samchain/econo-pairs-v1 huggingface dataset:
Christian Noyer: The euro and the banking sector  Speech by Mr Christian Noyer, Vice-President of the European Central Bank, at the Duisburger Banking Symposium, organised by the European Center for Financial Services, on 27 September 2000. *  *  *  Ladies and gentlemen, It is a pleasure for me to speak here at the Duisburger Banking Symposium. The famous American comedian, Bob Hope, once typified a bank as “a place that will lend you money if you can prove that you don’t need it”. As we all know, this description does not give credit to the extremely important role that banks play in a modern economy. Nowadays, economic life simply would not be possible without the wide range of services and products that banks offer to various groups of society. The issue that I shall address today - the euro and the banking sector - cannot be fully comprehended without considering the particular, and to a large extent unprecedented, nature of the introduction of the euro. The single currency does away once and for all with internal exchange rate fluctuations, completes the structure of the Single Market and, by virtue of its availability to almost 300 million people, increases the efficiency of currency use in an unprecedented manner. The introduction of the euro was a regime shift that will undoubtedly have a major impact on the euro area economy and its financial structure in the years to come.

The unemployment rate in the euro area was 7.5% in July this year, the lowest level since July 2008. Over the past years, the ECB has repeatedly and clearly shown its readiness and determination to fulfil the primary objective of achieving price stability, as laid down in the Treaties. This readiness and determination has been critical in addressing the economic crisis and the downside risks to our objective. It was with this same determination that, two weeks ago, the ECB’s Governing Council decided to act in response to the continued shortfall of inflation with respect to its aim. I am happy to be able to discuss these decisions with you today. I will first review the main developments in the euro area economy since my last appearance before this Committee. I will then present the monetary policy decisions that were taken by the Governing Council in the light of the economic outlook. As requested by this Committee, I will conclude by drawing some lessons from the past eight years that could be relevant when discussing the policy responses to the challenges that lie ahead of us. The euro area economic outlook Since my last hearing before this Committee earlier in the year, euro area growth momentum has slowed markedly, more than we had previously anticipated.
Such a commitment helps to strengthen confidence in the sustainability of public finances, reduces interest rate risk premia and improves the conditions for sound and sustainable growth. The implementation of credible policies is crucial in view of ongoing financial market pressures. Substantial and far-reaching structural reforms, complementing fiscal adjustment, should be urgently implemented to improve the prospects for higher sustainable growth and employment. Major reforms are particularly necessary in those countries that have experienced a loss of competitiveness in the past or that are suffering from high fiscal and external deficits. Increased product market competition and labour market flexibility would further support the necessary adjustment processes in the economy. All these structural reforms should be supported by the necessary improvements in the structure of the banking sector. Sound balance sheets, effective risk management and transparent, robust business models remain key to strengthening banks’ resilience to shocks and to ensuring adequate access to finance, thereby laying the foundations for sustainable growth and financial stability. We are now at your disposal for questions. BIS central bankers’ speeches  3

In respect of the Mudharabah depositors, any adverse shock to the financial performance of the asset portfolio in the balance sheet will be directly transmitted to the liability side, resulting in an adverse impact on the returns to the investment depositors. Islamic financial institutions have a fiduciary accountability in ensuring that depositors’ funds are prudently managed and that the risk-adjusted returns on investments are maximized. The ability to maximize risk-adjusted returns on investments and sustain stable and competitive returns to depositors will contribute to promoting confidence in the Islamic financial industry. Leveraging on information technology As we forge ahead, successful financial institutions will be those that are able to exploit the full potential and opportunities that arise from the IT revolution. In embracing new leading edge technology, the potential for the Islamic financial industry to provide new products and services will be enhanced. It also represents the potential to increase access to financial products through a wider range of new delivery channels. Greater application of IT in the industry can also enhance efficiency by driving down costs for consumers and businesses. Other areas include leveraging on IT in making strategic decisions in the alignment of business, in elevating institutional capacity and operational efficiency and strengthening risk management capabilities. The advent of Basel II for conventional banking has compelled institutions to make strategic investments in technology and risk management systems to be equipped in making the required quantification of credit, market and operational risk.
These four characteristics are critical to the long-run credibility and success of the international capital adequacy framework. In Basel III itself, the Committee has made substantial enhancements to the quantity and quality of capital. By agreeing to be part of the Committee’s RCAP initiative, and by responding to it, national authorities have made clear their commitment to fulfilling the G20’s call for consistency in implementing the reforms. And we are now, for the first time, delving into the capital calculation practices of individual banks from an international perspective, to see what needs to be done so that the results are sufficiently comparable and reliable. The Committee is well aware that any changes to bank and supervisory practices will have costs. The potential side effects of materially narrowing down modelling choices could include a reduction in risk-sensitivity and a corresponding increase in the potential for arbitrage. If not done well, it could also reduce banks’ incentives to invest in risk management models, especially their attempts to continuously broaden and deepen their understanding of risk. As always in regulation, we need to find the right balance: we need to reduce material practice-based differences in RWA variation, while limiting the adverse effects from doing so. Resolving this issue will also take time: there is no quick fix. It will be a significant undertaking, and we need to carefully study the right mix of regulatory and supervisory responses.

Our benchmarking work has, for the first time, given supervisors meaningful information on international benchmarks against which they can compare their domestic banks. Many supervisors are responsible for only a handful of IRB banks, and it can be difficult to generate reliable benchmarks from a small sample. But our studies have provided supervisors with a much clearer picture of how their banks stack up against their international peers, and supervisory action is already being taken against a number of the outlier banks that are on the low side.   Similarly, the Committee’s RCAP jurisdictional assessments are having an impact by reducing variability due to undesirable differences in national regulations. These may often seem to be small issues of technical detail, but they can have a material impact on capital outcomes. To the extent these differences are removed, they can add to the consistency of outcomes. The Committee is also looking at the issue of national discretions and Pillar 2, and it is investigating whether more can be done to reduce variability from these sources by elinimating discretion where possible, and strengthening supervisory guidance on model validation, review and approval.   Since transparency (or lack thereof) of bank modelling practices is at the heart of the problem, during 2014 the Committee plans to propose enhancements to Pillar 3. The aim is to provide banks’ external stakeholders with information to better understand banks’ risk profiles and risk-weighted asset differences.
Of course, I was a little uncertain as to whether I should just be pleased about this. But I think there is reason to be; it shows namely that we have a monetary policy regime which is stable and not dependent on single individuals. Inflation targeting – some thoughts on the future As I have mentioned, the macroeconomic outcome for Sweden has been relatively good over the past decade. Of course, this does not prevent there being questions worth discussing and much that can be improved. This also applies in the field of monetary policy. An important question in this context is what one can expect from monetary policy. If the expectations are excessive, there is a risk they will lead to the wrong issues being discussed and, if the worst comes to the worst, to political discontent that will undermine the current monetary policy system. Reasonable expectations According to the Sveriges Riksbank Act, the Riksbank is to safeguard price stability. We have chosen to implement this by keeping inflation at a target level of 2 per cent. The fact that the legislator has been clear that low inflation should be the target for monetary policy and nothing else, such as high growth or low unemployment, is because inflation is the only factor the Riksbank can govern in the long term. It is therefore unwise, and perhaps even counterproductive, to give a different impression.

Muhammad bin Ibrahim: Scaling up excellence – creating opportunities while mitigating risks Keynote address by Mr Muhammad bin Ibrahim, Deputy Governor of the Central Bank of Malaysia, at the Regional Conference on Money Services Business “Scaling up excellence – creating opportunities while mitigating risks”, Kuala Lumpur, 19 May 2014. *  *  *  I’m glad to be here with you today to join Mr Mathew A. Verghis in welcoming you to this regional conference on money services business. On behalf of Bank Negara Malaysia, I would like to thank the World Bank, the Malaysian Association of Money Services Business, and the International Association of Money Transfer Networks who partnered with us in organising this event. This conference aims to bring together regulators and industry players to review developments in the money services business industry at a time when there are significant changes occurring in the financial industry. In many countries, money services business plays an important role in complementing banking institutions to provide financial services to the community, in particular, the unbanked and small business communities. Given the forces of change that are reshaping the financial industry, it is timely to consider how these forces impacted the expectations, opportunities and challenges for money services businesses. The money services business industry contribute to an important purpose in our communities. They provide financial services to segments of society in both the developing and developed world that do not have access to basic banking facilities and services.
The “economics” of Europe starts from familiar arguments in favour of free trade and competition as the most effective means of ensuring that productive resources are efficiently deployed, promoting specialisation in areas of comparative advantage - and thereby satisfying consumer demands more effectively and increasing aggregate, macro-economic, welfare. These arguments apply, in principle quite generally - as much to international trade and competition as to regional trade and competition or indeed to trade and competition within individual national markets. The macro-economic benefits are less immediately obvious at the micro-economic level. Existing activity is threatened by greater competition, and there is a natural temptation - to employees, their employers and their national governments - to seek to defend their established activity through protective action in one form or another. The benefits of greater competition, and of the removal of barriers or distortions to free trade, on the other hand, flow essentially from the future activity that is likely to result - so that they are much less tangible. And the benefits - anyway in the short-term - do not necessarily accrue evenly across the free trade area - they accrue to those that are flexible and adaptable enough to take advantage of the new opportunities that free trade offers.

There is a view that the euro should in some sense ‘belong’ to the participating countries and to them alone. If that view were to prevail it would point in the direction BIS Review 29/1998  ˝  -5-  of one form of bureaucratic regulation or another - no doubt with a nod in the direction of monetary policy considerations as justification - which would damage the euro at least as much as it would harm the financial markets of the City. At the same time some of these same people argue for a successful, strong and widely-used euro that will take its proper place alongside the dollar and the yen as an international trading and portfolio currency, and in that context they positively welcome the active participation of London. In the end I do not think there is very much choice. In a world of increasingly integrated capital markets and liberalised capital movements it is inconceivable that the international use of the euro could be unnaturally constrained. And that will be in the interest of the users of financial markets - whether as borrowers or lenders - within Europe itself and across the world, including the Mediterranean region. It will be in the interest, too, of the providers of financial services by promoting the volume of financial activity throughout the European Union. Like trade in goods and other services, trade in financial services is very much a positive sum game.
12  9 8 7 6 5 4 3 2 1 0  EES December 2009 December 2009 Report March 2010 Report (*)  (*) Estimated using average financial asset prices over the last 2 weeks up to 29 March 2010. Source: Central Bank of Chile. BIS Review 61/2010  13

John Gieve: Economic prospects and the policy challenge Speech by Sir John Gieve, Deputy Governor of the Bank of England, at the Cityco Breakfast Meeting, Manchester, 16 January 2009. *  *  *  Introduction One of the things that strikes me most on coming back to Manchester is the pace at which the fabric of the city changes – and I was looking at this yesterday from up on the 23rd floor. It’s not much more than two years since I was last here but in that time the city centre has added about half a million square feet of retail space, more than 1½ million sq ft of new office space and nearly 8000 extra hotel beds (a 40% increase). All this development reflects the attractiveness of Manchester as a location for inward investment and even more importantly the strong growth in businesses indigenous to the city, many of which are represented today. But while I gather that nearly a million square feet of office space has been let again in 2008 it is clear that in Manchester, as elsewhere, the past year has been increasingly challenging for businesses of all types and the prospect is forbidding. The severity and nature of the challenges we face particularly in the banking sector makes it very difficult to predict where we will be in a year from now. And the pace of change means that it is even more true today than usual that we cannot rely for navigation on official statistics alone.
In the European Union, the formation of a monetary union has represented a major element in realising their economic integration. The adoption of a single currency was a critical step in fostering the regional European integration. In contrast, a monetary union with a single currency is not the step forward for the ASEAN region. A study by the ASEAN Central Banks in the early 2000s concluded that a common currency should not be the direction to be pursued by the region, given that, the ASEAN economies did not have the preconditions to achieve such a union. Indeed, such preconditions would require significant and high costs to the region. This would make it a non-viable proposition. The ASEAN region represents one of the most diverse regions in the world in terms of size, economic systems and structures, stages of development, financial systems and prevailing economic and financial conditions. It was therefore concluded that rather than pursuing a strategy towards achieving a single currency and a monetary union, the region would instead be better served by greater regional financial integration to achieve the very same objectives of a greater shared economic prosperity for the region. Another key difference between the European and ASEAN model of integration lies in the governance structure. In Europe, the monetary union is governed by a centralised institution, while the approach in ASEAN is to build on institutional arrangements and mechanisms that would facilitate financial integration while leveraging on a network of committees for the governance process.

While this implies that a one-size-fits-all level of transparency is unlikely to exist, a number of economic forces are omnipresent and therefore allow us to draw some conclusions from the academic literature on post-trade transparency. In those market segments that the MiFID II review aims to address, liquidity providers play a central role as they intermediate between end investors and thereby help to secure a wellfunctioning marketplace. Yet an efficient and resilient market requires a sufficient level of competition. Several studies6 show that a lack of transparency can be a serious threat to a level playing field because intermediaries may use their private knowledge of customer order flow as an informational advantage that allows them to exert market power. Therefore,  3  See opinion of the ECB of 25 January 2012 on a proposal for a Directive on the access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms and a proposal for a Regulation on prudential requirements for credit institutions and investment firms (CON/2012/5). 4  In particular the Money Market Contact Group, the newly established Bond Market Contact Group, the Foreign Exchange Contact Group and the Operations Managers Contact Group (see the ECB website for more information on these groups).
They must, however, increasingly take account of effects that spill back on their economy as well as shifts in the global equilibrium interest rate that their actions can spur.28 As the weight of EMEs in the global economy has steadily risen, the size of the spillbacks from a tightening in US financial conditions has tripled relative to its 1990 - 2004 average. With EMEs projected to account for three quarters of the global economy by 2030, these spillbacks will only continue to grow (Chart 10). IV. Medium term: reshuffling the deck by reforming the existing system In the new world order, a reliance on keeping one’s house in order is no longer sufficient. The neighbourhood too must change. There can be innocent bystanders but there should be no disinterested observers. We are all responsible for fixing the fault lines in the system. Addressing Pull Factors in EMEs EMEs can increase sustainable capital flows by addressing “pull” factors including: -  reinforcing monetary policy credibility including safeguarding the operational independence of central banks;  -  building the resilience of their banks;  -  deepening their domestic capital markets to reduce the reliance on foreign currency debt; and  -  expanding the scope and application of their macroprudential toolkits to guard against excessive credit growth during booms.

This was a commercial dispute between AIA and policyholders, which had to be resolved bilaterally between them, whether through negotiations, industry-based dispute resolution mechanisms or the courts as a last resort. MAS could not intervene. But MAS had a responsibility to ensure that policyholders had full information of what AIA was offering them, what this was worth, and what other alternatives they had. MAS also had a strong interest in seeing IDRO, the industry based dispute resolution mechanism, work. Thus what MAS did was to ensure that information was disseminated promptly, accurately and adequately, so that policyholders could make a considered decision. We issued a policyholders’ guide to help affected policyholders understand their own policies and the options available to them. AIA was asked to issue a public statement to explain fully and clearly its support package and adjudication process. MAS also made it clear to the industry that if any dispute arose over the jurisdiction or authority of IDRO, it would have had to contemplate introducing statutory and regulatory mechanisms for dispute resolution. Full disclosure and working dispute resolution mechanisms are preconditions for a disclosure-based regime and self-reliance to work. The AIA dispute simmered for many months. Eventually AIA responded to the concerns of policyholders, including those raised by CASE on their behalf, by revising and substantially improving its offer. As this offer addressed many of the earlier concerns, MAS welcomed it publicly.