samchain/econo-pairs-v1 huggingface dataset:
Constraints on earnings distributions through dividends, share buybacks and discretionary bonus payments to staff will be imposed on a bank when the conservation buffer is breached. The closer a bank’s regulatory capital ratio approaches the minimum requirement, the greater the constraints on earnings distributions. BIS central bankers’ speeches  3  incorporated banks will have to maintain at least 9% Common Equity Tier 1, compared to the Basel III minimum of 7%. Let me explain the reasons for this. (i)  First, the Basel III minimums do not adequately take into account the systemic importance of banks. Each locally-incorporated bank is systemically-important in Singapore and has a substantial retail presence. Together, they account for more than half of the total non-bank resident deposits and loans in Singapore. Hence, higher capital levels are required to strengthen their ability to absorb unexpected losses effectively in a crisis. This is necessary to protect depositors, reduce risks to the real economy, and safeguard our financial stability. The experience of countries at the centre of the crisis in Europe and the U.S. showed that the total cost of a financial crisis to the economy and the public can be substantial. (ii)  Second, Common Equity Tier 1 capital requirements that are significantly above Basel III will not result in a large reduction in economic output but would be beneficial in reducing the likelihood and cost of a crisis. Several empirical studies confirm this.

(iii)  Third, our approach must be sensitive to the impact on industry. No new regulation is costless. MAS must weigh the cost of new regulations on institutions which have to comply with them, against the broader benefits that those regulations have for the economy and society. With these principles in mind, I will now outline MAS’ approach to the issues I mentioned earlier. I will first touch on what Basel III will mean for Singapore’s capital adequacy requirements. After which, I will share MAS’ views on the current debate on universal banking. Capital requirements for locally-incorporated banks MAS has reviewed its bank capital adequacy rules. We will require Singapore-incorporated banks to meet Basel III earlier and at a higher standard. Singapore-incorporated banks will be required to meet the Basel III minimum standards by 1 January 2013, ahead of the Basel Committee’s January 2015 timeline. Singapore banks are well-capitalised and are in a good position to adopt Basel III sooner than 2015. Moreover, the long phase-in period provided by the Basel Committee was to ensure that the new requirements did not stall the economic recovery in countries that were at the centre of the crisis. Singapore’s situation is different: the recovery has been robust and the economy is well above pre-crisis levels. MAS will increase the minimum levels of common equity that locally-incorporated banks will be required to hold. The experience of other countries in the recent crisis shows that common equity is the most effective capital instrument to absorb losses and write-downs.
For now, let me highlight two particular areas of the study’s recommendations that we have started working on. Professional development and training of directors One area of improvement is in the training of directors. Having committed and skilled directors is a key component in the effective functioning of the board. Director training is particularly relevant for new or first-time directors, to assist them in understanding their roles and responsibilities, and to equip them with the necessary skills. Even experienced directors need to continually upgrade their skills, to oversee and steer companies in today’s rapidly changing and globalised landscape. MAS has been in discussion with the Singapore Institute of Directors on how we can build on its very useful work to date, and develop a comprehensive and sustained approach to training and development of directors in Singapore. MAS will help to fund a study that will help to operationalise this comprehensive approach to training. The study will cover a few areas. First, it will look into benchmarking directors’ training and development against best practices in other leading jurisdictions. A number of jurisdictions have in the last few years developed extensive structured training programs for directors. Secondly, it will examine possible collaborative arrangements between a range of organisations and training providers. Thirdly, it will also focus on how best such training initiatives should be financed.

Corporate governance regulations and best practices We have seen considerable reform in the regulations and codes of corporate governance, as well as the actual practice of corporate governance in the Asian Roundtable economies. For instance, Pakistan, Chinese Taipei and Thailand all adopted new codes in 2002, while new or updated codes have been adopted in Bangladesh, Hong Kong, Indonesia and Korea since 2003. This has yielded visible benefits. There is greater clarity in many Asian economies regarding the fiduciary duties of the directors of listed companies. There has also been progress made in terms of more independent directors being introduced to the boards of listed companies in the Asian region . Accounting rules have also been beefed up across the region. Some of the Asian Roundtable countries have made significant moves towards convergence with international standards and best practices on accounting. China, India, Indonesia and Philippines, have for example revised their accounting standards to bring them more in line with international standards. Corporate governance in Singapore Corporate governance in Singapore has similarly undergone evolution. I shall leave it to the speakers from the Singapore Institute of Directors and the Singapore Exchange to share on these more fully. I will talk briefly instead about our overall approach to corporate governance. Regulatory framework – balance of mandatory rules and best practices First, let me touch on the regulatory framework for corporate governance. In recent years, we have moved away from a merit-based approach towards a disclosure-based approach.
For outflow liberalization, on the one hand allowing more Thai resident outflows is beneficial as it helps lessen upward pressure on the currency as well as improve the investment profile of the Thai private sector toward a more diversified and possibly more efficient one. On the other hand, if risk assessment capacity of local investors remains low, too rapid outflow liberalization could make the country’s balance sheet more vulnerable rather than more robust. A balancing act is even more difficult when applying re-regulation on capital inflows. A measure that is too mild would lack effectiveness, while too drastic a measure would be too costly. For one thing, its distortionary effects would be large; for another, increased policy uncertainty could turn away productive investors and raise the country’s risk premium. Aware of these undesirable side effects of controls, we would limit their use to only when absolutely necessary and only on a temporary basis. On the use of interest rate policy, some may view the policy interest rate as another tool to deal with capital flows, and there have been public debates whether the recent hikes in the policy interest rate by the Bank of Thailand were consistent with our thinking on recent capital flow developments. Specifically, many have argued that the hikes would actually induce more capital inflows that add pressures on the currency. On this issue, let me say the following. Under inflation targeting, the policy interest rate is used primarily to help maintain price stability to achieve long-term balanced growth of the domestic economy.

Designating the policy rate to another role, like managing capital flows, would then confuse its primary role, especially when the risk of overheating together with a surge in capital inflows presents policymakers with a dilemma. Thus, our interest rate policy is not meant to deal directly with capital flows. Its side effect on capital flows is, however, not to be ignored. A fine balancing act is also needed when it comes to making interest rate decision given this dilemma. Perceivably, large interest rate differential may be a push factor for capital flows. However, given relatively small interest rate differentials between Thailand and major economies, we view that a gradual increase in the policy rate should not in and of itself be a cause of further inflows. In fact, we have empirically found that other factors such as growth differential and global risk appetite and liquidity are far more important than interest rate differential in explaining the recent surge of capital inflows to the country. On the other hand, given the pickup in global and domestic demand recovery, the risk of inflation has recently materialized and posed increasing threat to domestic price stability. With all these considerations, we deem that the recent interest rate normalization was necessary and was consistent under our inflation targeting, while its impact on further capital inflows should be minimal. So let me recap our challenge. Capital inflows are beneficial but they are not cost-free.
3 Friedman (1968), ‘The role of monetary policy’. American Economic Review. 4 In their 2020 paper ‘The long-run effects of monetary policy’, Jorda, Singh and Taylor report results  suggesting that overtight monetary policy can have long-lived effects on output via lower investment and capital accumulation (so-called “hysteretic” effects). But I don’t think the authors would claim that easy monetary policy, and high inflation, would boost long-run output (the effect would be asymmetric). In his Nobel prize lecture Lucas (1995) suggests that, in some circumstances, when money is the only store of value, you might even expect the long-run Phillips curve to slope backwards, as the inflation “tax” reduces the return to saving. Bank of England  Page 10  Chart 5: In the long run, real things are unaffected by nominal shocks  The fact that the relative price of energy has gone up so steeply in Europe has a real cause: Russia’s curtailment of the supply of gas. The same goes for the steep rises in prices of non-energy goods that came before, during the course of 2021. Because it prompted a shift in consumer spending towards goods, while at the same time impairing their supply, the pandemic pushed up the relative prices of things like computers and cars. As we saw in the introduction the result of these shocks has been a steep rise in the price of what the UK consumes relative to what it produces. That inevitably depresses real incomes, regardless of the path of monetary policy and overall inflation.

15/11/2019  Opening remarks 11th edition of the European SSM Roundtable/International Bankers Forum Margarita Delgado Deputy Governor  Good Morning and welcome to Banco de España for this 11th edition of the European SSM Roundtable, organised by the International Bankers Forum (IBF). The topic for today’s roundtable is the management of non-financial risk. This is an issue which is always in the spotlight and, at the same time, is quite hard to tackle. The concept of risk is continuously used in banking regulation. A quick search in the CRR1 or CRR2 text will reveal that it is mentioned nearly 1,500 times in each. Banks are certainly familiar with the regulatory requests to understand, measure, hedge, control, assess, address or mitigate risk. I believe it is fair to say that any firm that has survived the crisis and its long aftermath, without public support, has been largely successful in fulfilling these risk-related tasks. Of course, supervisors are also permanently concerned about risk; to some extent, it is what we are paid for. Still, I believe both banks and supervisors tend to feel rather comfortable when we assess financial risk. Don’t misinterpret me. We are perfectly aware of the consequences that a mismanagement of financial risk can entail, but we tend to look at financial risk in a more natural and intuitive way. Things get a lot stickier when we look at non-financial risk. What is the nature of non-financial risk? And what makes it different from more traditional financial risk?
Specifically, voices have been raised in favour of a substantial increase in the minimum non-weighted capital requirement, the leverage ratio. Moreover, demands for an outright separation of investment banking from commercial banking, along the lines of the Glass-Steagall Act, have gained political clout. While these proposals have merits – and, given the difficulty of the task, one should keep an open mind – qualifying remarks seem appropriate at the current juncture. We are in the midst of implementing a complementary and balanced package of measures. As we have seen, tangible progress has already been made. When it is fully implemented, this package will substantially reduce, and possibly eliminate, the TBTF problem. It is unlikely that a sudden change in strategy would lead to a faster elimination of the underlying risks. Rather than changing the regulation strategy midway, it is imperative that we press on with the full implementation of the TBTF package. We will then be in a position to assess its effectiveness and decide whether further measures are necessary. Full implementation entails, necessarily, further progress on the following four issues: First, the big banks must stay on track, and must fully and consistently implement the tighter risk-weighted capital and liquidity requirements as currently planned. This will, importantly, lead to a significant improvement in their leverage ratios. Second, the quality of the banks’ own risk assessment methods must be improved. Increasingly, doubts have been raised on the reliability of the internal models which banks use to compute their risk-weighted assets (RWAs).

Average prices (weighted by transaction)  2001 NOK 8 7 6 5 4 3 2 1 0  Weighted average price giro transactions  Weighted average price all transactions  94  95  96  97  98  99  00  8 7 6 5 4 3 2 1 0  01  For most services, customer prices are lower than banks’ unit costs. The exception is giro services at the counter. The unit cost for EFTPOS has declined so that transaction prices nearly covered costs in 2001. Prices have fallen because the transaction volume has increased and costs related to developing and introducing the system have been repaid. The price for using a card in a POS terminal has not risen appreciably in recent years. The unit cost for paying bills over the Internet is still high. This is probably because development and introduction costs are still not repaid and because there is excess capacity in the banks' solutions. Customer prices cover less than one-fourth of the costs reported by banks in connection with this service. It appears that banks are pricing this service on the basis of a long-term strategy that low prices during the introduction phase will encourage customers to use new, more efficient payment instruments earlier. If the pricing strategy actually increases use, it may contribute to increasing efficiency in the payment system in the long term because economies of scale will be exploited at an early stage.
Although credit and debit cards are the most important means of payment among the general public, cash (banknotes and coin) is still an important payment instrument and has actually gained in importance in the recent term. For a long period, cash in circulation amounted to less than 1% of GDP, whereas it now totals roughly 2½%. Price level developments and the increase in cash in circulation give cause to consider the need to issue a new banknote with a higher face value. The Central Bank has therefore begun preparing for the issue of a new 10,000 kr. banknote that will be equipped with better and more numerous security features than its predecessors. In appearance, the new note will be similar to the others in use, and the graphics will be related to the poet Jónas Hallgrímsson. The bill will also feature the plover. It is planned that the new banknote will be put into circulation in the autumn or early winter of 2013. On this occasion, and because we are faced with a large array of complex tasks, as I have mentioned in my speech today, I think it is appropriate to close with a poem by Jónas Hallgrímsson, which I interpret to mean that challenges like those ahead of us certainly require organisation and forethought. We can only cross the river where it is possible to pass. But to make the crossing we also need determination and courage. In Jónas’ words: The cliffs on life’s swift current are cleft by shallow valleys.

Second, inflation rose temporarily as a result of rising global oil and commodity prices. Monetary policy should not react to these either – and it didn’t. On the other hand, it is the task of monetary policy to prevent such increases from turning into a persistent inflation episode through a reaction of wages and other domestic cost factors. It is the third type of inflation that is a home-grown product. In increasing measure, the current bout of inflation falls into this category, as can be seen in the wage increases of the past year. Monetary policy must take action to impede this type of inflation, particularly when inflation expectations are well above target, as they currently are. A key question in this regard is why this inflation episode has occurred in spite of unemployment figures and other measures suggesting a considerable slack in the economy. Of course, a number of explanations are possible: that there is a lack of confidence in the will and ability to apply policy tools as needed to attain the inflation target; that the tradable sector, which enjoys good operating conditions due to the low exchange rate, is a driver of wage developments; and that the exchange rate is temporarily low because of the repayment of foreign debt, which is to some extent forced and is occurring more rapidly than is desirable. It is interesting, too, to ponder whether the slack in the economy is actually smaller than current assessments indicate.
Six long-term scenarios, that is to say with a 2050 horizon (and even the end of the century for some variables), have been developed and will continue to evolve under the aegis of the Network for Greening the Financial System (NGFS) iii [slide 3 for a focus on 3 scenarios], to whose 144 institutions the Banque de France provides its global secretariat. The current scenarios, which are consistent with the various physical scenarios of the IPCC, will soon be supplemented by a seventh scenario of “net zero 2050” achieved through greater energy sobriety; the publication of the updated NGFS scenarios is expected next autumn. In their current version, they are already used by a great number of supervisors – the majority of the 36 jurisdictions that  Page 4 sur 8 have conducted a climate stress test (for instance France, the EU, the UK and the US). Our pilot stress tests also pointed to a need for shorter-term scenarios with a five-year horizon as the transition is accelerating: the NGFS is currently elaborating on them by leveraging the work of its Members, including by Banque de France researchers iv. We at NGFS will publish a conceptual framework at end of this year, and are aiming to release a first vintage of these short-term scenarios by the end of 2024. In particular, they should display more adverse developments, and incorporate tougher shocks. They should also be tailored to explore the potential impacts of climate change, not just on activity but also on inflation.

A few years ago Japanese bankers used to tease me by asking what I thought of the “Wimbledonisation” of the City - meaning that this country organised the best competition in the world but the visitors carried off the prizes. I used to explain to them that it was activity - rather than nationality of ownership or even control - that mattered in terms of the City’s contribution to the wider economy, and in terms of its direct contribution to growth or employment, or BIS Review 134/1999  2  of income or tax base in this country; I even suggested that Tokyo would benefit as a financial centre if it became more open to overseas players. I don’t think that they were convinced at the time. But now that has begun to happen, and some of my Japanese banker friends tell me they finally see the point. It is in fact of course more generally a lot harder to see the benefits of increasing global competition if you are an existing producer, whether an individual business or the national representatives of businesses directly in the firing line than if you are looking at it in terms of the health of the macro-economy. But there is no doubt that it is this characteristic of openness to competition perhaps above all that explains the uniquely international nature of the City (with more foreign banks represented here than in any other centre) and accounts for much of the City’s continuing success.
At present, criticism is coming from both directions, and many critics maintain that interest rates are lagging behind developments in inflation and economic recovery. Whether this is true will come clear in the next few months, and if it is, remedial action will be taken. At its March meeting, the Monetary Policy Committee stated that further nominal rate increases were likely in coming months but that the scope of such action would depend on near-term developments in inflation and the exchange rate. Further ahead, it will be necessary to reduce the slack in monetary policy as the slack in the economy diminishes. The degree to which this takes place through higher nominal Central Bank rates will depend on future inflation developments. In order to understand current monetary policy, it is necessary to place it in the larger context of post-crisis adjustment and recovery. In a sense, it can be said that the inflation that has plagued Iceland since the crash is a three-fold phenomenon. First of all, it stemmed from the currency depreciation that was part of the economic adjustment that inevitably followed the overheating of 2005–2007 and the subsequent financial crisis. Monetary policy should not have quelled it, nor could it have done so. The real challenge as I mentioned in my speech at  BIS central bankers’ speeches  3  the Annual General Meeting of 2010, was to allow the adjustment to take place without permitting inflation or unemployment to become entrenched afterward.

Should the outlook for the petroleum industry show a significant shift, Norway will have to start down the hard path of economic adjustment. The high level of costs in our country may become a hindrance in the competition for tenders and market shares. What we need above all is a profitable and efficient business sector that can adapt to new times. In that respect, there are some aspects of the Norwegian economy that give cause for reflection. Chart 9  On the surface, developments are positive. Nominal mainland GDP growth at current prices has been surprisingly stable. Over the past 20 years, nominal mainland GDP has increased by around 6 percent annually, and growth is still hovering around that trend. There were some tendencies towards overheating in the years prior to the financial crisis. But the correction that followed during and after the crisis has brought growth back to trend. There is little in this chart to indicate that the world economy has recently been through the most severe economic downturn in post-war history. The picture changes when growth is broken down into price and volume. As mentioned, high prices for domestically produced goods have supported our country’s income. Since 2005, producer prices have increased considerably faster than trend. This illustrates that mainland businesses have also benefited from the substantial improvement in Norway’s terms of trade. BIS central bankers’ speeches  9  Chart 10  Economic activity, on the other hand, slumped during the financial crisis.