samchain/econo-pairs-v1 huggingface dataset:
d. Fourth, to position the financial system to facilitate an orderly transition to a greener economy. e. Fifth, to advance value-based finance through Islamic finance leadership. 31. These aspirations paint a picture of a dynamic and vibrant future. That is indeed what we hope and strive for. We ought to be excited about the prospects and possibilities of the future – but we must ensure it is built upon a bedrock of resilience, so that whatever progress we secure is not short-lived. 32. For the financial sector, decades of continuous effort to strengthen the financial system – be it to build buffers or to implement measures to deepen and develop our financial sector – has been crucial to ensure that it can support economic growth. In the aftermath of the Asian Financial Crisis, the comprehensive reforms of the banking sector resulted in more robust and well managed institutions. This in turn supported a more resilient banking sector and enabled banks to achieve greater scale to serve the broadening needs of a diversifying economy and expansion in the region. We also advanced strategies to deepen our bond markets, to be a stable and alternative source of funding for the economy. 33. I can remember how tough it was to push those reforms though, and to get them done but those efforts meant that when the GFC happened, Malaysia’s financial sector was in a strong position to withstand the shock.

This time, from an economic model based on cost minimisation (i.e. a low cost model) to premium maximisation. We need to aspire to become an innovation-based economy. What do I mean by being an innovation-based economy? a. First, the most critical raw materials of the economy are ideas instead of natural resources or capital. b. Second, products are of mass customisation and high complexity, instead of mass production. c. Third, organisations are characterised by entrepreneurs, start-ups and collaborative networks. d. Fourth, business competitiveness is not dependent on incentives, subsidies or cheap labour, but defined by world class talent, strong institutions and good governance. e. Finally, market forces work through creative destruction to respond efficiently to the changing needs of the economy and society. We cannot protect every job, business, and industry. But social safety nets can protect the most vulnerable and help all segments transition to new opportunities. 26. To some extent, the work has already started. The Government has already laid down the key strategies within our national policy documents such as the Twelfth Malaysia Plan (RMK-12) and the National Policy on Industry 4.0. However, the success of these plans and aspirations requires strong policy coordination to secure success. This is especially important given our need to invest to strengthen economic complexity and leverage on our strength as a resource rich country. 27. Now, the challenge is to turn these plans and blueprints into action and results.
For example, Malaysia’s top halal export markets (e.g. China, Singapore and Japan) are signatories to the Net Zero target and non-sustainability practices will lead to an increase cost of business exporting into these markets. Malaysia’s halal food and beverages segment, which makes up 80% of Malaysia’s halal production and 86%5 of total halal exports may be adversely affected by climate change. An increase in temperature will lower the resilience of the agroecosystem against pests and pathogens, resulting in lower yields and quality of crops, affecting the supply of raw materials. In addition, more MNCs are embracing the sustainability agenda compelling halal SMEs to factor in sustainability as part of their business strategies, operations and decision making. It is heartening that prominent halal MNC manufacturers have already started imposing sustainable practices across their supply chain. Nestle for example, has established the Paddy Club back in 2012 as an initiative to ensure rice used for the company’s cereal products is sourced sustainably and responsibly. Another example is the Sustainability Agriculture Code as a pre-requisite for suppliers to enter Unilever’s supply chain as part of the group’s ambition to sustainable sourcing. Towards this end, the Islamic financial institutions have put together a lot of efforts and resources in place, underpinned by the concept of Value-based intermediation (VBI) such that financing and banking activities are in line with sustainability practices.

The remarkable success of the Central and Eastern European countries of achieving EU membership after a thorough transformation and rapid growth of living standards undoubtedly holds a lot of recommendations and lessons for the South Eastern European countries. These countries had similar, maybe even more advanced starting positions than the other transition countries, but South Eastern Europe is now lagging far more behind in terms of progress towards the EU. However, we should bear in mind that the main reason for this is definitively the political instability and war conflicts in the region, which understandably prevented faster economic transformation and reforms. Luckily, it appears that political support for EU accession and the determination to pursue EU membership, including all the necessary economic and political reforms, are strengthening. In analyzing the economic developments in the region of South Eastern Europe, some notable differences with the CEE countries appear. South Eastern Europe has much lower pace of reforms and lower growth rates. Related to this, capital inflows in the region have been much smaller and have shown a much bigger dispersion among countries, ranging from 834 USD per capita in Albania to 3,932 USD per capita in Croatia, cumulatively in the period 1989-2007. 12 Credit expansion has been high, but has still to reach rates and length of the one seen in more advanced transition countries. Consequently, there have been less demand pressures as well as comparatively lower inflation than in the other countries, although inflation has been rising recently.
6  See: McKinnon, R.I. and H. Pill (1997). “Credible liberalisations and overborrowing,” American Economic Review 87(2), pp. 189–193. BIS central bankers’ speeches  3  The inflationary consequences of strong growth led to a loss of competitiveness, as the real exchange rate appreciated (Chart 14). The current account of the balance of payments shifted into deficit, creating a dependency on the inflow of foreign capital (Chart 15). 7 And the rapid pace of economic growth obscured the underlying weakness of public finances, in some cases abetted by creative accounting practices, such as shifting government liabilities off the balance sheet. The case of Ireland seems particularly close to Asia’s experience in the 1990s: while public finances appeared relatively strong, a vast external debt was being accumulated by the banking system. The implicit government liabilities towards the financial sector arising from deposit insurance schemes and the need to manage systemic risks were neither fully recognised nor appropriately priced (Chart 16). By contrast, the Greek experience appears closer to that of Latin America. In these cases, fiscal indiscipline, in part initially obscured by creative accounting practices, lies at the heart of the accumulation of financial imbalances, rather than a build-up of external debt on bank balance sheets. Argentina’s crisis in 2001 is a case in point, although the experience was shared by many Latin American countries in the 1980s (Chart 17).

As a result, euro area countries cannot afford to implement a sovereign default without suffering as a consequence of such a default a major breakdown of their financial, economic and social structure. There is no post-war example of a government in an industrialised economy restructuring its debt. For a euro area sovereign to seek to restructure its debt would be a huge leap into the unknown. This aspect is frequently omitted by financial analysts in their  10  The classic reference is Fischer. I (1933). “The debt-deflation theory of Great Depressions”, Econometrica 1(4), pp. 337–357. BIS central bankers’ speeches  5  newsletters or by commentators or academics in their short op-eds. And this is the reason why they do not get the point right when they state that default and restructuring is unavoidable in the euro area. The fourth difference is that, given the much greater depth and intensity of financial and economic integration in Europe, the strength of contagion across financial institutions and markets is potentially more significant within the euro area today than was the case in Asia in the 1990s. That is not to say that there was no contagion in the 1990s. But the cross-border exposures within the euro area are an order of magnitude greater than was the case for such intra-regional cross-holdings in Asian EMEs. This means that the potential for spillovers and a systemic area-wide crisis is much higher and has to be factored into the policy responses.
But it is equally important that we take steps to dampen the incentives the regime currently creates simply to seek out those assets which have a high return relative to the expected losses set out in the rules. This is particularly important because the competitive nature of the market for moving corporate pension schemes over to insurers means that even if firms have the best intentions to invest in productive UK assets, they will still be compelled to invest in the most MA-producing assets they can find or risk losing the business to other competitors. In order to make progress on these issues we have published a full Discussion Paper and Technical Annex, alongside the Treasury’s wider consultation paper, in which we set out the evidence as we see it and propose one way forward. [14] The data collection exercise we ran with the industry earlier in the review indicated to us that the different structures for the MA included in that exercise should not be pursued because their impact could be too large and in particular they would make insurers’ balance sheets too volatile. [15] The industry made these points very strongly, and provided data which supported their case. Hence our team went back to the drawing board and has brought forward revised proposals, which on our assessment are around 70% less volatile than the structures included in the earlier data collection exercise. So far the industry reaction to these revised proposals has been strongly negative.

In connection with international risk factors, we placed emphasis on the uncertainty surrounding international economic conditions and the concern about the low risk premia in financial markets. I think it is fair to say that developments have borne us out here. Other risk factors were related to the vulnerability of Norwegian bank customers, lower interest margins for banks and the new capital adequacy rules. Uncertainty surrounding developments in international economic conditions and financial markets There has recently been considerable turbulence in international financial markets. Could this have a substantial impact on Norwegian financial markets and could it have serious consequences for growth and employment in Norway? Let us look at the reasons for the turbulence and how it has spread. The source of the turbulence can be found in the US housing market and particularly in the subprime mortgage market. In addition, this type of loan is frequently offered at a low rate of interest with small repayments in the first years of the loan term and a higher interest rate later. Mortgages with this structure involve gambling on a rise in house prices. If house prices rise, borrowers’ collateral will increase in value, allowing the mortgage to be refinanced on better terms. Or the borrower can turn around and sell the dwelling at a profit. This is what happened for a period, but then house price inflation slowed, partly as a result of tighter monetary policy.
Households’ distribution of income and credit is more uneven in CEE than in euro-area; and corporate balance sheets have not been repaired to the same extent as the banks’ balance sheets were. As for the alternatives on the supply-side, the capital market is thin, and the role of the other financial institutions is less important than that of banks – although there are some differences in country-level data. This leads us to another challenge which has become increasingly important in non-euro Member States: the sovereign-bank nexus. Indeed, banks operating in non-euro area countries 2/4  BIS central bankers' speeches  are more exposed to the domestic sovereign debt, as they hold a higher share of it. However, sovereign securities are the only highly liquid assets available in large amounts in small markets; hence banks have no realistic alternative to build liquidity buffers. Moreover, government debt levels in CEE are much lower than the euro-area average. The contrast between high banks’ exposures to sovereign debt and low government debt in noneuro countries emphasizes the structural challenges in these countries. Any solution for addressing the sovereign-banks nexus should account for the specificities of non-euro Member States, and in general of emerging countries not issuing debt in a reserve currency. In the spirit of European integration, any limit should be addressed to the banks’ group level, not at the subsidiaries level – a solution which would help preventing fire sales and would not affect financial stability in these countries.

HICP inflation, excluding energy and food, will remain very high until the end of 2022, but thereafter it is expected to decline as the upward pressures from the economic reopening subside and supply bottlenecks and energy input cost pressures ease. The ongoing economic recovery, tightening labour markets and some effects from compensation for higher inflation on wages – which are expected to grow at rates well above historical averages – imply high underlying inflation until the end of the projection horizon, although the baseline assumes that longer-term inflation expectations will remain well anchored. In any event, the risks to the inflation outlook remain on the upside and have intensified, particularly in the near term. In the medium term, these risks include a protracted worsening of production capacity in the economy, persistently high energy and food prices, inflation expectations being revised up above the target level and larger than anticipated wage increases. However, a decline in demand over the medium term would ease the inflationary pressures. Under the downside scenario that I mentioned earlier, reflecting the possibility of a severe disruption to European energy supplies, inflation averages 8.0% in 2022 and 6.4% in 2023, before dropping below the baseline projection to 1.9% in 2024.
Safeguarding the interests of consumers without stifling innovation remains one of the most difficult balances to achieve for regulators. Regulators are constantly trading off considerations of privacy against efficiency; fragmentation against competition; access against risks of abuse. In the digital age, these trade-offs become impossible without equipping consumers with the information, knowledge and tools that they need to protect themselves and make decisions that are in their own best interests. It is only through a complementary mix of appropriate but not excessive regulation, and enlightened and confident consumers, that we will find the right balance of guiding the development of digital financial services so that it is neither hurried nor hampered, and remains sustainable and well-functioning to promote financial stability and inclusive growth. For Bank Negara Malaysia, our regulatory agenda is supported by a long-standing focus on financial education. This year, I am pleased to share that this has been elevated to a nationallevel priority with the launch of Malaysia’s first five-year National Strategy for Financial Literacy. A key focus of the strategy is helping consumers protect themselves against fraud and exploitation, and embrace innovation more confidently in the digital era. This needs to start with the young, but without neglecting those for whom the digital world is both unfamiliar and daunting. Specific challenges in a digital era Let me just mention a few of the specific challenges that financial services authorities will have to contend with in the digital era.

–  Or should it be deposited in a bank or lent through another channel? Even before discovering oil, the state had long been a substantial direct owner of Norwegian companies. The value of state investment in Norwegian companies is more than NOK 600 billion. 15 The state owns more shares in Norway than in the US where the oil fund has its largest investments. 16 But will substantial investment in one’s own business – or one’s own nation – guarantee growth and prosperity? Many OPEC countries received enormous income after the oil price shocks in the 1970s. They later not only experienced low growth, but negative growth. 17 Professor Ragnar Torvik writes that one of the main reasons behind the decline was that such a large portion of the additional income was invested domestically. Politicians invested in projects that may have brought political gains – but resulted in economic loss. 18 We can also draw on Norway’s historical experience. In the post-war period, the Norwegian economy was to be reconstructed through a large-scale investment programme. 15  Report no. 13 to the Storting (2010–2011) Aktivt eierskap – norsk statlig eierskap i en global økonomi [Active ownership – Norwegian state ownership in a global economy], Ministry of Trade and Industry (in Norwegian only): http://www.regjeringen.no/pages/16193771/PDFS/STM201020110013000DDDPDFS.pdf) and the annual reports of the Government Pension Fund Norway and the Government Pension Fund Global.
This assessment is also reflected in the September 2010 ECB staff macroeconomic projections for the euro area, according to which annual real GDP growth will range between 1.4% and 1.8% in 2010 and between 0.5% and 2.3% in 2011. Compared with the June 2010 Eurosystem staff macroeconomic projections, the range for real GDP growth this year has been revised upwards, owing to the stronger than expected rebound in economic growth in the second quarter as well as better than expected developments over the summer months. For 2011 the range has also been revised upwards, reflecting mainly carry-over effects from the projected stronger growth towards the end of 2010. In the Governing Council’s assessment, the risks to this improved economic outlook are slightly tilted to the downside, with uncertainty still prevailing. On the one hand, global trade may continue to perform more strongly than expected, thereby supporting euro area exports. On the other hand, concerns remain relating to the emergence of renewed tensions in financial markets and to some uncertainty about growth prospects in other advanced economies and at the global level. In addition, downside risks relate to renewed increases in oil and other commodity prices, and protectionist pressures, as well as the possibility of a disorderly correction of global imbalances. With regard to price developments, euro area annual HICP inflation was 1.6% in August, according to Eurostat’s flash estimate, compared with 1.7% in July. The small decline in inflation is likely to reflect base effects in the energy component.

Yields on both indexed and non-indexed bonds have continued to fall this year, with the yield on government guaranteed indexed bonds now well below 5 percent which some had regarded as the floor. Although money and bond market yields declined in 1997 the lending rates of commercial and saving banks changed little. These rates have now begun to come down. Profitability of deposit institutions The profitability of banks improved during 1997. Current information on profits of the commercial banks shows a substantial increase compared with the preceding year. Their combined return on equity was 9.2% in 1997, compared with 8.2% in 1996 and 5% in the year before that. Nonetheless, profitability varied widely among them, and the different conditions that they faced complicate comparisons. Landsbanki (the National Bank) and Búnaðarbanki (the Agricultural Bank), for example, incurred large irregular expenses related to the final settlement of their pension obligations, which cannot be expected to recur in future. Provisions to reserves for loan losses have fallen sharply among all the banks. At the same time, the six largest savings banks recorded some decline in profitability compared with the previous year, and their return BIS Review 42/1998  -7-  on equity was 8.5%. I should underline, however, that profitability varied widely among individual savings banks.
Situations remain very diverse among advanced economies: while the balance sheet of the Bank of Canada amounts to 5% of its nation’s GDP, the Swiss National Bank holds assets equivalent to 80% of the Swiss GDP. Discretionary and technical factors both explain those differences and evolutions. The former holds for countries that choose to accumulate foreign exchange reserves. The latter is topical in the case of the euro area: the ECB’s balance sheet performs an intermediation function between National Central Banks through the so-called Target 2 system. So, as a mechanical phenomenon, balances in the system tend to grow in times of market segmentation i.e. an impaired interbank market and strong capital flows inside the euro area. Similarly, conducting monetary operations via open market or via repos makes the size of the balance sheet more or less dependent on the size of the interbank market. However, the recent increase in size mainly results from a shift in the monetary policy regime. Central Banks have taken a proactive – rather than purely passive – approach to their balance sheets. They have, according to the common parlance, “put these balance sheets to work”. And, as a result, in the formulation of monetary policy, “quantities” – the amounts of assets and liabilities – have come to play an increasing role as compared to “prices” – the level of interest rates. This, of course, is a component and a consequence of unconventional monetary policies.

Some people would argue that the stocks of assets held by Central Banks matter more than the flows of purchases. Others would contend that the composition and size of purchases are the real levers. The issue boils down to whether an expansion in the monetary basis is enough to trigger credit expansion or whether the latter is correlated to banks willingness to expand credit and more importantly to the appetite of economic agents to borrow. Based on how monetary policies have been conducted for the past several decades, banks have always had the ability to expand credit at a given level of interest rate irrespective of the size of the Central Bank’s balance sheet. Being at the ZLB does not change that simple reality. Hence I would tend to argue that, given the transmission channels of an asset purchase program, its composition and length may matter as much as its size. In any event, increasing the size of the Central Bank’s balance sheet, via large scale asset purchases, sends very important signals. This “signaling” operates at several levels. It may contribute to strengthening forward guidance on the policy rate. More importantly, it may have a direct impact on inflation expectations, therefore contributing to lowering real interest rates. When the balance sheet size is explicitly linked to the achievement of an inflation objective as in Japan, it may prove an effective tool to communicate the monetary authority’s determination – what economists would call a “commitment device”.