samchain/econo-pairs-v1 huggingface dataset:
I am further pleased because the topic of the Oration, “Harmonizing Fiscal and Monetary Policies to deliver sustainable growth and Stability” is one that is relevant and timely, since there are a large number of global and national developments which regularly underscore the vital importance of harmonization of the Monetary and Fiscal policies in countries as well as in regions. Monetary policy and fiscal policy In order to set the backdrop for today’s Oration, let me initially provide you with a brief insight as to what Monetary policy and Fiscal policy entails. Monetary policy is the means by which a central bank seeks to achieve macroeconomic stability. In Sri Lanka, the authority responsible for the formulation and implementation of monetary policy is the Central Bank of Sri Lanka. The Monetary Law Act No.58 of 1949 is the legislation under which the Central Bank (CB) was established, and it provides a wide range of instruments that could be used by the Central Bank for monetary management. Developments in the economy and the financial system have led to a gradual evolution of the objectives, and the framework for the conduct of monetary policy. In 2002, in an amendment to the Monetary Law Act No. 58 of 1949, the objectives of the Central Bank  BIS central bankers’ speeches  1  were re-defined as “economic and price stability” and “financial system stability”, with a view to encouraging and promoting the development of the productive resources of Sri Lanka.

Case Study 6: Stabilization measures of 2012 Mr. Chairman, the next illustration I want to present to you is one of the clearest examples of policy co-ordination between fiscal and monetary policy. That was the stabilization package of 2012, which was introduced by the MoF and the CB from February to April 2012, in response to the pressure on the balance of payments, high imports, high credit growth and pressure on the exchange rate. As we all know, to deal with that growing tension, the Central Bank increased the policy interest rates, allowed the exchange rate to be more flexible and placed a 18% credit ceiling upon banks’ lending. In tandem, the Government imposed higher duties on the import of vehicles and a few other commodities, and increased the administratively determined prices of petroleum products. These measures were implemented in a carefully planned out and logical sequence. As a consequence, the desired stability within the economy was achieved quickly, with the Balance of Payments returning to positive territory, and the exchange rate stabilizing. In fact, this new situation enabled the Monetary Board to relax the monetary policy tightening cycle that commenced in February 2012, as early as in December 2012. This joint exercise therefore shows how quickly and effectively, a coordinated fiscal and monetary policy could deliver results, instead of the implementation of stand-alone monetary or fiscal policies, which usually take a long time to impact the economy, thus resulting in to the entire economy having to suffer from tight policies for longer periods of time.
I think we’ve been clear in our expectations around AML/BSA: •  That AML/BSA needs to be managed on an enterprise-wide basis;  •  That AML/BSA needs to be a high priority for the board of directors, senior management and line management;  •  That the message on compliance needs to be carried down well into the organization, so that those who are on the front lines making daily decisions understand the importance of compliance and the consequences for failing to meet the requirements; and  •  That AML/BSA shouldn’t be treated as a static exercise – standards and best practices evolve and you are required to keep up with and adhere to the latest requirements. As I know you are also aware, we are seeing keen competition for talent/resources in this area. While we recognize that it may be difficult to identify and retain talent, having a solid recruiting strategy and ongoing training in place, as I mentioned earlier, are important components to addressing the problem. You might wonder why this topic remains on my list – and it’s because in spite of the heavy public attention on the matter, including a range of public enforcement actions, it remains a work in progress for many firms. And, for firms that haven’t yet been faced with MRAs or a public enforcement action, I worry about complacency. So, I raise it again because it seems that another warning shot is warranted. 2.

We all know that regulation in markets is nothing new and what it requires is a better analysis by firms on the cost of doing business in different markets compared to profitability. For some firms, we see aggressive actions to adjust their geographic footprints to avoid, at least for a time, the impact of the new standards. For other firms, we see productive and realistic discussions about how to address the new standards, including how booking models and other business operations need to change. In addition, we are seeing home country supervisors engaging in discussions with firms, asking important questions about how host country rules and regulations will affect group operations and seeking to understand the knock-on effects of the new rules across the global operations. As firms are adapting both business strategies and operations to meet home country and host country rules and regulations, we are hearing about the challenges that have been identified. However, there is still a lack of specificity around these challenges, including quantifying the impact – on business, strategy, customers and staff; identifying potential near-term mitigants; and developing proposals on potential longer-term solutions that could be the basis of a productive dialogue. Rhetoric is fine, but it’s not enough. We need to understand on a more concrete level how these changes are going to impact the firm, from your clients to your operations, from your business models to your culture.
There is a risk the bank will fail and be unable to repay its debts to depositors. Similarly, when a bank lends money to buy a home or start a business, there is a risk that the borrower will default. 2/7  BIS central bankers' speeches  In the United States, these risks are mitigated through a combination of public laws and internal controls, including deposit insurance and lending guidelines that, since the financial crisis, have become more stringent. Those are simple examples of risks taken by banks, and there are relatively straightforward ways to mitigate those risks. But the more complex banking activity becomes, the more difficult it is to identify and manage risks. And the more connections exist in a global financial system, the more risk can be distributed or amplified, and the greater the opportunity for new systemic risks to emerge.2 Banks can face risks from employees, some of whom are located in offices in financial centers around the world. Some risks are, again, inherent. We are all human, which means we sometimes make honest mistakes. There is also a risk from intentional employee misconduct. For example, a trader may seek personal gain by taking undue risks in investing someone else’s money. An analyst may disclose confidential information without permission. Or, more simply, in an institution that deals with money, some people may decide to take some for themselves. In some of these cases, the bank may be the victim of the crime.

3 It is true that the households’ total assets exceed their debts by a broad margin. However, these assets are largely illiquid, which means that they would be hard to convert into cash if the households needed to reduce their debts quickly (see Figure 13). Few other tools are in place – monetary policy has its part to play We can also examine the issue of indebtedness more generally by reviewing the history of stabilisation policy in Sweden. During the period with a fixed exchange rate prior to 1992, when responsibility for stabilisation policy lay with fiscal policy, it was not considered that the sovereign debt imposed any limitations on fiscal policy. This eventually led to the sovereign debt becoming unsustainable, and we had to reform the framework for public finances. We gradually managed to put public finances into much better shape and to achieve a falling tend in the sovereign debt as a percentage of GDP (see Figure 4). After the fixed exchange rate regime was abandoned in November 1992, we also needed new rules for monetary policy. The inflation target was the solution adopted. Inflation has been low and stable since the mid-1990s and the expectations of the public and the market participants have been anchored around the target of two per cent (see Figure 11). We can thus claim that the current framework for stabilisation policy has enabled us to gain control over the sovereign debt and inflation.
3 People have been getting back to work and the unemployment rate has started to edge down. Although this improvement is welcome, the economy is still far from healthy and a full recovery will likely take years to achieve. 1/4  BIS central bankers' speeches  One of the things that's been unique about this recession is the lightning speed of events. Traditional macroeconomic data sources—like the labor market report and GDP—are published with lags of weeks or months and don't typically allow one to see the changes within the month or quarter. In response, economists at the Federal Reserve and elsewhere have increasingly turned to analyzing a wide variety of high-frequency data, which—as the name suggests—are published daily or weekly, with only short reporting lags. 4 High-frequency data give us more timely and granular information about what's going on in the economy in between the standard macro data releases. They also help us paint a more detailed picture of people's behavior and how it's changing in the midst of unprecedented circumstances. These data tell us whether small businesses are hiring and whether people are eating in restaurants, staying in hotels, and boarding airplanes. When states started to reopen, signs from both the standard macro data and the high-frequency granular data have been encouraging. Together, they indicate that we've likely seen the low point of the downturn and that the overall economy has begun to recover. Even in New York, the hardest hit state, we have seen initial signs of a turnaround.

We look at issues that could have a significant impact on an individual company or on the fund’s overall investments. Risk is analysed at country, sector and company level. Negative external effects are likely to involve a cost for companies sooner or later, potentially through taxes or regulations. Based on our assessment of such risks, we may choose to divest from a company. On the other hand, we seek overweight in companies with positive external effects. All of these measures are part of our work on responsible investment. The aim is to establish a unified chain of tools that all support responsible investment as an integral part of our management objective: the highest possible returns. Transparency A fund owned by the government must be highly transparent, not only to the Norwegian public but also in an international context. Transparency and disclosure of information is a key feature of the fund. All investment principles and guidelines as well as strategic advice and second opinion reports are made public. We publish quarterly reports on fund performance, which are presented at press conferences. The fund’s annual report discloses a complete list of all the investments held at the end of the year, and also provides an overview of corporate governance work. Voting records from general meetings are published in real time. 6  BIS central bankers’ speeches  Concluding remarks Let me conclude.
And, although we bring as much economic and statistical science to bear as we can, we know that our forecasts, and indeed our policy judgements, are subject to a range of error. They cannot be accurate to every last digit. We can't expect to hit the target all the time, but by consistently aiming to do so (and we do consistently aim to do so looking 2 years or so ahead - whatever you may have read in some recent media commentaries) we can hope to get reasonably close to the target on average over time. Given the uncertainties, which are well illustrated by the sudden - and no doubt to some extent erratic - jump in the RPIX inflation rate in the year to January of 2.6% announced this morning, the overall results over the past decade since the recession of the early 1990's have been encouraging. Whether that's a result of good luck or good judgement I leave to others to decide - I'm more interested in the outcome. Since the Summer of 1992, inflation, on the target measure has averaged just 2.6% - and has been more stable than at any time in our history. And it has been consistently remarkably close to target over the past 5 years. But the even better news is that stable, low, inflation has been accompanied by steadily increasing overall output and employment, and by a progressive fall, until very recently at least, in the rate of unemployment.

If a private player were to run such a system, all participating banks  18 Swish is owned by Getswish AB but administrated by Bankgirot. 19 As of April 2018. Current statistics on payments can be found on the Riksbank’s website, www.riksbank.se/sv/finansiell-stabilitet/betalningssystemet-rix/statistik-over-betalningar-i-rix/2018/. 7 [15]  would have large claims on that player, just as they have on the Riksbank at present. If such a private player were to enter bankruptcy, this money would be lost. That risk does not exist when the central bank runs the system. In addition, the central bank can supply the necessary liquidity that allows payments to function without friction. The central bank can thus function as ‘the banks’ bank’. It is therefore common for the settlement system to be placed at the central bank. It is also a service demanded by the banks themselves. Settlement in the RIX system also involves finality, which is to say that the payment is legally executed when it arrives in our system. The payment market is changing The arrival of the Internet in the late 1990s and early 2000s boosted the digitalisation of society and the payment market. New participants entered the market and many digital services linked to payments are presently offered, such as mobile solutions, electronic identification and so on. Changed consumption patterns such as increased on-line shopping are also generating demand for digital payments.
If today’s inflation targeting regime is to avoid the same label, it must be practiced flexibly so that it fosters economic stability over time. 16  BIS central bankers’ speeches  Confidence in low and stable inflation remains firm. That must always be the main task of monetary policy. Yet our own history and the recent experience of other central banks have shown that the system can come under pressure. When circumstances change, central banks must also be capable of adapting and new thinking. We must learn from the past, be prepared for sudden shifts and seek out new solutions. Come what may. BIS central bankers’ speeches  17

The interconnectedness between these three laws recognizes the importance for central bank in optimizing the synergy in responsibilities for safeguarding concurrently monetary and financial stability. The new BOT Act empowers the central bank to ensure monetary and financial system stability and enhances its operational efficiency and effectiveness of monetary operations. This is achieved by strengthening the transparency and accountability of the BOT’s monetary policy process. Under the new Act, the Monetary Policy Committee will be charged with legal responsibility in the realm of both monetary policy target and exchange rate management policy. The Act will also increase the Bank’s operational independence by making it more difficult to dismiss the Bank’s governor, requiring a cabinet decision with a clear underlying reason. Meanwhile, the Financial Institutions Business Act (FIBA) governs the framework and conduct of financial institution supervision, designed to capture the international best practices of financial institution supervision according to Basel Core Principles (BCP). Specifically, this law allows the central bank to implement consolidated supervision of financial conglomerates, as their business models evolve, together with prompt corrective actions, macro-prudential measures, and measures to improve consumer protection from unfair practices by some financial institutions and non-banks. Finally, the Deposit Protection Agency Act will replace the current blanket deposit guarantee in place since 1997. The new system of limited-coverage deposit insurance will be phased in over four years to allow banks and depositors to adjust to the new framework.
Perhaps they are just being polite but it seems to me that, when faced with the 4 5  http://www.bankofengland.co.uk/pra/Documents/regulatorydata/capital/2016/sep/bsrcrelease1609.pdf CP48/16, http://www.bankofengland.co.uk/pra/Pages/publications/cp/2016/cp4816.aspx 5  All speeches are available online at www.bankofengland.co.uk/speeches  5  cold reality of taking on these risks, insurers have often simply concluded that the yields available are insufficient compensation for the risks incurred. An over-zealous approach from the PRA? I now turn to the other general theme from TSC submissions – whether or not we at the PRA have implemented Solvency II over-zealously. Or put another way, have we ‘gold–plated’ the directive? You will be unsurprised to hear that I say not. As I said earlier, it is only natural that there will be tension between the regulator and firms, because our objectives may be consistent but they are different. But rather than ask you to take my word on trust, let me provide some practical examples and attempt to explain how and why we have acted in the ways we have. First, consider the challenge that the Association of British Insurers (ABI) made in its written evidence to the 6  TSC , that the Senior Insurance Managers Regime (SIMR) that we have introduced “extensively ‘gold plates’ pillar 3 requirements of Solvency II”. The SIMR is designed to ensure the individual accountability of senior managers and directors of insurers for their own conduct, for overseeing the business conduct of key individuals reporting to them, and for the ongoing safety and soundness of their firms and the protection of their policyholders.

As such, it is a key tool that the PRA uses to deliver its objectives. The SIMR is consistent with the provisions of the Bank of England and Financial Services Act 2016. So whilst the ABI is correct in its assertion that SIMR is not required by the Solvency II directive, it is the consequence of UK legislative choices and not simply an invention of the PRA. Second, there is the thorny topic of approvals under Solvency II and, in particular, internal model approvals. The industry is quite right to point out that the overhead to gaining model approval is considerable. In some cases, weight rather than page length would have been a more appropriate measure of application size. But remember that firms with approved internal models in effect set their own regulatory capital requirements. Once we grant model approval, the PRA has only a very limited ability to adjust a firm’s Solvency Capital 7  Requirement. And as my colleague David Rule previously commented “even acting in good faith, business pressure may create the risk that model changes generating lower capital requirements are favoured over time, and therefore that solvency standards might deteriorate”. In designing our approach, we were also mindful of the FSA’s experience in approving internal models for banks under Basel II, where promised future improvements tended not to materialise. It should therefore come as a surprise to no-one that we approach model approval diligently, sceptically and rigorously.
Professional and transformational leadership: Leading beyond your institution Human capital development is of course incomplete without the presence of leadership. Leadership is a force like no other. Leadership drives organisations to new levels of performance and achievement together. But leadership can also be a source of inertia. As innovation continues to draw deeper lines of interconnectivity, successful future leaders are no longer those who only steer their institution, but those who can influence and collaborate with others to drive the growth of the industry towards brighter prospects. The future of banking lies very much in the collective vision of its leaders. Much of our developments in the past have been regulatory-driven. This approach is not sustainable. Drastic change is required. Collectively, industry leaders need to be more involved in playing a pivotal role to shape the future banking ecosystem. While it is natural to strive for individual or institutional success, the industry must break away from the tendency of working in isolation, or worse, waiting for others to lead. Instead, collective responsibility is needed in areas 2/3  BIS central bankers' speeches  where common solutions are required for the betterment of the banking sector. Bank Negara Malaysia has already identified several priority areas, particularly in the fintech space, which will benefit from greater joint participation by the industry. While this is a start, it should not limit the possibility of industry leaders coming together to address other areas of shared interest. I certainly hope to see this becoming a norm in the near future.

In fact, Newton has left us with more than one insight. Newton surmised that once inertia is overcome, an object achieves momentum and acceleration, but not without force being applied first. In a similar way, the same areas of corporate inertia today can be harnessed to drive the momentum of tomorrow. But only through a combined force of action and leadership can we truly achieve this. 3/3  BIS central bankers' speeches