samchain/econo-pairs-v1 huggingface dataset:
For the G20 as a whole that is $ By eroding these costs, financial reform alone can therefore more than deliver the G20 commitment to raise GDP by more than 2%. The Basel Committee found these costs to be minimised only if risk-weighted bank capital ratios were raised above 15%.28 The Basel III requirements did not go this far, in part because they anticipated the additional requirements for loss absorbing capacity that G20 Leaders have just endorsed. Once implemented, the combined effects of the reforms will take the system much closer to the degree of safety needed to minimise the costs of financial crises. That authorities have reached this point in a measured way – allowing both equity and forms of debt to qualify as loss absorbing capacity – shows our sensitivity to the potential costs of greater safety. What are those costs? Three points are worth emphasising. First, the Basel Committee study judged that each 1% increase in capital ratios could reduce output by just 0.1% as higher bank funding costs were passed through to borrowers. However, even that small number seems an upper bound. It fails to take account of the fact that monetary policy can offset the impact of higher lending spreads on effective borrowing rates.29 In fact, the need to offset the impact of higher lending spreads is one reason why some advanced economy central banks, such as the Bank of England, are so clear now that interest rate increases, when they come, will be gradual and limited.

The IMF concluded its latest Article IV Report noting that financial regulation and supervision here is “among the best globally and…a frontrunner in implementing global regulatory reforms”.25 Trust can be sustained only if all countries follow the example of Singapore to implement standards consistently, fully and in a timely way. To provide confidence that full and consistent implementation is taking place, the FSB will support that with rigorous and transparent peer reviews and implementation monitoring. We are providing clear and simple reporting, through the work chaired by Ravi Menon in our Standing Committee on Standards Implementation. In my letter to G20 Leaders last week, I provided that Committee’s latest findings of our monitoring process, in a simple summary with report card. 24  Chart 14, from Haldane (2014), shows the correlation between national savings and investment. That correlation had reached zero just before the crisis, suggesting that the global financial system was fully integrated. However, this has now reversed sharply. Sapir and Wolff (2013) document the home bias in equity markets even within the euro area. 25  IMF (2014b). BIS central bankers’ speeches  11  From next year, the FSB will further enhance this reporting, through an annual reporting process on implementation. This will seek to highlight both shortcomings and good practice, and will seek to assess whether reform measures are having unintended effects and must therefore be adjusted. The FSB’s work will include focus in particular on the effects in emerging markets.
So that means Greece would not even need to be included in the government bond buying programme? C.N. Don’t jump the gun! The first question for the Governing Council is: should we decide to launch it? My personal reading is that if we were to decide to have a government bond buying programme, we should have a cap in terms of the percentage of what we would be buying, so that most of the financing will continue to rely on the private market. That would mean a relative limit of outstanding debt of each country? C.N. Yes, in my view, such a programme can be launched only if a majority of the debt were to continue to be held by private investors. So it should not be an absolute figure like 500bn? C.N. Personally I do not put too much trust in the absolute figures regarding caps. For me there is only one objective: to maintain price stability. That means we both need to have the credible prospect of returning to our objective of close to but lower than 2 per cent inflation, and we must ensure that expectations are not disanchored. If, thanks to the fall in the oil price, inflation, which was already very low, were to remain too low for too long, we would need to act to continue to ensure the credibility of our goal. There doesn’t seem to be a consensual view in the Governing Council? C.N.

Malaysia also has in place the financial infrastructure and facilitative rules that contribute towards efficient price discovery and shorter time to market, thus providing an efficient platform for sukuk issuance and trading activities. The established legal, regulatory and Shariah framework in the Islamic financial infrastructure in Malaysia is reinforced by the supporting financial infrastructure, including the settlement and bond information system. To facilitate an efficient sukuk issuance process in Malaysia, an MIFC One-stop centre is being established as a single contact point for efficient delivery process to facilitate the issuance of sukuk. To further facilitate this process, there is no restriction on the ability to use international rating services, on the ability to hedge positions and on the ability to swap issuance proceeds into foreign currency. As part of our ongoing efforts to position Malaysia as an attractive gateway for the issuance of sukuk, a number of legal and regulatory requirements are further customised to reduce the cost of sukuk issuance. Profits and dividends received by non-resident investors from holding of ringgit and non-ringgit Islamic instruments issued in Malaysia are exempted from withholding tax. Special Purpose Vehicles (SPV) for Islamic financing purposes via the Islamic capital market are not subject to the administrative procedures under the Income Tax Act 1967. In addition, companies that establish these SPVs are given a tax deduction on the issuance cost of the Islamic securities incurred by the SPV. The issuance cost for all Islamic securities approved by the Securities Commission are also eligible for tax deduction.
One important step led to a common methodology for the supervisory review and evaluation process, the core of supervisory activities and the basis for the capital level the SSM expects a bank to hold according to its individual risk profile. Starting with 19 different supervisory practices and information levels, it was pivotal to set a basis of quantitative as well as qualitative information about individual banks and the differences in national banking systems. We can now reap the fruit from  BIS central bankers’ speeches  1  having a single European supervisor by moving our capacity for benchmarking to a European level. But it was not only a busy year, it was a very special year, too. Everything we decided, we decided for first time. Everything we did set a precedent. Thus, everything had to be discussed in the Supervisory Board of the SSM, consisting of the representatives of the 26 national supervisory authorities as well as of 6 ECB representatives. We formulated supervisory policies in all major areas, for example large exposure limits, the fitness and properness of board members, conditions for changes in qualifying holdings, prerequisites for capital reductions and issuances, model approvals, capital and liquidity waivers, IPS etc. We also discussed and agreed on concepts and processes for supervisory planning, onsite inspections, risk analysis, reporting of banks. Integrating 19 national supervisory cultures and traditions with a wide range of administrative practices demanded and still demands organisational and methodological rigour.

This was necessary to lay the foundation for our work and to exploit that we are one of the biggest supervisors of the world. We are exceptionally well placed to look for the best practices and to identify emerging risks by using our unique database. Good benchmarking combines strong analysis and data-driven assessment with expert judgement. It allows taking into account the specificities of individual banks while still fostering consistency of assessments across banks and countries. Good benchmarking looks at risks from multiple perspectives and helps to develop a deep, holistic understanding of each institution’s overall risk profile and viability. Third, we need to further analyse in detail and for each topic individually where we are able to create a harmonized approach within the SSM, where we are able to remove uneven playing fields. We already did so for the options and national discretion. In November we will consult on the legal text we drafted for executing the discretion given to us regarding the 122 OND identified and decided upon by the SB. Apart from the famous ONDs, the current legal environment in which we operate is characterised by many different interpretations and national gold plating. In this  2  BIS central bankers’ speeches  context, we face a particular challenge. It goes without saying that the SSM applies national law; consequently, the SSM is not always able to ensure a level playing field when national laws diverge.
The HKMA’s subsidiary, the Hong Kong Mortgage Corporation (HKMC), which was set up with an objective of buying mortgage loans from banks to supply the markets with additional liquidity, could hardly find any seller in recent years. 4. And our banks are also highly capitalised. Their average Capital Adequacy Ratio is over 20% whereas the average classified loan ratio stays at low levels under 1%. Therefore, they also do not have a strong motivation to issue capital efficient products like synthetic securitisation. 5. However, that does not mean that this will always remain the case, and there is no place for structured credit products here. There are a few factors that can spur the further development of these products in the coming years. 6. First of all, Hong Kong has always excelled as an international financial centre that serves not just the local economy, but also the whole region in the Asian time zone, especially the Mainland of China. Everyone knows the success of the Hong Kong equities market. It is disproportionately large compared to our GDP, but it is still growing at a rapid pace with a strong pipeline of IPOs of companies from the Mainland and elsewhere. 7. In the bond space, there is a fairly common misconception that we do not have a bond market to speak of.

Yes, it is true that corporate HK dollar bond market is small, thanks to the success of the Linked Exchange Rate System which enables our corporations to tap into the much deeper investor pool of US dollar bond markets without much currency risk or hedging costs. But as revealed in a recent report by the International Capital Markets Association (ICMA), Hong Kong is actually the largest centre for arranging Asian international bond issuance, capturing 34% (or $ billion) of Asian international bonds in 2020, followed by the US (18%), the UK (17%) and Singapore (5%). 8. Hong Kong is also well ahead of other major international financial centres in terms of arranging first-time bond issuance, capturing 75% $ billion) of the Asian market versus Singapore (9%) and the UK (5%). Issuers and investors alike are well served by our comprehensive financial ecosystem underpinned by free flow of capital, an internationallyaligned common law system and regulatory environment, and the presence of world-class professional services with talents from all over the world. 1/4  BIS central bankers' speeches  9. All these mean that Hong Kong is well placed to serve as a centre for Asian structured financing just like other financial intermediation that we are doing, as this market continues to mature in this part of the world. 10. The macro trends are also supportive. With the record low interest rates and abundant liquidity in many advanced economies, investors are keen to look for some decent yields for their investments.
The origins of the crisis are complex, but it had its roots in the bursting of a credit bubble that had grown to great size during the middle part of the last decade. Prior to the onset of the crisis, a combination of rapid financial innovation and unbalanced global economic integration resulted in a mispricing of risk worldwide. This was particularly extreme in certain markets such as U.S. housing and housing finance. This mispricing of risk led to a misallocation of resources and an excessive build-up of debt in many parts of the global economy. Many – though not all – U.S. households responded to the easy availability of credit and rising home prices by taking on more debt. When the housing boom lost steam and began to burst, expectations about housing prices and wealth were disappointed. The bursting of the credit bubble also created instability within the global  BIS central bankers’ speeches  1  financial system, and this in turn resulted in a sharp constraint in the availability of credit for households and businesses. The result was what is now called the “Great Recession.” Over the period from late 2007 through mid-2009, real gross domestic product (GDP) declined more than 5 percent, making this recession the longest and deepest recession of the postwar period. The recession manifested itself in many ways, but one of the most painful was the severe impact it had on the labor market.

That is a formidable task, and it is striking that, in the US, the FDIC has introduced a requirement that troubled banks must be able to demonstrate that, if necessary, they could report each day the details of so-called Qualifying Financial Contracts, which are essentially derivatives. We may need to contemplate something along those lines in the UK. All of that is needed after buyers for the business have been found. Potential bidders for all or part of an ailing bank will themselves need the kinds of information typically offered to bidders in a “friendly” M&A transaction. So there is a case for banks routinely maintaining such a Data Room as part of their crisis contingency plans. In delivering its resolution responsibilities under the 2009 Banking Act, the Bank is ready to work with banks and the FSA in helping to specify in more detail what is needed in practice. If the information can be ready almost routinely the execution of resolutions would be aided. In summary, as a consequence of its new statutory role, the Bank can have a need for a lot of information about banks getting into distress. That might usefully be seen alongside the information needed before a bank reaches the point of being unviable, when it might apply to draw on the Bank’s public liquidity insurance facilities, notably the Discount Window. And beyond that, a bank might seek Emergency Liquidity Assistance, where the Bank acts under the Tripartite MoU.
But even with a growth rate of just over 3%, the Swedish economy would be expanding more rapidly than we believe it is capable of in the longer run. Econometric estimates of the output gap. Per cent of potential GDP 4  4  2  2  0  0  -2  -2  PF HP UC  -4  -4  -6 -8 1980  -6 -8 1984  1988  1992  1996  2000 Source: The Riksbank  Let me conclude by underscoring what I mentioned initially, namely that forecasting inflation proved difficult in the 1990s, in Sweden as well as elsewhere. There have been substantial changes in our economies, partly because policy now focuses on stability and competition has become stronger in various ways. Inflation in Sweden has been a positive surprise in recent years even though activity has been rising strongly, so further positive surprises should naturally not be ruled out. Still, there are now many indications that resource utilisation is relatively high and will go on rising. That implies that, little by little, inflationary pressure will grow. We will be presenting a comprehensive assessment of inflation prospects in the December Inflation Report. In that context we will also be deciding the repo rate. Recent developments have not altered the picture I formed in October. Although it is still too early to specify when, there will presumably be grounds for increasing the repo rate in the future. BIS Review 107/2000  6

Thus, our banknotes promote the historical and cultural heritage of our country and highlight the most powerful achievements of many prominent historical figures through centuries. I feel good when I see that the two first denominations of this series, 200 lek and 5000 lek, put in circulation since September 2019, are welcomed by the public, have met the expectations of the Bank, and already are gradually becoming a sustainable part of currency in circulation, by supporting the continuous strengthening the quality of banknotes in circulation, aimed at preserving their integrity, in relation with the public, and upholding a dignified image of both the Bank of Albania and the Albanian state. Today, nearly two years later following the launching and the successful issuance in circulation of the first two denominations, the Bank of Albania is launching the two other banknotes, part of the new series of the Albanian banknotes, the denominations: 1000 lek and 10000 lek. The latter is a completely new denomination in the series of the Albanian banknotes. The printing and issue into circulation for the first time of the new banknote with the largest value, 10000 lekë, represents in itself, the adoption of the banknotes’ structure to the evolution of the structure of prices and wages, the development the electronic payments, and of the other indicators related to the management of currency.
However, thus the procyclical nature of the banking operations and the banks' tendency for larger relaxation of the credit activity standards in periods of growth are proven, which in time of economic activity deceleration, through risks reassessment, results in higher loss volume due to impairment and restraint from crediting non-financial entities. And the last, however key question: What are the challenges for the forthcoming period? It is definitely clear that there is a need of a comprehensive response to the world financial (banking) crisis. In his new book "The Return of Depression Economics and Crisis of 2008"), Paul Krugman says: "How did this second colossal muddle arise? In the aftermath of the Great Depression we redesigned the machine so that we did understand it, well enough at any rate to avoid big disasters. Banks, the piece of the system that malfunctioned so badly in the 1930s, were placed under tight regulation and supported by a strong safety net. Meanwhile, international movements of capital, which played a disruptive role in the 1930s were also limited [due to the regulations]. The financial system became a little boring but much safer. Then things got interesting and dangerous again. Growing international capital flows set the stage for devastating currency crises in the 1990 of the 20th century, and for a globalized financial crisis in 2008. The growth of the shadow banking system, without any corresponding extension of regulation, set the stage for latter-day bank runs on a massive scale.

But we do know that there will be new processes and products and that the industry structure will change in directions that cannot be foreseen now. Nor can we exclude the possibility that Norway may enter a lengthy period of stagnation, for example when the petroleum sector is scaled back. Another lesson is that price stability is not self-generating. In the event of substantial disturbances and an unsuccessful economic policy, the economy may lose its nominal anchor. As a result, inflation may accelerate or be too low or negative, and production may become very unstable. As the country’s central bank, we take our work to safeguard price stability very seriously and we will continue to work towards this end. We set the key rate from month to month while keeping in mind the three-year horizon, but the objective is to generate confidence in stability in the value of the krone in the long term. Those of us who are still alive at the turn of the next century, will see if we achieved this objective. 2  BIS Review 43/2005
The issue was not capital raising as in the SCAP, but instead how fast should they continue to build their capital. What’s prudent? This translated into an evaluation about the amount of capital that they could prudently pay out via dividends and/or share buybacks. Fourth, with respect to the distribution requests, we were not calculating the amount of capital that the banks can distribute. Instead, we were making an “up” or “down” decision per their requests. Either we “objected” or we “did not object.” We want banks to have good capital planning processes and make intelligent decisions with respect to capital. We don’t want to determine their capital actions or what their distributions should be. They need to be able to do this. Fifth, with respect to disclosure, this decision was left to individual firms. In some cases, banks disclosed whether we objected or not to their plans for distributions, while in other cases they simply announced their intention with regard to future capital distributions. So what have been the lessons from our stress test exercises? One key issue during the financial crisis was the unwillingness of banks to proactively raise capital so they would be better prepared to withstand a “bad state of the world” scenario should that transpire. Banks didn’t want to do this for two reasons. First, capital raises might signal that they were, in fact, weak. Second, the capital raises would be dilutive.

4  Principal component analysis is a statistical technique for compressing information, reducing the number of variables and examining systematic variations in data. The method entails calculating new latent variables, principal components, which can explain most of the variation in the process. 5  The flexible-price output gap is mentioned in modern research into monetary policy, where one often talks about flexible-price production instead of potential GDP. Flexible-price production means the production that would arise if both prices and wages were entirely flexible. However, determining this gap is sensitive to how one models the economy and interpretation may be difficult in the absence of in-depth knowledge of the model's properties. For a discussion of the flexible-price output gap and monetary policy, see Jonsson, M., Nilsson, C. and Palmqvist, S. (2008), “Should monetary policy stabilise resource utilisation?” Economic Commentaries 1, Sveriges Riksbank. 6  Öberg, S. (2007), “Productivity and monetary policy”, 7 June 2007 and Öberg, S. (2008), “Monetary policy and productivity”, 29 January 2008. 7  Reinhart, C. M. and Reinhart, V. R. (2010), “After the Fall”, National Bureau of Economic Research Working Paper No. 16334. See also Reinhart, C. M. and Rogoff, K. S. (2008), “The Aftermath of Financial Crises”, National Bureau of Economic Research Working Paper 14656. BIS Review 130/2010  3  lower at the end of the forecast period than we expected two years ago. Lower productivity is responsible for virtually the entire decline, while the number of hours worked is estimated to remain largely the same.