samchain/econo-pairs-v1 huggingface dataset:
Embedded in this arrangement are also good governance and ethics, together with the upholding of the universal values of justice and fairness provide implicit checks and balances in the system. These very elements of Islamic finance, which are essential features as required by the principles of Shariah, provide an in-built mechanism that enhances the prospects for its soundness and stability. These explicit elements address several of the issues that have surfaced in the conventional financial system during the current crisis, including in particular the breakdown in governance that led to indiscriminate lending, excessive risk taking and irresponsible financial innovations that were motivated by greed and short-term gains. In Islamic finance, the process of innovation and formulation of Islamic financial products and services must also be done carefully and in accordance with Shariah. As it is recognised that unfettered financial innovation can become a major source of instability in the financial system, financial innovation in Islamic finance must have the primary objective of realising benefits to its users, thus incorporating ethical value propositions. The explicit risk sharing element between the financier and customer further ensures that these mutual benefits are well-supported through requirements for necessary information to be provided to the market on the risks borne by Islamic financial institutions. There is also the governance structure in  2  BIS Review 129/2010  place, for example, the need for the establishment of Shariah committees at Islamic financial institutions and Shariah audit.

With a humble beginning of establishing the first Islamic bank in 1983, Islamic finance in Malaysia has evolved to become a comprehensive domestic Islamic financial system, comprising the Islamic banking institutions, the takaful industry, the Islamic money and capital markets. Malaysia’s Islamic banking sector grew 20% annually since 2001 in terms of assets and as at the end of June 2010, the share of Islamic banking assets in the total banking sector has expanded to reach 20.9 percent as compared to 6.9 percent a decade ago. Malaysia also remains the world’s largest sukuk market, accounting for more than 60 percent of global sukuk issuances. Islamic finance prospers in Malaysia because it is competitive, innovative and in sync with what the market want. Recent developments of Islamic finance that strengthen its resilience Significant milestones achieved in the recent decade in the area of international financial infrastructure provides further support for sustainable and orderly development and continued growth of Islamic finance. In 2002, the Islamic financial Services Board or IFSB was established with the role as an international prudential standard setting body for Islamic finance. The IFSB has been instrumental in developing and issuing global prudential standards and guiding principles for the industry. Further efforts to ensure sustainability of Islamic finance in this new and more challenging environment include the formation of a Task Force on Islamic Finance and Global Financial Stability by the Islamic Development Bank and IFSB.
In particular, we can draw on a framework developed a century after the introduction of limited liability – the contingent claims model of Nobel Laureate Robert Merton (1974). This tells us that the equity of a limited liability company can be valued as a call option on its assets, with a strike price equal to the value of its liabilities. Figure 1 demonstrates this option-like payoff profile to holding a hypothetical bank’s equity. The beta of a firm is measure of how its value varies with the market as a whole. Arithmetically, the beta of a bank’s equity is the product of its leverage and the beta of its assets.11 So assuming an asset beta of 0.1 and a leverage ratio of 10, the bank’s equity beta will be equal to one. The returns on bank equity and the return on the market will then lie on a 45 degree line, provided returns are positive. When market returns are negative, however, returns on bank equity will not follow them south. Instead they will be capped by limited liability. This asymmetric payoff schedule generates interesting incentives. The value of the equity option is enhanced by rises in the volatility of the bank’s assets. Why? Because volatility increases the upside return without affecting the downside risk. If banks seek to maximise shareholder value, they will seek bigger and riskier bets. Joint stock banking with limited liability puts ownership in the hands of a volatility junkie. How has the junkie responded to these incentives?

In a number of recent events, central banks have had to intervene in size, using public money, to remove the threats to financial stability. Providing backstop liquidity insurance when tail risks to financial stability crystallise is a core part of central banks’ job. And the FPC has discussed the importance of examining whether central banks should have facilities to provide liquidity to a wider set of financial market participants in stress. But central banks cannot be a substitute for the primary obligation of market participants to manage their own risk, or for internationally co-ordinated reforms that enhance the resilience of the non-bank financial sector. For that reason, such facilities must be carefully targeted on the financial stability vulnerability at hand, and designed in ways that incentivise the right private sector behaviours, incuding reducing incentives for excessive risk taking in the future. [24] My colleagues in our Markets area have been considering these issues,[25] including with colleagues internationally[26] – and a number of these principles were implemented in our LDI interventions. Conclusion Events of recent weeks, months and years have once again reminded us of the systemic risks posed by poorly-managed leverage in the non-bank financial system. All too often excessive risk taking alongside improper liquidity risk management has threatened conditions in the real economy - an issue that feels especially pertinent in the current environment of high volatility and tightening financial conditions.
The Republic of Macedonia is on the map of foreign investors due to several factors, which were emphasized also by the surveyed companies. Low labor costs, i.e. low wages, low taxes, good qualification structure of the labor force, as well as the macroeconomic stability, mirrored in low and stable inflation, exchange rate stability, low levels of budget deficit and public debt. These were the core pillars the business decisions were laid on. Therefore, we – the macroeconomic policymakers, have an obligation to keep the solid fundaments of the Macedonian economy in the next period. 2  BIS central bankers’ speeches

At the same time, changes in the interest rate and exchange rate may influence developments in the real economy in the short run. This means that fiscal and monetary policy have a combined effect on the overall level of activity in the economy. With large and to some extent varying budget revenues, the basis for determining central government expenditure and taxes from one year to the next may easily be impaired. If budget expenditure fluctuates to a large extent in step with oil prices, the result will be abrupt shifts and instability in the Norwegian economy. Changes in oil prices may then quickly influence wage and price expectations, the exchange rate and long-term rates. In that case it will be very demanding to achieve nominal stability. Short-term interest rates will have to be changed frequently and sharply, and long-term rates will reflect a high risk premium for the Norwegian krone. It is therefore important that the annual budgets are anchored in a long-term strategy that takes sufficiently into account that oil revenues can fluctuate from one year to the next. It is advantageous if fiscal policy can also be used to counter fluctuations in demand and production. The political assessment has also been that a countercyclical fiscal policy provides the best basis for sound developments in the distribution of income and wealth. If fiscal policy is used to smooth fluctuations in demand and production, it will also contribute to stability in the krone exchange rate and in the competitive conditions for the business sector.
Christian Noyer: The euro area: a collection of countries or a single economic entity? Speech by Mr Christian Noyer, Vice-President of the European Central Bank, at the American Chamber of Commerce in Germany, Stuttgart, 29 June 2001. *  *  *  Ladies and gentlemen, it is a great pleasure to be at the American Chamber of Commerce in Stuttgart. The question posed in the title of this speech can be addressed by noting that the euro area comprises those – currently twelve – Member States of the European Union which have adopted the euro as their single currency and thereby irrevocably transferred the responsibility for conducting monetary policy from the national level to a supra-national and independent institution, the European Central Bank (ECB). Consequently, as regards monetary policy, the euro area is, by construction, a single entity. This is also the case for many other fields of economic interaction. Most important is the Single Market, which ensures freedom of movement of persons and free trade in goods, services and capital across the whole European Union and therefore also in the euro area. The single currency completes the Single Market. The euro area is thus, to a very large extent, a single economic entity. Obviously, this answer does not imply that the euro area is also a single political entity. However, and most importantly, what is crucial is not whether the euro area is a single entity in each respect.

Assuming that this process begins later this year and continues uninterrupted, the balance sheet size would likely normalize in the early part of the next decade.4 There is uncertainty about the exact timing for several reasons. We don’t know how fast our agency MBS holdings will pre-pay, how quickly currency outstanding will grow, how many bank reserves will be required for the efficient execution of monetary policy, or the evolution of other liability items on the Fed’s balance sheet that affect the amount of bank reserves. Against that backdrop, one major issue that remains outstanding is whether the Fed will continue to operate with a “floor” system, in which the Fed maintains a relatively abundant supply of reserves and the effective federal funds rate is managed by periodic adjustments to the interest rate the Fed pays on bank reserves. Or, whether the Fed will move back to a “corridor” system, in which reserves are relatively scarce and the effective federal funds rate is managed by frequently adjusting the supply of reserves to meet demand at the desired federal funds rate level. In this type of regime, it is the quantity of reserves, rather than the interest rate the Fed pays on reserves, that is the primary driver of the federal funds rate.5 Having managed the System Open Market Account during the financial crisis—a period during which the demand for reserves was very volatile—I very much favor a floor-type system. It is much easier to manage on a day-to-day basis.
This can be described as the difference between what a family will need to maintain its level of consumption should a breadwinner, or one of the breadwinners, passes away, versus the amount of financial resources including life insurance coverage. A Geneva Association report1 in 2014 estimated that for the US alone, the life protection gap was a staggering $ trillion. In 2012, the LIA estimated the gap in Singapore to be about $ billion2. Patrick mentioned this as one of the priorities for LIA and highlighted that a follow-up “attitudinal study” will be conducted. I understand that LIA’s 2017 Protection Gap Study will be released later this month. The case for adequate life insurance protection is a strong one. So why is there such a large protection gap? Let me highlight a few possible reasons. 1/5  BIS central bankers' speeches  (1) One factor is that life insurance involves the rather unpleasant topic of death, a morbid subject that many avoid. (2) Another common feedback is that many people find it difficult to properly ascertain their insurance coverage, given the difficulties in projecting long-term financial needs. (3) Yet another perception is that life insurance policies are both expensive and complex. There is also a belief that agents would rather sell more lucrative investment-linked policies compared to term life policies.

For instance, MAS has set up our regulatory sandbox regime to facilitate testing and experimentation of cutting edge technology or innovative business models within defined parameters and duration. Certain sandbox participants benefit from caseby-case regulatory exemptions following our review. We are exploring the feasibility and scope for a more nimble and flexible regulatory approach; one that is modular and risk-appropriate or even an activities-based regulatory approach towards certain innovative business models, as opposed to a strictly entity-based regulatory framework. We are also devoting resources in our work on “SupTech” or Supervisory Technology. MAS has been beefing up our surveillance and analytical capabilities, including the setting up of a dedicated unit for SupTech within our Data Analytics Group. The aim is to transform our supervisory and market surveillance work to be more digital and effective, This will also allow MAS to be more effective in our supervisory engagement with each of your firms. In addition, we will be employing more advanced techniques such as network analysis, or text and voice analytics to support our investigation and enforcement actions. Conduct gaps Let me now cover my final remarks around conduct gaps. In an increasingly digital environment and as more Singaporeans become technology savvy, financial advisers should evolve to provide more holistic wealth and risk management advice. A successful transition will require maintaining a deep level of consumer trust that representatives will act in the best interest of their clients.
Your Honour, This conference follows a similar one held in Botswana hosted by the Botswana Central Bank from 5 to 6 February, 2007 and supported by the BIS Governance Forum and the IMF. It also comes shortly after our very successful conference held at this same venue in November last year on the theme, “Central Bank Independence, Does It Hurt the Treasury?” All these activities are part of the building blocks to a bigger project we have been undertaking in the SADC region aimed at developing a Model Central Bank Act. For us in Zambia, efforts at perfecting the governance as well as the operational efficiency of the financial sector are being done through the Financial Sector Development Plan (FSDP). Under the Plan we have already developed Corporate Governance Guidelines for the financial sector as a whole. Many of these have a lot of relevance to the Central Bank as well. Through the FSDP, even issues such as who should chair the Board of the Central Bank are being discussed. Lastly, let me say that we expect to learn from what other central banks have done, and what challenges they have faced in their quest for enhanced central bank governance. However, it should be noted that each country should establish a legal framework for its central bank governance, which best fits that country’s own history and institutional evolution. This should also take into account international best practice.

Ladies and Gentlemen, this seminar comes at a time when the economic performance of our country has significantly strengthened as partly reflected in the developments in the gross domestic product (GDP), inflation, interest rate and exchange rate. At a preliminary estimate of 5.7% in 2007, growth in real GDP has been above 5% for the fifth consecutive year. During the month of January 2008, inflation remained in single digit at 9.3%, from 8.9% and 8.2%, in December 2007 and December 2006, respectively. Commercial banks lending rates have also exhibited an investment-supportive trend while the Kwacha has remained relatively stable. Further, we have observed an improvement in the fiscal operations of the Government, which is supportive of the country’s inflation and growth objectives. The financial sector has also been very stable and registering appreciable growth in the recent years. Nevertheless, Mr. Chairman, despite these achievements, our country like so many other developing countries, still faces some challenges. Notable among these, is the urgent need to consolidate and build the gains so far attained. In particular, the need to attain sustained price and financial systems stability can hardly be over-emphasised. This is even more pronounced given the recent electricity outages experienced across the country and floods that have ravaged some parts of Zambia. Chairperson, it is also pleasing to note that, in the recent past, there has been recognition of the need to adopt economic and structural reforms in most African countries and some benefits are already evident in this regard.
All these legal improvements and technological modules, which are being made available to you should be followed by concrete actions on your side, to expand the range of instruments and lower their costs. ***  Dear ladies and gentlemen, The banking sector has had and will continue to have a positive development prospect in Albania. That does not mean, however, that there are no challenges lying ahead of us. On the contrary, there are numerous, complex and dynamic ones, often combined with unpredictable development, domestically and internationally. It is our duty, as actors and regulators of this industry, to respond in a timely and decisive fashion, to turn the already identified challenges into development opportunities, as well as to enhance the stability and resilience of the sector against unforeseeable shocks. As we proceed, I would like to invite you all to openly share your thoughts on these issues. I am certain that a constructive dialogue will enable us to prepare a concrete, realistic, and – why not – ambitious plan. Once again, let me reiterate that the banking sector is a national treasure and a strategic sector. This status allows it to have an important voice in the formulation of development policies, along with an obligation to serve with utmost commitment to the economy and the society. Thank You! 5/5  BIS central bankers' speeches

The first relates to the institutional relationship between the central bank and the government and the second to the multiple objectives assigned to the central banks. All the evidence points to improved long-term inflation performance when monetary policymakers are freed from institutional constraints that hamper their freedom of maneuver and given full operational independence. Such independence is best achieved by enshrining it in an institutional framework that provides for legal independence from the government, with accountability for achieving a clearly defined mandate focused on price stability. Few Asian central banks yet enjoy full legal independence, though most now have greater de facto independence than they once had. Fixed, or partially fixed exchange rate regimes, of course, also constrain the independence of monetary policy. As capital accounts become progressively more open, few countries can sustain over time a commitment to exchange rate stability without risking price stability. Eventually central banks will run up against limits on their capacity to sterilize the effects of exchange market intervention designed to limit the pace and extent of appreciation of the exchange rate. Although measured inflation in emerging Asian economies remains relatively low, the pace of credit growth and the behavior of asset prices provide some evidence of a growing tension among competing objectives. The longer this policy conflict persists, the greater the distortions building up in the economy, the greater the risk of future inflation and the greater the risk of a bumpy future.
In  particular, any situation should be avoided whereby for a prolonged period of time an NCB’s net equity is below the level of its statutory capital or is even negative” (ECB 2022, Section 2.2). 22 [30]  Figure 13. Central banks’ balance sheet totals Per cent of GDP  Note. GDP is calculated as the sum of the present quarter and the three previous quarters. For any quarter(s) that GDP has not yet been published, the most recently published GDP statistics are used. Sources: Eurostat, Japanese Cabinet Office, Statistics Sweden, Swiss State Secretariat for Economic Affairs, U.K. Office for National Statistics, US Bureau of Economic analysis, respective central bank and the Riksbank. It is difficult to compare the accounts of different central banks because different accounting principles are applied in different countries. Many of the other central banks use accounting principles that mean that changes in value have a slower impact on reported earnings. The increase in interest rates this year will thus be reflected directly in the Riksbank’s annual accounts, but will be spread over many years for some other central banks. Moreover, some central banks, such as the Bank of England, have an agreement with their government that the effects on the results of asset purchases should be entered in the government budget, without affecting the performance of the central bank.43 Nordström and Vredin (2022) nevertheless attempt an overview of the effects on the results of the central banks’ monetary policy motivated holdings.

To achieve this, policymakers will need to acknowledge the risk and come up with the appropriate safeguards. First and foremost for emerging markets is the continued strengthening of the domestic financial sector as I have noted, which is the key pre-requisite for raising the ability of the financial system and the economy to manage risk. Next, regional financial mechanism will also need to be strengthened to provide additional safeguards in the context of market surveillance and coordination of crisis prevention and resolution efforts. One lesson we have learnt dearly from the current crisis, as well as from the Asian financial crisis, is that globalized finance can be a source of serious risk to global economic and financial stability. Policymakers at the global level must accept this fact and be prepared to respond to it in a forward-looking way. I probably have used up the allocated time. Again, I want to thank the Central Bank of Peru and Reinventing Bretton Woods Committee for the invitation. It has been a pleasure, and thank you for your attention. 4  BIS Review 92/2009