samchain/econo-pairs-v1 huggingface dataset:
Writing in 2011, Ioannis Sarmas, my former colleague at the European Court of Auditors, presented three dimensions of the Greek governance problem: “[first] the lack of an internal control system allowing the government to pilot the country out of turbulence zone; [secondly] the absence of a culture of accountability requiring public fund managers to demonstrate the results achieved and finally … the inadequate powers for the auditing mechanisms preventing them from focusing on the waste of public money.”1 Governance reforms I will now move on to major reforms at the European level that are addressed to correct weaknesses in governance. On the fiscal side, governance has been enhanced by the strengthening of the Stability and Growth Pact. There appears to be broad consensus that to avert the recurrence of the crisis, fiscal consolidation should be enshrined in the governance structure of every country. Surveillance is enhanced and the monitoring of economic policies is becoming more comprehensive. To this end, the Fiscal Compact obliges all euro area countries to run a structurally balanced budget. In particular, the problem of sustainable budget planning is addressed by introducing a country-specific medium-term budgetary objective, which involves a cap on growth of public expenditure that is in line with the medium-term rate of  1  Ioannis Sarmas “The Greek financial crisis from an auditor’s point of view” Cour des comptes européenne Journal July–August 2011. BIS central bankers’ speeches  3  growth.

In this connection, guidance for financial institutions to classify economic activities that contribute to climate change objectives is provided through our work in developing a principles-based taxonomy. This would be the start to build deeper understanding in climate risk, for financial institutions to better identify, assess and manage the risk. The Bank is now working to finalise the Climate Change and Principles-based Taxonomy, which is expected for issuance next year. The Bank also collaborates with the financial industry to accelerate initiatives to build the required capacity and expertise relating to green and sustainability. Through the Value-based Intermediation Community of Practitioners (VBI CoP), various guidance documents have been developed to spur adoption of VBI, which considers the triple bottom line of people, planet and prosperity. In August this year, the Value-based Intermediation Financing and Investment Impact Assessment Framework (VBIAF) Sectoral Guides on Palm Oil, Renewable Energy and Energy Efficiency were issued to guide financial institutions in implementing VBIAF on these sectors at a more granular and transactional level. Work is also in progress to develop the next VBIAF Sectoral Guides on Manufacturing, Oil and Gas, Infrastructure and Construction, targeted for issuance in 2021. Furthermore, greater climate disclosure by financial institutions is in the pipeline; as we are progressing plans to further encourage financial institutions to adopt the TCFD recommendations for climate-related disclosure.
This bears emphasising because in recent years a host of issues have been laid at the door of the Bank of England from housing affordability to poor productivity. Calls for the Bank to solve these challenges ignore the Bank’s carefully defined objectives. And they confuse independence with omnipotence. 4  All speeches are available online at www.bankofengland.co.uk/speeches  4  Monetary and financial stability are foundational. They are necessary for prosperity but they aren’t sufficient to deliver it. The biggest determinants of the UK’s medium-term prosperity will be the country’s new relationship with the EU and the reforms it catalyses. Most of the necessary adjustments are real in nature and therefore not in the gift of central bankers. The Bank will do everything it can to support adjustment consistent with its statutory obligations. We will continue to assess and express our independent assessment of the risks associated with Brexit. We will also use all our powers, consistent with our remits, to mitigate those risks and to smooth the adjustment to new opportunities. Monetary policy will be set to achieve the inflation target in a way that helps smooth real adjustment in the economy and supports jobs in the wake of very large external forces. Banks will be capitalised so that they can withstand any severe shock that could be associated with Brexit – however unlikely – and still meet demand for credit. The financial system as a whole will have the capacity to finance the transition and the opportunities beyond.

Subject to achieving the target, the MPC is also required to support the Government’s economic policy objective, currently strong, sustainable and balanced growth. Accountability Under what Mervyn King termed constrained discretion, the Bank takes its orders from the remit and is accountable to Parliament and the people for its performance. Their expectations certainly have changed since Montagu Norman justified his decisions to a compliant predecessor of the TSC by appealing opaquely to his “instincts.” Not a response I’ve dared to venture during my thirty odd parliamentary testimonies. More seriously, the need for the Bank to be open and accountable is greater than ever, not only because of the growing distrust of institutions and the ‘experts’ who reside within them, but also because better public understanding makes our policies more effective. That’s why the Bank has increased dramatically the scale and quality of its outreach. We now publish all relevant information for each policy decision on the day it is released. We disclose the key judgments underlying our forecasts and account for differences when they occur. Leveraging our network of 12 regional agencies, we meet with thousands of businesses every year, discuss with the tens of thousands of people who attend our town halls and Public Forums, and engage with the hundreds of thousands more through social media. Performance and Lessons Learned The gains from independence have been enormous. In the two decades that followed independence, inflation averaged just under 2% compared with over 6% in the preceding two. It’s been one-fifth as volatile.
Such price increases are all the more remarkable given that these prices had tended to stagnate in recent years. This jump in the price of commodities was mainly attributable to the continuous growth in domestic demand in the emerging markets and low extraction and production capacity. In our opinion, this situation is not likely to change in any direction in the short term. Although partially offset by the weak US dollar, the rise in the oil price during the final quarter of 2007 triggered a sharp increase in inflation – from 0.7% in September to 2% in December. The price rises of other commodities were also significant, but they only had a minor impact on inflation in Switzerland. In fact, commodities are not directly included in the reference basket used to calculate the price index, which means that their price increases only had a minor impact in this respect. However, the indirect effects, i.e. higher prices for goods and services as a result of higher production costs, constitute a much more serious inflationary risk. Having said this, the related impact last year was modest because many companies chose not to pass on their higher costs to consumers, given the considerable competitive pressure in numerous markets. Moreover, the relatively moderate increase in wage costs and gains in productivity over the last few years allowed companies to absorb a good part of the additional costs they had incurred as a result of higher commodity prices.

But with hindsight, seen across the world as a whole, there was a case for somewhat tighter monetary policy to prevent the demand for resources outstripping supply (although I would note that our interest rates have been consistently higher in recent years than those elsewhere in the advanced economies). The rise in oil and food prices has appeared as an external pressure on each country on its own but it is not external to us all collectively. A particular problem here – that has yet to be resolved – is the expansion of the dollar bloc. The emerging economies were importing loose monetary policy, which scarcely seemed appropriate to their domestic conditions. However it is hard to believe that a somewhat tighter monetary policy would have been guaranteed to head off the credit boom and subsequent crunch altogether. Put another way, monetary policy is a blunt instrument. To prevent excesses in financial markets, we might have had to generate an unnecessary slowdown in the real economy. I share the view therefore that we have to look for new regulatory measures to complement interest rates. There are a number of specific lessons on regulation which have already been identified. The FSA, for example, is already strengthening its prudential supervision. And internationally, we need to fill gaps in the current framework – for example on mortgage origination in the US, increasing the capital requirements for some credit products and loan commitments, and ensuring that investors and rating agencies assess new products more diligently.
This brings me to the issue of ERM2 membership and its consistency with our current monetary policy regimes. The proponents of the ERM2 regime argue that it is a useful monetary policy framework which can have a disciplining impact on domestic policies, limit exchange rate volatility, and help determine the conversion rate for EMU entry, but at the same time provides enough flexibility. Even though there is no doubt a valid point in all these arguments, some of the accession countries’ central banks have expressed much less enthusiasm about the ERM2. I wonder whether we are able to reach a consensus on this subject today. On the practical level, we all have to define our policy positions as regards the appropriate timing of ERM2 membership, choice of central parity, supportive policy mix and so on. Our debate should pay attention to the differences among the individual accession countries in addressing these policy issues. So far, I have focused on the monetary aspect of EMU entry only. In many cases, though, monetary policy is unlikely to be the major bottleneck in the accession process. For many countries, the key practical constraint seems to be their public budgets. Notable exceptions are the Baltic States and a few other candidate countries, for which there seem to be few obstacles to early eurozone entry in this respect. But many other countries run large public deficits, even after subtracting one-off transition costs.

The necessary reforms would have to include changing the public finance structure to address the ageing problem, overly generous social security systems, etc. These are problems shared by all European countries, and are politically quite hard to resolve. The consolidation of public budgets to a sustainable position is thus one of the key challenges for some accession countries (as well as for the present EU members). This is all the more true because upon EU accession the Stability and Growth Pact will also become relevant to the new member states. This is something that has not been fully realised and appreciated yet, at least in the Czech Republic. It will be very interesting to hear the experience of the other accession countries. There are many more aspects to the accession debate. These include balance-of-payments developments and exchange rate issues; the role of structural policies in achieving the optimumcurrency-area criteria; the role of fiscal and income policies in fulfilling the Maastricht criteria both on  2  BIS Review 17/2003  inflation and on exchange rate stability; financial sector reforms and developments, including their implications for monetary transmission; and so on. I could spend much longer discussing these matters, as well as focusing more deeply on the issues that I have already mentioned. Nonetheless, I do not want to prejudice our debate by volunteering my own opinions at the very beginning of this conference.
The region is now well ahead in the areas of regional surveillance and supervisory arrangement, and in crisis prevention, management and resolution. Regional support mechanisms have also been established. There are also regional institutional arrangements in place for the active sharing of information on the emerging risks to regional stability and on building domestic capacities and to coordinate regional responses in the event of eminent risks to the region. These efforts will be further strengthened into the future. Islamic finance as a growth area in Asia The rapid integration of Islamic finance into the international financial system is a growing feature in the financial landscape of Asia. Developments in several emerging economies in Asia have seen the rapid expansion of Islamic finance. Global Islamic financial assets are now estimated to be more than 1 trillion US dollars. While more than 60 percent of the world’s Muslim population is in Asia, the interest in Islamic finance transcends to beyond this community. The inherent principle of Islamic finance, which requires financial transactions to be accompanied by underlying economic activity, ensures the close link between the expansion in financial assets with the real economy. It also increases its potential in fostering  BIS central bankers’ speeches  3  sustainable growth. This has positioned Islamic finance to be well-anchored to serve the real economy, and enhances its potential as a sustainable and stable form of financial intermediation.

For the households, the financial system provides a means to optimally spread their income and consumption over their life cycle. Accumulating wealth via saving, investment and borrowing in the initial years, and de-accumulating of the wealth during the later years, such as through pension products and annuity schemes during retirement. This is particularly important as a population matures. The absence of these products will impose tremendous burdens to the government fiscal position and the overall standards of living. The Malaysian experience has been to encourage diversity of financial product offerings to ensure that the needs of all segments of the population are met. This includes, from having basic banking products at negligible cost for lower income groups, to the wider range of  BIS central bankers’ speeches  1  savings, investment and protection products for the middle income groups and for the higher income groups, wealth management and comprehensive advisory services. In the area of financing, a key priority for any country is financing to promote home ownership. This is to meet an important basic need of society and to encourage wealth accumulation among households. Malaysia approached this by initially establishing Cagamas, a national mortgage corporation, which enables banks to source long-term funding to match long-term housing loans. The national mortgage corporation has continued to evolve to promote the secondary market for housing loans via securitization and mitigating risks in mortgage financing through the provision of mortgage insurance.
But we can likely manage these risks by designing the retail CBDC with sensible safeguards, such as stock and flow caps on the amount of digital Singapore dollars that anyone is allowed to place with MAS. On balance, the case for a retail CBDC in Singapore is not urgent. • For a subject that has attracted much attention, there are neither strong reasons for or against a retail CBDC in Singapore. Why do I say that? • Physical cash is likely to be with us for quite some time more and so the need for a digital version of cash is moot at this point. • The financial inclusion benefits of a digital Singapore dollar are not compelling. A high proportion of Singaporeans have bank accounts and electronic payments in Singapore are pervasive, highly efficient, and competitive. • Possible currency substitution by foreign digital currencies is a remote tail risk at this point. The issuance of a retail CBDC is ultimately a socio-economic rather than a monetary consideration. Moving to a fully cashless society with all money in the form of bank deposits will not make a significant difference to the conduct of monetary policy. The question is whether the public is comfortable with holding only bank deposits and whether there is public demand for a state-issued currency that is as safe as cash but in digital form. So for now, there is no strong case for a retail CBDC.

Investors in these tokens are at risk of suffering significant losses. But MAS is also of the view thatblockchains and crypto tokens can bring many potential benefits. The blockchain is suited for applications where it is important to know the history of ownership and transfer of value but there is no trusted central party or reliance on a central party is too costly. A potentially strong use case of crypto tokens is to facilitate cheaper and faster cross-border payments and trade finance. But to be regarded as money, crypto tokens need to be more stable in value and have credible backing. Hence, the emergence of stablecoins. Stablecoins Stablecoins seek to combine the credibility of fiat currencies with the advantages of the blockchain. The more prevalent stablecoins are pegged to the US Dollar, promise to redeem at par, and claim to be backed by reserves. Will Juno accept stablecoins as money? An encouraging sign is that stablecoins are beginning to find acceptance outside of the crypto ecosystem. Some technology firms have integrated popular stablecoins into their payment services. Visa and Mastercard both allow transactions to be settled using USD Coin. Or are stablecoins more akin to the Chimaera, a monstrous fire-breathing hybrid creature in Greek mythology? Stablecoin issuers look like banks when they take money and offer to return it on demand, but if they do not intermediate credit, would bank regulation be appropriate for them?
At the One Planet Summit in Paris in 2017, financial institutions responsible for managing $ trillion of assets – equivalent to annual global GDP – publicly supported the Task Force for Climate-related Disclosures (TCFD). 2  The supporters included 20 globally-systemic banks, 8 of the top 10 global asset managers, the world’s leading pension funds and insurers, the largest sovereign wealth fund and the two dominant shareholder advisory service companies. Established by the Financial Stability Board (FSB) in response to a call from G20 Leaders, the TCFD delivered recommendations for voluntary disclosures of material, decision-useful climate-related financial risks for the G20 Summit in Hamburg. Suitable for use by all companies that raise capital, the recommendations: -  include disclosure of governance and risk management arrangements;  -  establish consistent and comparable metrics applicable across all sectors, as well as specific metrics for the most carbon-intense sectors; and  -  encourage use of scenario analysis so as to consider dynamically the potential impact of the risks and opportunities of the transition to a low carbon economy on strategy and financial planning. That financial institutions have come out so strongly in support of enhanced disclosure reflects their recognition that there is a correlation between managing climate risk and long-term value creation as well as their belief in the power of markets. They know that for markets to do what they do best – allocate capital effectively and dynamically – they need the right information.

Muhammad bin Ibrahim: Issues surrounding intellectual property Welcoming remarks by Mr Muhammad bin Ibrahim, Deputy Governor of the Central Bank of Malaysia (Bank Negara Malaysia), at the Intellectual Property Financing Conference 2014, Kuala Lumpur, 23 September 2014. *  *  *  It gives me great pleasure to welcome you today to the 2014 Intellectual Property (IP) Financing Conference – themed “IP Potentials in Financial Landscape Evolution”. I would like to thank the Malaysian Intellectual Property Corporation and the Asian Institute of Chartered Bankers for co-organising this event with Bank Negara Malaysia. We are also grateful to Secretary General Dato’ Sri Alias bin Haji Ahmad for joining us today to deliver the keynote address and officiate the conference. In the age of the information economy, the importance of intellectual property as a key enabler of productivity and economic growth has become significantly more pronounced as intangibles make up an increasing proportion of business investments. This conference was carefully designed to raise issues surrounding IP. Many issues and questions require resolutions and insights. How do we achieve strong and effective IP protection that will encourage companies to bring new innovations to the market? How do we unlock the value of IP within businesses and encourage the financial system to make better use of this value in financing decisions? How do we start to develop a more transparent market for IP assets? These are some of the issues and questions that the Conference should explore to optimise the full potential of IP in Malaysia.
That’s why we’re fully behind the call of the Financial Stability Board of the G20 for consistent measures of leverage in funds to be developed in this area to help enable direct comparisons across funds and at a global level.14 The International Organisation of Securities Commissions (IOSCO) has consulted on how to do this and will finalise its work on leverage measures this year. 15  We believe that a core set of measures will need to be consistent across jurisdictions. A consistent set of measures must allow the demands on liquidity that funds of all sorts could face, and the liquid assets they have available to meet those demands, to be monitored. Only then can we assess properly how their resilience is evolving. Redemption pressures on open-ended funds  The role of investors in open-ended funds is the second feature of the non-bank system that could shape the resilience of credit supply. More than $ trillion of global assets are now held in investment funds that offer frequent, often daily, liquidity to investors despite investing in potentially illiquid underlying assets. 16 These funds hold 13% of outstanding corporate bonds in the UK and 25% in the euro area. Ten years ago they held less than half those shares. And they now hold around 10% of the global leveraged loan market. When investors in these funds redeem their investment, the fund must sell a slice of its assets to meet the cash need. As redemptions accelerate, a fund can become a forced seller.

11  All speeches are available online at www.bankofengland.co.uk/news/speeches  11  Chart 14 Financial conditions index (UK)  Chart 15 GDP fall during the crisis compared to tail risks flagged by high debt vulnerabilities and low bank capital resilience  Difference from average since 1995 (number of standard deviations)  6 5  Three-year cumulative GDP growth 2007Q41 in 20 forecast 2010Q4 (%) (as of 2007 Q4) 0  4 3 2 1  -1 -2 -3  0 -1  2019  2017  2015  2013  2011  2009  2007  2005  2003  2001  1999  1997  1995  -2  -4 -5  Household Credit  Corporate Credit  Current Account  Low Bank Capital  Other  Total  Actual Sources: Bloomberg Finance L.P., Eikon by Refinitiv and Bank calculations. Notes: Financial conditions index (FCI) estimated using principal component analysis. The FCI summarises information from the following financial series: term spreads, interbank spreads, corporate spreads, sovereign spreads, long-term interest rates, equity price returns, equity return volatility and relative financial market capitalisation. An increase in the index indicates a tightening in conditions. Notes: Figure based on Aikman et al. (forthcoming). The chart compares the actual cumulative three-year fall in UK GDP during 2008-2010 to the 5th percentile of real GDP growth forecasted for the same period as of end-2007. This estimate is decomposed in the same way as described in the note to Chart 13 and additionally shows the estimated impact of low bank capital resilience.