samchain/econo-pairs-v1 huggingface dataset:
Here, both the African countries themselves and we in the industrialised world can make important contributions. Some historical reflections on globalisation and technological changes Despite all the talk of the “new” global economy, the present international economic integration is actually no new phenomenon. During the fifty years prior to the First World War, there was considerable cross-border mobility for both goods and capital. Then, as now, the increased globalisation was driven by trade liberalisation and major technological advances, thanks to the development of railways, steam engines and electricity. In some respects the integration was even more extensive at the beginning of the 20th century than it is today. For instance, foreign direct investment was a much greater percentage of GDP, labour was much more mobile across national borders and even agriculture was more liberalised. However, in other respects it can reasonably be claimed that the world economy is more interlaced now than it was a hundred years ago. The first difference is that a much larger percentage of the countries in the world now participate in the global economy, after opening up their borders to trade and investment and adopting liberal market reforms. Another aspect that should be highlighted is that although the net flows of international capital are lower than prior to the First World War, the total financial flows are much greater today.

21.10.2020  Opening remarks XIX Germán Bernácer Prize Ceremony at the Banco de España Pablo Hernández de Cos Governor  Ladies and Gentlemen, It is a great pleasure for me to welcome you all, and to introduce this Award Ceremony for the 19th Germán Bernácer Prize. I would like to start by thanking Luis de Guindos, Vice-President of the European Central Bank and Chairman of the Selection Committee of this award, for his contribution to this initiative. Luis, we are greatly honoured by your presence at this ceremony. Let me also thank The Observatory of the European Central Bank – chaired by Guillermo de la Dehesa – and the sponsors, represented here by Luis Isasi, President of Banco Santander España. As you know, the prize is named after Germán Bernácer, a prominent Spanish macroeconomist with deep knowledge of monetary theory, who became Head of the Servicio de Estudios of the Banco de España in 1930. The Bernácer prize recognises outstanding scientific research by young economists under 40 from the euro zone, and our institution has been a strong supporter of this award since its inception in 2001. On this occasion, I am glad to congratulate the winner of the 19th Prize edition, Mr. Loukas Karabarbounis. He is a Professor of Economics at the University of Minnesota, a Consultant at the Federal Reserve Bank of Minneapolis and a Research Associate at the National Bureau of Economic Research.
Zeti Akhtar Aziz: Islamic finance and global financial stability Keynote address by Dr Zeti Akhtar Aziz, Governor of the Central Bank of Malaysia, at the Seminar on Islamic Finance: During and After the Global Financial Crisis – "Islamic finance and global financial stability", Istanbul, 5 October 2009. *  *  *  "The unfolding events during this global financial crisis have brought to the forefront the issues concerning the stability of financial systems and the robustness and resilience of the international financial architecture. At the heart of the crisis is the breakdown of the functioning of the financial intermediation process and the loss of confidence in the financial system. As the world continues to struggle with the consequent global economic recession and the continued fragile financial system, it has intensified the search for solutions. Indeed, wide ranging reforms are now currently being discussed. The future financial landscape in the aftermath of this crisis is, therefore, likely to be significantly different from the present. In the search for the appropriate reforms, there is a general consensus that we need to return banking to its basic functions – to provide financial services that adds value to the real economy. This in fact represents the very essence of Islamic finance. These are the very elements that are espoused in the Shariah principles that underpin Islamic finance and which explains its resilience during this international financial crisis.

Firstly, as Professor Dasgupta made clear in his Review, nature and many of the ecosystem services it provides are often “mobile, silent and invisible”, and therefore incredibly complex to fully appreciate. We may understand the price of wood and some of the services provided by forests (such as climate regulation or flood prevention) but we will never understand all the interactions that exist within nature. Secondly, different social groups and individuals relate differently to nature, as the IPBES made clear in its recent report on the diverse ways of valuing nature.xxv For instance, a poor fisherman or an indigenous person may not be able to put a high price tag on the fish he catches or the forest she lives in, yet their entire livelihoods directly depend on the existence of specific ecosystems. In other words, nature does not have a fundamental value but rather means 6  Page 7 sur 12 different things to different people. Recognizing this diversity of values, at the global level, is key to enable its protection. We cannot say how much a seaside or a bird song represents. Thirdly, even if we could perfectly account for the points above (complexity and multiplicity of values), nature remains only very partially substitutable. This means that we risk underestimating the costs of losing ecosystem services. For instance, Professor Dasgupta provocatively but insightfully reminds us that if we only look at how much pollination contributes to agricultural outputs in highincome countries, we may end up with a very small percentage of GDP.
Banking sector Under the consolidation programme, the bigger banks in the sector are permitted to benefit largely from organic growth while the mid-tier banks are expected to strengthen their financial viability and grow through consolidation. As larger banks grow, it will be difficult for smaller banks to remain competitive, and therefore, small banks are encouraged to merge with strong partners. The outcome of the consolidation in the banking sector is expected to result in a sector where at least 5 Sri Lankan banks will have assets of over Rs. 1 trillion with a stronger regional presence by 2016, while domestic banks, which hold assets less than Rs.100 billion now will have to increase their asset base above Rs.100 billion through consolidation by 2016. Further, as the Sri Lankan economy’s investment ratio is expected to be maintained at over 30 per cent of GDP, there will be an increasing demand for investments within the country. However, the 2 banks with development banking focus in Sri Lanka, namely, the National Development Bank PLC and DFCC Bank with DFCC Vardana Bank Ltd., are still not as big as the economy requires them to be to cater to the current and future needs of the economy. Therefore, these 3 banks will be merged so that the resulting entity would be large enough to comfortably raise long-term capital from domestic as well as international markets and cater to the growing demand for investments by both the private and public sectors.

TLAC and MREL are comprised of debt-instruments and equity. The key point here is that this important reform requires a very clear distinction among debt contracts between forms of subordinated debt contracts which will bear losses in resolution first and deposit and other senior funding contracts on the liabilities side of the bank balance sheet. This may seem like a very simple point, but past arrangements meant it was unclear, and the moral of the painful story is “don’t leave the providers of debt funding in any doubt about their creditor status.” The lack of clarity about the instruments on the liabilities side of bank balance sheets and the order and mechanisms by which they would absorb losses was an important issue in the crisis. Looking ahead, clear disclosure of creditor hierarchies at a legal entity level will be a critical component of the resolution regime, so that all creditors know where they stand before resolution occurs. Let’s turn now to the other side of a bank’s balance sheet, the assets side. The massive increase in balance sheet size pre-crisis accompanied what came to be known as the “search for yield”, which could be re-named the “search for risk which turns out to be unsustainable”.
For instance, the IMF projects the aggregate euro area deficit for this year to be just over 3% of GDP, compared with around 8% in the U.S. and almost 10% in Japan. The equivalent figures for gross debt are around 90% of GDP in the euro area, compared with 106% in the U.S. and 235% in Japan. The right response to this discrepancy between fundamentals and perceptions is not defeatism. It is to fix the institutional flaws that facilitate it. Again, the European Council took an important step in this direction at the recent summit. Building on the report presented by the Presidents of the European Council, Commission, Eurogroup and ECB, it called for a specific and time-bound roadmap for the achievement of a genuine Economic and Monetary Union. This roadmap will be presented by the end of 2012. This is a very important development, for two reasons. First, it sends a clear signal of Member States’ commitment to the euro and to making EMU work. This should help remove  BIS central bankers’ speeches  3  investor concerns about the future integrity of the euro area. Second, the report presented by the Four Presidents is far-reaching and comprehensive – it has been designed to address the key challenges facing EMU in all relevant policy areas. It therefore proposes work on four parallel tracks: 1. The first is a financial union, with a single framework for supervising and resolving banks and for insuring customer deposits.

This would build on the single supervisory mechanism now under development and ideally lead to a European version of the FDIC, financed by contributions from the private sector. 2. The second building block is a fiscal union, with powers at the euro area level to prevent unsustainable fiscal policies and to limit national debt issuance. With these powers in place, a path towards common debt issuance would also be possible, but only at the end of the process. 3. The third building block is an economic union, which would help euro area members to remain fit and to adjust flexibly within monetary union. This could entail, for example, moving from soft coordination of structural reforms in Member States to an enforceable framework at the euro area level. 4. And the fourth building block is a political union, which aims at strengthening democratic participation. This final building block is equally important, as the other measures cannot be effective unless they are legitimate. This requires innovative thinking as regards the involvement of the European Parliament and national parliaments in decision-making on euro area issues. 4. Conclusion  The roadmap towards a stronger EMU, seen together with the decisions on the ESM and the Compact for Growth and Jobs, represents a comprehensive response to the crisis. The euro area has clearly understood that the time of partial solutions and piecemeal reform is over. In implementing this response, there are sure to be difficulties along the way. This is the reality of operating in a union of 17 democracies.
Chart: Distribution of exports – 1835, 1950 and 2016 The oil sector has generated substantial revenues for Norway. And we have extracted large quantities of oil and gas at favourable prices. From the end of the 1990s and up to 2014, the price of North Sea oil rose from about USD 10 to more than USD 100 per barrel. In spite of the fact that oil prices have fallen by about half compared with a few years ago, sales of oil and gas still provide a third of the country’s export revenues. 3/4  BIS central bankers' speeches  The substantial profits generated by the petroleum sector have been managed efficiently. Our economy is in good order. Well-functioning institutions and a high degree of trust between the various social groups provided a solid foundation. It was established at an early stage that Norway’s oil and gas reserves belong to the people. The system of taxation and framework conditions for the petroleum industry were designed so that the large profits from this sector would accrue to the state. We have been able to enhance public welfare and prosperity. Chart: From natural resources to financial wealth At the same time, Norway’s subsea petroleum wealth has to a large extent been transformed into foreign financial assets. With the oil fund, not only current but also future generations will benefit from our oil and gas reserves. The capital in the oil fund is more than two and a half times the size of mainland GDP.

But we also learned early on that fish was valuable as a form of currency. As early as in the medieval era, dried cod from Norway was a sought-after product further south in Europe. With their ships laden with dried cod, the Vikings were able to trade the fish for beautiful cloth, exotic spices and precious metals. Chart: The 200-krone banknote (The Cod) Fishing has been a key source of income and an integral part of the coastal culture in Norway for 1/4  BIS central bankers' speeches  centuries. For many people, fish has been a crucial part of their diet. Some crops do not thrive in Norway’s climate of long winters and cool summers. Cod and herring, trout and salmon, on the other hand, have flourished. Sturdy boats designed to cope with the rough waves and unpredictable winds of the open sea enabled us to bring the catch to shore. And before more modern transportation routes became available, cargo ships were needed to transport the catch to customers at home and abroad. Chart: Distribution of exports 1835 The possibility of storing and transporting fish over long distances generated jobs and foreign exchange income. In 1835, 39 percent of Norway’s export revenues came from the sale of fish. Shipping provided 25 percent of Norway’s export revenues. Consequently, it has always been important for the country’s economy to ensure market access for Norwegian seafood exports, as was the case during Norway’s prohibition period in the 1920s.
This bias is prevalent in complex and opaque situations which are surely predominant in the modern financial system. Turning to the indebtedness of sovereigns, we cannot put the blame for excessive indebtedness on financial incentives. But the overweighting of current benefits and the overdiscounting of future costs can easily be attributed to electoral considerations and the finite career of elected politicians, careers which become shorter when they cannot “seduce” their electorates. At a cognitive level, I would also put the blame on another factor that could be called a “Keynesian bias”. Here, I refer to the conviction that countercyclical policies should be activated in downturns to mitigate the social cost of output and employment losses, but that they need not be reversed in upturns. This conviction is based on the view that there is no natural, theoretical or even apparent practical limit to state indebtedness, at least for developed economies. This cognitive bias is, in my view, a major explanation for the observed structural deficits in government accounts leading to an ever-rising debt to GDP ratio. In the OECD as a whole, for instance, the public debt to GDP ratio has increased from 70% in 2000 to 103% today! While we can dispute the precise diagnosis, we cannot disagree with the fact that the present crisis should and will serve as a wake-up call. Sovereigns, like banks, need to build up a buffer ahead of potential unfavourable economic developments.

Why does financial literacy matter? It is more than clear that the absence of understanding of the basic financial concepts erodes our capability to make proper and well-informed choices in terms of savings, investment, and borrowing. The costs of these choices are not confined only to individuals, but they can have systemic implications, eroding the overall financial stability. The translation of these misinformed decisions into systemic risks is exactly one of the main reasons why financial literacy became the mainstream in the past decade. The pre-crisis credit boom was supported by irrational exuberance and overconfidence of “never ending” rise in assets prices and low financing costs. The credit boom turned into credit bust, and the consequences of the “bubble – burst” are still with us. According to the latest IMF map of weak spots, heavily indebted households are still the main source of vulnerability in many systemically important advanced and emerging economies, and potential source of next financial crisis. Apparently, being financially literate and informed, can help in preventing, or at least mitigating the occurrence of such “weak spots”. To bring the issue closer to the regional context, let me remind us of the “episode” of excessive borrowing in Swiss francs that occurred in several countries in the region (Hungary, Croatia, Serbia, Poland), amidst low interest rates and assumed stability of the exchange rate. Hence, the last crisis clearly demonstrated that many agents are not fully aware of the consequences of their financial decisions.
Europe is particularly badly affected, as temperatures here continue to rise above the mean and, despite our efforts to reduce CO2 emissions, we lag far behind in terms of what we need to do to adapt to some of the inevitable consequences. It is time we face the facts. As citizens, as institutions, and as all actors in the economy – including of course banks. It is essential that banks share with their stakeholders detailed information on their exposures to C&E – risks. Only then can we all effectively work together to address the consequences of climate change. This is why today I would like to draw your attention to another important landmark in the ECB’s supervision of C&E risks: the publication of our second stocktake on the transparency of banks’ disclosures of their C&E risk profiles. The European and international agenda on climate Publishing this update is part of our supervisory agenda on climate. As you know, C&E risks have been one of our supervisory priorities for some years now and we have started treating them just like any other prudential risk. In this context, we have been rolling out a series of corresponding supervisory activities. In 2020 we published our guide on climate-related and environmental risks, which outlined our supervisory expectations relating to the management and disclosure of C&E risks. In 2021 we published a self-assessment benchmarking report.

And regulators and policymakers need to be appropriately responsive to the adoption of sustainable practices. Conclusion In conclusion, the Islamic finance industry today faces an important, strategic choice – to either continue on a path that largely ignores the stark social and environmental realities that confront humanity, or to thoughtfully chart a new path that fully embraces the idea and philosophy of finance beyond profits. The latter will be an unfamiliar path in many respects, but one that is far closer to the fundamental premise of Shariah on which Islamic finance is based upon. Embarking on this path will require deep conviction and visionary leadership across financial institutions, governments and policymakers. But the pay-offs will be immeasurable. For many in society, it will also make the difference between economic freedom and opportunities, and a lifetime of hardship. Thank you. See also: 1. Implementation Guide for Value-based Intermediation 2. Value-based Intermediation Financing and Investment Impact Assessment Framework (Consultative Document) 3. Value-based Intermediation Scorecard (Consultative Document)  4/4  BIS central bankers' speeches
And since we will only purchase bonds with a remaining maturity of between one and three years, there will still be ample room for market discipline on governments at longer maturities. Second, our actions will not lead to inflation. The weak overall economic situation, combined with slow money growth, means that the risks of inflation are currently very low over the medium term. Our interventions will not change this outlook. In fact, for every euro we inject with our interventions, we will withdraw a euro. So they will not affect monetary conditions. Furthermore, we see no signs that our announcement has affected inflation expectations. They are firmly anchored because we have always delivered price stability. And citizens can trust that we will continue to do so: price stability remains our mandate and our sole objective. Third, our actions will not lead to greater risks for taxpayers in Germany. Taxpayers are protected by the fact that our interventions will take place only in countries with sound economic and fiscal policies. Their continued commitment to these policies will be ensured by the ESM programme. And the ECB will assess compliance with this programme in full independence. Moreover, by normalising conditions in financial markets, our actions will help reverse the capital flows into Germany that are creating some distortions here. This should ultimately support the savers, pension funds and insurance companies that depend on interest income. And it should reduce TARGET2 imbalances.

Financial union is essential in a single currency area where cross-border capital flows can lead to credit booms and other imbalances – and where the negative effects of a bust can spread rapidly to other members. One essential part of financial union is a single banking supervisor. As you know, the European Commission has recently proposed that the new supervisor should be based at the ECB. This is important to ensure consistency across the euro area and to prevent regulatory capture. Day-to-day tasks, however, would remain with national supervisors who have the competence and resources to implement them. But financial union does not have to imply the pooling of deposit guarantee schemes, an issue that I know is of concern in this country. Organising and funding deposit guarantee schemes can remain a national responsibility, with comparable effectiveness. In the longer term, all four pillars are equally important. They are the bedrock for the enormous potential of the single currency for Europe’s citizens. Completing economic and monetary union would give citizens greater security against any future crisis. It would create the foundations for sustainable growth and employment. For all citizens of the euro area, it is therefore essential that Europe’s leaders stay on course. Thank you for your attention. BIS central bankers’ speeches  5