samchain/econo-pairs-v1 huggingface dataset:
Against the backdrop of this global financial crisis, Islamic finance is inevitably affected and subject to challenging conditions reflected by a steep slowdown in activities such as sukuk issuance and declines in equity value managed by Islamic funds. New sukuk brought to the market in the first three quarters amounted to some $ billion, down 40% from the same period last year. 1 But the pullback in new sukuk issuance and the widening of sukuk yield spreads are generally in line with what has been happening in the conventional market. This broadly suggests that the global sukuk market slowdown has more to do with the general market conditions and a general reluctance to issue US dollar instruments. Observers say that while there are still those who wish to issue sukuk, investors would prefer to stay on the sidelines in the current volatile market environment. It is true that the industry is experiencing a temporary setback, but this also reflects how closely integrated Islamic finance is with the global financial system, which is not at all bad news for the industry because when global markets stabilise and take a turn for the better – as they must in the long run – Islamic finance will ride on that curve and excel. While we are in the midst of a global financial turmoil and there are many challenges lying ahead of us, I’m delighted to find this impressive gathering of regulators, shariah scholars, business leaders and practitioners who commit themselves to the future development of the financial market.

There is clearly very significant long-term potential across most of the region. The second issue is our continuous commitment to developing Islamic finance in Hong Kong. The Chief Executive of the Hong Kong Special Administrative Region acknowledged in his Policy Address in 2007 that Islamic finance offers huge potential for development. To further consolidate Hong Kong’s position as a global financial centre, Hong Kong should actively leverage on this new trend by developing an Islamic financial platform. Our priority is to push ahead with the development of an Islamic bond market. There should be no doubt about our determination to establish a platform for Islamic finance in Hong Kong. In a recent speech, the Secretary for Financial Services and the Treasury also mentioned that having reviewed Hong Kong’s legal, taxation and regulatory regimes, there is no fundamental obstacle to accommodating a sukuk market in our existing system. Technical modifications to the taxation regime to provide a level playing field for Islamic finance transactions are being pursued as a priority. With our commitment and status as an international financial centre, we believe that Hong Kong is well positioned to develop Islamic finance. We should play to our key strengths and capabilities and I would like to highlight two very important aspects on which Hong Kong intends to capitalise. The first aspect relates to the core strengths of Hong Kong in providing a stable and free economy. Hong Kong has been ranked the freest economy in the world for 14 consecutive years by the Heritage Foundation.
The assessments were based on an assumed appreciation of the Swedish krona from the current TCW index level of 124 to 120 in the coming year and just over 117 in the year after that. Inflationary impulses from the rest of the world were expected to be low in the forecast period. The rising domestic demand was not expected to result in an alarming increase in inflationary pressure. Investment growth and labour supply were judged to be sufficient to avoid general problems with capacity during the period. The development of wages and productivity was expected to be favourable for a moderate, though rising, rate of inflation. Inflation expectations among market agents, firms and households were still low. Inflation was expected to be below the target in the short run and then be in line with the target further ahead. With the fundamentally positive picture of the Swedish economy, including good growth in the forecast period and a successive return to the targeted rate of inflation, the Riksbank left the repo rate unchanged. As uncertainty had increased since the earlier assessments, however, the uncertainty interval surrounding the main path was considerably wider. But the risk spectrum was symmetrical, that is, the risks of inflation being higher than in the main scenario were judged to be as great as the risks of lower inflation.

Eddie Yue: Asian Development Bank – working to reduce poverty in Asia Statement by Mr Eddie Yue, Deputy Chief Executive of the Hong Kong Monetary Authority, and Head of Delegation, Hong Kong, for the 49th Asian Development Bank Annual Meeting, Frankfurt am Main, 3–5 May 2016. *  *  *  I would like to thank the Government of Germany for hosting the 49th Annual Meeting of the Asian Development Bank (ADB), and the Management and staff of ADB for the excellent arrangements of the event. I would also like to congratulate ADB for the successful conclusion of the Eleventh Replenishment of the Asian Development Fund, which would provide critical resources to ADB to further its work in poverty reduction in Asia. ADB is approaching its 50th Anniversary this year. Over the past fifty years, Asia has undergone tremendous development. The economic miracle in Asia, together with the important work of the Bank, have lifted millions of people out of poverty and substantially improved our standard of living. After decades of rapid growth, however, there have been signs that the trend growth of the region is slowing. This reflects, to a considerable extent, supply-side constraints on potential output. In particular, a number of emerging economies in the region have been held back by infrastructure bottlenecks. As I have noted during the past few Annual Meetings, to sustain growth and propel the economy to the next stage of development, boosting infrastructure investment is a top priority for many developing members in the region.
BIS Review 33/2010  These strong demand and supply-side fundamentals help to mitigate concerns that the impetus from Asia and emerging markets will quickly fizzle out, or that it will be undermined by the re-emergence of global imbalances. And the increasing importance of Asia in the world economy means it is now a material influence on the growth of the world economy. As Chart 5 shows, the seven largest economies in the Asia-Pacific region, including India, China, Japan and Australia, now account for close to a quarter of world GDP – not far short of the contribution to world GDP from the United States and the European Union. Indeed, there is a worry that growth in Asia and other emerging markets may prove too strong, fuelling the growth of asset prices and putting upward pressure on global energy and commodity prices. As Chart 6 shows – the strong growth in developing economies and emerging markets in the mid-2000s was associated with significant upward pressure and volatility of oil, food and metal prices. BIS Review 33/2010  5  Recent movements of the oil price have been very sensitive to news about the pace of global growth, and commodity prices have picked up more generally as growth has returned to the world economy. If the momentum of the global recovery is sustained, there is a risk of further upward price pressure from this direction, with a knock-on impact on broader measures of inflation around the world.

As Chart 4 shows, forecasts for growth this year and next in the major Asian markets – and in developing and emerging market economies as a whole – are for a continuation of the healthy growth rates seen in these economies throughout the past decade. There are good grounds for believing that this strong performance in Asia and other emerging markets will continue to be an engine of world economic growth as the recovery continues. First, there are healthy supply-side fundamentals in the economies of Asia – a large potential labour supply, with the region accounting for about half of the world’s population, and scope for continuing productivity catch-up with the more advanced economies. Second, governments in Asia and many other emerging market economies remain committed to market-oriented policies and continued integration into the world trading system, which has proved an important underpinning for rapid growth and development in the past. 7 Third, public and private finances are generally in good shape. The banks and other financial institutions in the major Asian economies were not directly affected by the crisis in the same way as the financial sector in the US and Europe. Government finances have also started from a stronger position, which means that fiscal policies can continue to support private sector demand and there is much less need for serious fiscal retrenchment as a result. 7  4  See, for example, The East Asian Miracle: Economic Growth and Public Policy, World Bank, 1993.
Together, reserve and uncalled capital made for a deep contingent capital pool for even limited liability banks, amounting to as much as 50% of banks’ liabilities. With big money on the line, extended liability kept bank shareholders and managers on their toes. Risk monitoring incentives remained sharp and risk appetites blunt. In the US, banks in states with higher-multiple extended liability regimes typically assumed less balance sheet risk (Grossman (2001)). The same was true of UK banks with high proportions of uncalled capital (Grossman and Imai (2011)). For a time, extended liability seemed to strike a reasonable risk-taking balance. But entering the 20th century, that balance was again about to tilt. Consolidation was underway in banking. Between 1825 and 1913, the number of English and Welsh banks fell from over 600 to around 70.10 As the industrial structure of banking adapted, vetting of shareholders became impractical. In an echo of today, it was argued that these larger institutions were better able to diversify away their risk. 5  Turner (mimeo). 6  Economist (1879). 7  Acheson et al (2010). 8  Acheson et al (2010). 9  Macey and Miller (1992). 10  Collins (1988). BIS central bankers’ speeches  3  Extended liability had also shown itself to be ineffective in dealing with banking failure. In crisis, exercising the capital option had heightened panic, not diminished it. As the Bank of England’s Deputy Governor remarked, “today a bank could not in a crisis make a call on shareholders without aggravating the crisis” (Turner (2009)).

Norges Bank is the source for figures from 1996. BIS Review 16/2009  Equity capital in investment banks in the US and Europe was very low, as low as 2-3 per cent of total assets. Many of these banks have now collapsed. The authorities in many countries are working to enhance financial market resilience. For Norway, it would not be appropriate to return to the regulatory regime of the postwar period. Interest rate regulation, credit budgets, a wide range of state banks, regulation of crossborder capital movements and a fixed exchange rate are not the answer. Instead, new and higher capital requirements must be imposed on banks. Banks calculate how much capital they need using their own risk models. The models capture losses and gains previously generated by lending. Equity capital requirements are determined by previous experience of the risk exposure of investments. One drawback is that the historical basis for the models, and hence for the risk assessments, is too limited. With losses now rising, as a result of the abrupt and pronounced turnaround, banks must increase equity capital. Thus the rules governing capital requirements amplify the economic cycle. Three changes are particularly relevant: First, for a given risk assessment, capital requirements must be higher. Second, banks must not be able to reduce capital below a minimum level even if they extend loans that, according to the models, seemingly involve low risk. Third, banks must build up strong capital buffers over and above the minimum requirement in normal times.
Chart 3: Annual private sector underlying regular pay growth  Sources: OECD and Bank calculations. Notes: Wage equation based on Yellen (2017). Short-term inflation expectations are based on the Barclays Basix Index and the YouGov/Citigroup one year ahead measure of household inflation expectations. Slack is based on the MPC’s estimate of the unemployment gap. Productivity growth is based on long-run market sector productivity growth per head. The unexplained component is the residual. Underlying pay growth represents Bank staff estimates of private sector regular pay adjusted for furlough and compositional effects. The third development I want to draw out is the significant recent news on fiscal policy. But before explaining why this matters for monetary policy I will make a couple of points about the role of the MPC and how we treat fiscal policy in our forecasts. First, it is not part of the remit of the MPC to comment on whether a particular tax or spending policy is the right action to take or whether the overall stance of fiscal policy is appropriate. However it is part of our job to comment on and respond, as necessary, to the impact individual measures or the overall stance of fiscal policy have on demand and inflation. Fiscal policy rightly came to the fore during the pandemic, and the furlough scheme in particular was a major fiscal intervention which provided very significant support to demand and to the labour market, up until it ended a year ago.

To illustrate this, at the time of the MPC’s last forecast in August 2022 the gas futures price for 2022Q4, the quarter we have just started, was seven times higher than what was expected in our August 2021 forecast. Gas prices have been very volatile since. At the time of the August MPR, Bank staff estimated that the annual energy bill for a typical household under the OFGEM price cap would rise from just under £ to around £ from 1 October, a 75 per cent increase and three times higher than the equivalent bill in October 2021. In the face of these very large prospective increases, on 8 September the Government announced an Energy Price Guarantee, which came into effect on 1 October, a fiscal shock which I will come back to. For the UK economy a key characteristic of the global energy shock is that it depresses supply. The UK is a net importer of energy so national income will be lower; the UK economy is poorer. These effects were already apparent before Russia’s invasion of Ukraine but the war has exacerbated them, and even with the Guarantee households and businesses will be worse off due to higher energy bills than they were a year ago, intensifying the problems associated with the cost of living. The increase in energy prices has been a significant contributor to inflation over the last year in the UK and the Euro area.
The demand for Swiss franc liquidity also rose sharply. Naturally, we made the necessary amounts available to the full extent. As was to be expected, it became evident that only a part of this liquidity was needed, and we were able to reabsorb it through repo transactions as early as 12 September. On the two days following the attacks, repos totalling approximately Sfr 40 billion were turned over. The experiences gained in the aftermath of 11 September have shown three things. Firstly, that the financial system - even in this unique and completely unexpected situation - still managed to function relatively smoothly. Different players contributed to this, but it was mainly the banks themselves which supported one another with creative flexibility in the interest of the situation as a whole. Secondly, our repo system enabled us to take the necessary steps without problems. Had we still been dependent on foreign exchange swaps with US dollars, conducting monetary policy under the given conditions would have been eminently more difficult. Thirdly, these experiences prove how vulnerable the highly integrated global financial system really is. They clearly underscore that securing the stability of the financial system must constitute an important part of the role of central banks. The Swiss franc on the foreign exchange and capital markets We do not expect that the introduction of euro cash, which is upon us in a little less than a month, will have any significant impact on the financial markets.

An important achievement within the EMEAP process has been the establishment of a Monetary and Financial Stability Committee, or MFSC, which is charged with the mandate of facilitating greater regional collaboration in preserving monetary and financial stability as well as in the development of regional financial markets. Since its establishment, the MFSC has exceeded expectations in terms of the commitment towards supporting regional monetary and financial surveillance, and in advancing efforts to institutionalize cross-border crisis management and resolution arrangements. These developments will contribute towards reducing any procyclical impact of Basel II and facilitating over time, refinements to the risk parameters that are more appropriate to local and regional experiences. The continuation of such efforts at the national and regional levels will reduce the prospects for potential disruptions in the regional financial systems. One of the most important consequences of Basel II lies in the effect that it will have in sharpening the focus on corporate governance in banking institutions. While there has been considerable attention focused on the quantitative implications and operational aspects of the Basel II framework, there has been less attention given to the corporate governance dimensions associated with its implementation. The expectations on the board and senior management oversight are significantly higher under Basel II. The board of directors is expected to ensure that a sufficiently strong risk control framework is in place before banks can adopt the more advanced approach.
This dimension of economic research is often overlooked: it is nevertheless crucial to grasp complex interdependencies between physical and economic phenomena, across sectors and countries, and across time horizons – I will come back to it (2) disclose: impose transparency requirements including on counterparties; (3) incorporate climate risk, into our operations on corporates (on both asset purchases and collateral policies). As regards asset purchases, the CSPP3 should take into account climate-related factors, including the alignment of issuers with the Paris agreement, and will adjust purchases on the primary and secondary markets accordingly. Moreover, regarding euro-denominated non-monetary portfolios, Eurosystem central banks committed last February to implement sustainable and responsible investment strategies and to report the first results by end of 2022. Banque de France’s policy has been exemplary since 2018 regarding the management of its own funds, whose alignment on a 2° C objective is already effective. We won’t stop there though: we started to exit from non-conventional oil and gas earlier this year, we announced that we are exiting totally from coal by end 2024. We now commit to work toward aligning our own portfolios with a 1.5°C objective. One additional word about the international context of these developments. Here again, we saw a major improvement this last year with the new American involvement: climate-related issues are now firmly on the agenda of the G20, the G7, the FSB and all other standard setting bodies. The NGFS, created in Paris in December 2017, is a unique knowledge hub.

The forthcoming NGFS work should therefore also focus on shorterterm horizons (2030, and not only 2050) as the transition to a low-carbon economy may be less linear than anticipated, with tipping points accelerating the transition in a disorderly way. [Slide] We generally need to better understand the long-term trade-off, in terms of GDP, between transition and physical risks and the cost of delayed action. The chart breaks down the GDP losses under three scenarios into the costs of transition and physical damages. Under the “Paris Agreement” scenario, GDP would be 5% lower in 2060 and around 7% lower in 2100, and most of this reduction can be attributed to transition policies. Under the two “Too-little too-late” scenarios, the transition costs are limited, but by the end of the century the impact of physical risks becomes much larger, leading to overall losses that could range between at least 10 and 20% of world GDP level. From an economic and rational standpoint, the prescription is clear-cut: an orderly transition would require a governmental forward-looking guidance, sending long-term signals and anchoring credible but ambitious commitments. This “climate forward guidance” should include an appropriate pricing of carbon; and as long as we don’t have such global pricing, a carbon border adjustment mechanism (CBAM), as recently put forth by the EU in order to prevent carbon leakage is appropriate. We all know how politically sensitive these issues are, domestically as well as internationally.
25  And each caused a stretching of the social fabric, often to close to breaking point. It is now well-established that each industrial revolution caused a significant loss of livelihood for workers whose set of tasks was most susceptible to automation. The upshot, often, has been a “hollowing out” of jobs across the skill distribution. 26  Because reskilling and retraining takes time and effort, job displacement  worsens pay prospects for a great many, significantly and persistently. 27  And these losses were often made  worse because they were concentrated occupationally and geographically. 28  A second, accompanying adverse side-effect of technological disruption has often been rising levels of income inequality. Historically, those skilling-up to keep one step ahead of the machine saw demand for 22  Levine and Renelt (1992). Acemoglu and Robinson (2012). 24 North (1990). 25 Haldane (2015b). 26 Katz and Margo (2013), for example, show that skilled blue collar employment in US manufacturing declined while white collar and unskilled manufacturing employment increased. 27 Autor (2017) documents lower relative wages for those in US most exposed to international competition. 28 Autor (2017). 23  8  All speeches are available online at www.bankofengland.co.uk/speeches  8  their skills rise and, with it, their wages. By contrast, those at the other end of the skills distribution saw their incomes fall, due to reduced demand and increased supply of their skills. The resulting rise in income inequality has tended, historically, to heighten popular discontent and worsen social cohesion.

The second area of prospective demand for humans skills is bespoke design and manufacture (“hands”). Routine technical tasks are relatively simple to automate and are already well on their way to disappearing. 57  Gratton and Scott (2016). AlphaGoZero is one such attempt. It is an updated version of AlphaGo, a computer programme that plays the game ‘Go’, which itself was the first software to beat a human professional player in full match. 58  15  All speeches are available online at www.bankofengland.co.uk/speeches  15  But the same is not true of non-routine technical tasks – for example, the creation of goods and services that are distinctive in their design, manufacture or delivery. A rise in global wealth and income is likely to create an increasing demand for luxury goods and services of this type, whose characteristics are unique and supply constrained. Indeed, this can be seen already in the rising demand and price of rare art and artefacts and independently-produced foodstuffs and beverages. To meet this demand, Mark Carney has spoken about the re-emergence of a new artisan class. If so, this would mark something of a return to our pre-industrial revolution future. 59  The third, and perhaps the biggest potential growth area of all, is social skills (“hearts”). That is, tasks requiring emotional intelligence (such as sympathy and empathy, relationship-building and negotiation skills, resilience and character) rather than cognitive intelligence alone. These are skills a robot is likely to find it hard to replicate.