were consistent with a top-down assessment of revenue and credit losses generated from an adverse stress scenario for the macroeconomy. We are incorporating these types of broad, horizontal reviews more deeply into our supervision process. So, what else are we doing going forward? There are a large number of initiatives under way to make our financial system more robust to shocks and more resilient to the inevitable swings in activity and sentiment. These initiatives include several aimed at strengthening bank capital requirements. When these initiatives are fully implemented, they should prevent some of the practices we witnessed during the crisis – for example, a banking organization paying out dividends to demonstrate that it is strong when, in fact, by depleting capital, such an action is making it weaker. One important initiative in this regard is to better capture all the sources of risk in the capital assessment process. This, for example, includes the trading accounts of banks. Some institutions had clearly not set aside adequate levels of capital given the risks that were embedded in their trading positions. We are also exploring the potential for contingent capital. The goal is to bolster the amount of common equity available to absorb losses in adverse economic environments. This might be done by allowing the issuance of debt instruments that would automatically convert into common equity in stress environments, under certain pre-specified conditions.
One reason behind the problems in the labour market is that we have not really been able to keep up with the structural change process that follows in the wake of globalisation or, expressed in another way, that we have not been quick enough in adapting to the increased pressure for change when, for instance, the manufacturing industry is challenged by low-cost countries in eastern Europe and Asia. To summarise: our look back in time leads to the conclusion that the change in monetary policy regime was a success, despite the fact that the period since the mid-1990s was a fairly turbulent time for conducting monetary policy. There have been, for instance, periods of considerable financial  4/7  unease and extraordinary events of various types. A few of the many examples are: the Asian crisis, the Russian crisis, the IT bubble and the acts of terrorism on 11 September 2001. In addition, food prices and various energy prices, in particular oil prices, have periodically varied substantially for varying reasons, such as war, natural disasters and dry summers. I would now like to give you a brief summary of the current economic situation and then conclude with a few thoughts on future challenges for monetary policy. The current economic situation As you have probably noted, we Executive Board members chose to hold the repo rate unchanged at our most recent monetary policy meeting in late October. This decision was also in line with market expectations. The outlook for the Swedish economy is bright.

One question that has been raised is whether the Riksbank should disregard imported inflation and instead focus on domestically-generated inflation. This argument is based on the assumption that as the Riksbank is unable to affect imported inflation, it should aim monetary policy towards the areas that can be influenced. Let me give a simple example of why I do not consider this viewpoint to be valid. Of course, the price in a foreign currency that a foreign producer receives for its goods is entirely beyond the Riksbank’s control. However, when the product is imported to Sweden, Swedish importers, for instance, wholesalers, have to exchange foreign currency in order to pay for the goods. In other words, monetary policy plays some role in the price in Swedish krona that the importer has to pay for the goods through its effects on the exchange rate. When the importer then wishes to sell the goods in the Swedish market, it must have a network of retailers who will sell the product. This means that Swedish costs, such as wages and rent paid for premises, also play a part in the price the retailer charges for the goods. Naturally, the demand for the product is also an important factor. In other words, the traditional supply and demand relationship in the Swedish market is important to the endprice that Swedish consumers have to pay for the imported goods.
Today, I would like to speak more on the roles of the Government and the financial sector. Role of the Government and the financial sector First, the Government. The roles of Government to lead, convene, set standards, invest, educate and champion – are all quite obvious. The Government plays a leading role in setting the stage for the nation’s climate agenda. This includes setting the national targets for green projects according to identified priority sectors, as well as the financing needs and technical information. It is important for this information to be available publicly to create the requisite awareness for mobilisation of green finance. Moving forward, the push for disclosure through the establishment of a national framework for carbon emissions reporting is another critical enabler to increase data availability and transparency for a systematic transition to a low-carbon economy. This will contribute towards the development of more data driven climate policies and targeted carbon emissions reduction schemes. Second, the role of finance. We have spoken about the critical need to bring in private capital for green investment. The Bank, as a financial regulator, recognises this key role of finance and has introduced various measures towards this end. Given physical, transition and liability risks and their implication to the economy and financial system, there is a bona fide recognition that climate risk is well within our mandate of safeguarding monetary and financial stability. With that, the Bank has taken a phased and proactive approach in strengthening financial system resilience to climate risk and in driving sustainable finance.

Fraziali Ismail: Climate action in the Malaysian financial sector Keynote address by Mr Fraziali Ismail, Assistant Governor of the Central Bank of Malaysia (Bank Negara Malaysia), at the International Greentech & Eco Products Exhibition & Conference Malaysia, virtual, 20 October 2020. * * * To date, there is a genuine buzz in global climate action. The Paris Agreement, with 197 signatories, provides a pathway for nations to step up their climate mitigation and adaptation efforts. The UK for example, is committed to a ground-breaking target of net zero carbon emissions by 2050. There is zero budget natural farming in Andhra Pradesh in India, the great pivot to natural farming in China, the wide spread adoption of electric buses in public transport urban fleets all over the world, including Malaysia. Seventy two central banks and supervisors around the world, including Malaysia have come together via the Central Banks and Supervisors Network for Greening the Financial System (NGFS) to pursue climate action. This coalition of the willing has initiated several initiatives such as identification of best practices on supervisory and macrofinancial dimensions of climate-related risks. The issue is clearly now being mainstreamed in discussions at international and state levels, among regulatory agencies, at board levels across industries, in schools, and the list goes on. But while the hills are covered, there are mountains ahead. Green financing is still lacking; green investments remain under funded.
Asset purchases are part of our current toolbox, President Draghi has been clear about that. But that doesn’t mean that they are the preferred option in current conditions. And it should be said that if forward guidance on interest rates is credible and steers expectations in the desired direction, further purchases may not be needed at all to ensure that financing conditions are appropriate. Observers increasingly expect the ECB to launch new longer-term refinancing operations for banks – TLTROs – and they make the case that this measure, especially in conjunction with an increase in the deposit facility rate, could improve the situation for banks and support lending. What would you say to that, especially in the light of your concerns about the procyclical behaviour of banks? Our TLTROs have been a very useful tool to deal with impairments in the transmission of monetary policy and are part of our toolbox. As the procyclical behaviour of banks is an important reason why economic cycles sometimes end badly, we do need to monitor the transmission of monetary policy through the banking system carefully. In March we will make an assessment of the current and expected state of bank transmission. You will be leaving the ECB at the end of May, having experienced and helped to shape a period of great change at the ECB.

The Central Bank of the Republic of Turkey will take part in the FSB Steering Committee during the period 2013–2015 when Turkey will be chairing the FSB Regional Consultative Group for the Middle East and North Africa (MENA). As part of the governance reform of the International Monetary Fund (IMF), a New Constituency was established with the countries Turkey, Austria, Hungary, the Czech Republic, the Slovak Republic, Slovenia, Belarus and Kosovo. According to this agreement, Turkey will assume the Executive Director position for a two-year term between 2014–2016 and 2018–2020. At the G-20 meeting held in Los Cabos a number of emerging market economies including Turkey declared their intention to contribute to global financial stability by increasing the resources of the IMF. The Central Bank of the Republic of Turkey intends to contribute to IMF resources up to USD 5 billion, which will be counted as part of Turkey’s international reserves. The duties and responsibilities of central banks with regard to payment systems have to do with the development of the financial sector, which is the third main field. Efficient payment systems contribute to the deepening of financial markets by decreasing operation costs and settlement risks. Therefore, the active role assumed by central banks in the design, operation and oversight of payment systems becomes more crucial given the size of the global financial system. Hence, in line with the global trends in this field, the Central Bank of the Republic of Turkey cooperates with the Turkish financial system for the advancement of payment systems.
responsible wage settlements that help to restore workers’ purchasing power without setting off a wage-price spiral. The ongoing expansion in labour supply should provide some relief to labour market tightness. The relaxation of our border restrictions and resumption of foreign worker inflows should help to moderate labour cost pressures. To prevent a further build-up in labour cost pressures, it is important that the inflow of non-resident workers continues unimpeded. The risk of a wage-price spiral is contained for now but bears watching. A concern in several advanced economies with some degree of wage indexation is that wages and prices start chasing each other and inflation gets worse and more entrenched. If real wages increase faster than real productivity, the increase in unit labour costs will lead to firms raising prices to protect their margins, setting off a second round of wage increases and a wage-price spiral. Automatic wage indexation is rare in Singapore and the pass-through from prices to wages has been historically weak. Nonetheless, the risk of a wage-price spiral cannot be discounted, especially in the context of a tight labour market and high inflation. To contain the risk of a wage-price spiral, it is important that real wage growth not exceed real productivity growth persistently and firms do not pass on in prices the full impact of wage cost increases. MANAGING DEBT AMID RISING INTEREST RATES  One of the key challenges posed by the combination of rising prices and rising interest rates is the burden imposed on debt servicing.

MAS has conducted a study on the future of financial services to 2030 against the backdrop of some of these changes. MAS has refreshed the Financial Services Industry Transformation Map (ITM) for the period 2021-25, based on this study and extensive consultations with the industry. This ITM 2.0 sets out a blueprint of strategies and initiatives to further strengthen Singapore’s position as a leading financial centre in Asia. The ITM will be launched and presented in a couple of months. POSITIONING THE FINANCIAL SECTOR FOR SUSTAINABILITY  MAS will release next week its annual sustainability report detailing the progress made by the Singapore financial sector in the journey towards greater sustainability. The report will provide a detailed account of the various initiatives to strengthen the financial sector’s resilience to climate risk; develop a vibrant sustainable finance ecosystem; build a climate-resilient Official Foreign Reserves portfolio, including targets to reduce the weighted average carbon intensity of the equities portfolio; and reduce MAS’ own carbon footprint, including targets to reduce greenhouse gas emissions by 2030. MAS’ FINANCIAL RESULTS Let me now provide an update on MAS’ financial results. MAS recorded an overall loss of $ billion for FY 2021/22. This has reflected lower investment gains, a large negative foreign exchange translation effect, and higher interest expenses. Investment gains on the Official Foreign Reserves were $ billion. Concerns over monetary policy tightening by central banks and geopolitical tensions weighed heavily on global financial markets last year.
BIS Review 152/2009  also be looked at in Islamic finance, which has also to deal with additional issues of harmonised regulation. The G20 has agreed to establish a new global Financial Stability Board, with a wider group of developed and emerging countries as part of the new international financial architecture. It will be responsible for coordinating banking regulation, developing regulatory and supervisory standards, preparing early warning reports and exchanging information with supervisors. It is important that this forum gives due recognition to Islamic finance given its increasing importance in the international financial system and its potential role in contributing to global financial stability. In the Islamic financial industry, the IFSB is at the forefront of international efforts to increase regulatory cooperation, and encourage common rules and enhanced monitoring of international financial risks. The IFSB and the IDB has an important role in building cross-border consensus and collaboration on the strategic direction for the Islamic financial services industry for better alignment to the objectives of financial stability. As Islamic finance continues to become an integral part of the global financial system, there is scope for the current framework of cooperation to be strengthened and broadened to address the new challenges that have emerged. Islamic finance has been inclusive in its development, not only at the national level but also across jurisdictions. At the national level the Islamic financial system provides the full spectrum of financial services from the large multinational corporations to micro-enterprises and to households.

Investments are spread across most markets, countries and currencies to achieve broad exposure to global growth and value creation, and ensure good risk diversification. 1/4  BIS central bankers' speeches  The fund was established in 1990, during Norway’s deepest recession in the postwar period. At the time, it was not obvious that the fund would gain much in value. The government ran budget deficits in the following years. The first capital transfer to the fund was made in 1996, reflecting a net fiscal surplus. From then on, the value of the fund started to increase rapidly. Higher oil revenues towards 2000 led to calls for higher spending. Political pressure to spend more evolved. A fiscal rule was established in response to this development. The aim was to phase petroleum revenues into the economy gradually. The fiscal rule guides the annual transfers from the fund to the fiscal budget. It limits average petroleum revenue spending over the cycle to the expected real return on the fund – currently estimated at 3 percent – over a business cycle. The rule established a long term petroleum revenue spending strategy. The government may deviate from the 3 percent rule depending on the circumstances. If the economy is facing a severe downturn, there should be room for a more expansionary policy. During the great financial crisis, the Norwegian government was able to allow public spending to increase in order to counteract the downturn.
The enormous dependence on wholesale financing given the low share of deposits as a proportion of total funding, lack of transparency, cross-ownership ties and connected lending, and other points were also mentioned. Up to that time, the banks had actively sought to raise funds with large international bond issues and were strained to bring in funds for all their activities, which now become more difficult. Both the banks and the authorities reacted to the criticism by cleaning up their act, but also by taking the offensive with a propaganda campaign. 6 That worked. In retrospect, one could even say this was unfortunate, as it would have been much easier to reduce the size and the riskiness of the system in the conditions prevailing in 2006 than in 2008. Furthermore, one of the solutions was to start collecting deposits abroad, which was to prove devastating for the Icelandic nation once the banks failed. The banks also entered new markets, including the US, where issuers with good credit ratings found it easy to sell bonds. As a result, risk appetite returned and Moody’s took the banks to triple-A for a while in 2007. Moreover, the Icelandic banks were perhaps better prepared than otherwise for the dramatic reversal of market sentiment that took place in mid2007. Interestingly, the high credit default swaps compared to their ratings made the banks’ bonds good input for structured products.

Wishing for an open and fruitful discussion, I look forward, and I think I am not the only one, to listening attentively and hope that the following issues will be addressed: •  Advancements that banks will adopt for the payments in the next 5–10 years;  •  Barriers, problems, opportunities and risks that prevent the progress;  •  Views of traditional banks about the payments via mobile phones supplied by mobile phone companies and assessment of the preparation degree of banks for cooperation or competitiveness;  •  New trends for the increase of payments security. Which is the place of biometric elements? Congratulations and Thank you for the work you do. You are part of the future. We all are looking forward to the next meeting of a continuous discussion on the forthcoming innovations. BIS central bankers’ speeches  3