samchain/econo-pairs-v1 huggingface dataset:
GFC also led to a fundamental shift in our approach to banking regulation and supervision, essentially by exposing the fault lines in the inadequacy of earlier regulatory architecture. 1 Keynote speech delivered by His Excellency Dr. Mohammad Y. Al-Hashel, Governor, Central Bank of Kuwait in the  14th High Level Meeting for the Middle East & North Africa Region, jointly organized by the Basel Committee on Banking Supervision, the Financial Stability Institute and the Arab Monetary Fund, on December 11, 2019 in Abu Dhabi, UAE. Central Bank of Kuwait - Public ‫ عام‬- ‫بنك الكويت المركزي‬  -2-  By now, those fault lines are well-understood. Banks held too little capital and of poor quality. Inadequacy of capital was further weakened by the absence of a backstop measure to contain excessive leverage. Banks that were too big to fail enjoyed the market power but were not required to internalize the cost of risks they brought to the overall system. Suitable measures of liquidity, in both funding and market sense, were lacking. And the efforts to contain systemic risk, both in its time and structural dimension, were hardly in sight. In a nutshell, the rule book was evidently deficient. And if that was not enough, banking supervision was micro prudential in nature. Supervisors believed that ensuring stability of individual institutions would make the system as a whole stable, thus largely ignoring the buildup of systemic risk. The GFC brought into sharp focus the gaps in our regulatory regime.

Central Bank of Kuwait - Public ‫ عام‬- ‫بنك الكويت المركزي‬  -5-  International Energy Agency (IEA) estimates that achieving Paris Agreement target on climate change would require, by 2050, about 80% decrease in the CO2 intensity of the building sector, 95% of world energy supply to be of low carbon and 70% of new cars to be electric. This will cause significant, even if slower, shift in the structure of our economies with strong bearing on the financial sector. That is why the NGFS, the Central Banks and Supervisors Network for Greening the Financial System, has argued that ‘climate related risks are a source of financial risk and therefore fall squarely within the mandate of central banks and supervisors to ensure that financial system is resilient to these risks’. Regulators need to determine how best to incorporate and operationalize climate related risks in their prudential policy settings. It would require expanding the risk matrix to formally include climate related risks and enhancing the analytical tools to assess financial sector exposures to extreme weather events. Bank of England has announced that in 2021, it will start stress-testing banks on different climate pathways. Ultimately, the key is to retool the regulatory regime to factor in risks to climate change in a holistic fashion, instead of adding on an additional item in the risk matrix. Conclusion Let me conclude. While we have managed to fix the fault lines exposed by the GFC, our understanding and ability to respond to some of the emerging risks remain limited.
An area that Islamic finance has a major potential role is in the reorientation towards achieving a more inclusive and sustainable growth – an important post-crisis development agenda. Serving the small and medium-size enterprises (SMEs) presents huge potential for Islamic financial institutions, particularly those with the capability to deploy innovative equity-based structures and alternative forms of financing, such as private equity and venture capital. Asia is also now becoming a primary force for the global Sukuk market, with 68% or USD120 billion of the total sukuk outstanding in 2011 originating from the region, thereby providing an important investor base for sukuk issuance from different parts of the world. Whilst Malaysia has evolved a vibrant sukuk market, more Asian countries have turned to the sukuk market for financing large-scale projects including for infrastructure development. Several countries in the region are currently reviewing their legislation and taxation to enable debut sukuk issuance. The Asian sukuk market has also been progressive in the innovation frontiers. There has also been a growing trend for multi-currency sukuk issuances. This provides greater prospects for tapping a wider pool of investors, including from the Middle East and Europe. In Malaysia and more recently, in Indonesia, Sukuk issuances have also aimed at retail investors. This is to take advantage of the high levels of surplus savings in Asia, whilst providing wider investment options to retail investors that have traditionally invested in bond funds and unit trusts.

One of the benefits from low inflation is that firms can concentrate on real relativities rather than decisions being dominated by the general rise in prices. Whatever the reason, the downwards pressure which normally arises from a fall in output, has not been sufficient to push inflation negative. The explanations for these changes in behaviour and their inflationary consequences are likely to be many and varied. And it may be some time before we can be sure which of many hypotheses are correct. But one factor we know is that interest rates have been at an all-time historic low during this recession (Chart 7). And Bank Rate started to fall well before the trough in output. The effect of this on, for example, firms’ cash flow, has been very significant and was reinforced by the effects of the asset purchase programme reducing corporate borrowing costs. It seems a reasonable starting assumption that behaviour during the recession should be broadly symmetric during the recovery. When demand growth strengthens, output could be flexibly ratcheted up, reversing the processes seen during the downturn. If so, then it is unlikely that substantial inflationary pressure would be generated as the result of a recovery in demand: there will be plenty of capacity within firms and a ready supply of labour, both of which should help to keep costs subdued. But this is clearly a major uncertainty and hence a risk in our projections of future inflation.
In such contest bank of Albania has been working together with important Albanian institutions, first and foremost with fiscal authorities, different European Central Banks, international financial advisories and academia to identify the new regime of monetary policy. The new regime must be efficient in the light of recent changes in financial markets and most importantly must provide good anchors for monetary policy and its sovereignty. Please allow me to briefly describe the major characteristics of what we think will become the new regime. A. Monetary policy regime  As I already mentioned we have been working on the new regime for more than two years. During this period we have been tossing ideas and scrupulously studying the details of a fully fledged inflation targeting regime. As you might well understand, we are getting ready to launch the new regime at the beginning of 2009. Our analyses show that, considering the current features and expected developments of the financial markets, inflation targeting provides the best policy choice for the future. A relatively long history of low and stable inflation, efficient monetary policy, sound banking system, free floating exchange rate, fiscal consolidation and last but not the least a suitable and reliable institutional framework, are important factors that have convinced us on the potential success of inflation targeting regime. 4  BIS Review 119/2007  B. Institutional framework  The harmonization of monetary and fiscal policy will continue to be a challenge.

However, increasing credit to GDP ratio in all countries, ranging from 23 percent in Macedonia to 76 percent in Croatia also raises the concerns for a possible credit boom. There are some important trends worth being noted: Credit composition is dominated by consumer credit and less oriented to enterprises; Credit/deposit ratio has steadily increased indicating banks willingness to extend their lending activity at a faster pace than the growth of savings. However, the average of credit/deposit ratio of the region is still below the level of the new EU member; Lending is mostly in foreign currency as a result of high euroization of the economies and lower interest rates in foreign currency; Another structural change in credit portfolio relates to the upward trend towards longer-term lending, which at least in three countries of the region (Albania, Macedonia and Bosnia & Herzegovina) consisted of 50 percent or more than total lending; The spread between interest rates of deposits and credits remains high. There are several explanations to this such as lack of efficiency and competitiveness among banks, high premium risks of the economies in the transition period, collateral problems, legal system obstacles etc. However, it’s worth mentioning that the spread between deposit interests and credits has declined in the recent years, as a result of increased competition in the banking system. Despite these characteristics must be admitted that the share of the banking system in the economy is relatively small by European standards.
However, if we scale it to the country’s GDP, it was in the range between 6.1 to 6.9% over the past five years. Thus, despite the headway we have made in advancing e-payments, the persistency of cash among the public and small and medium sized businesses remains high. This opens up the economy to risks as cash is still being used by criminals to launder illegal proceeds, as we 3/5  BIS central bankers' speeches  have seen from some high-profile cases over the past year or so. Similarly, this is the preferred mode to finance terrorist activities, which will involve transacting in cash. Therefore, it is timely for us to look at ways to strengthen the controls to mitigate financial crime; namely the cash threshold reporting requirement. When we compare Malaysia with other countries, our current threshold is too high and disconnected from the size of our economy, especially relative to our purchasing power. Hence, it needs to be updated. In this regard, we would like to announce that we will be lowering the daily cash threshold report to RM25,000 effective 1 January 2019. This will bring the cash threshold report in Malaysia to be more at par with other countries. We do not anticipate any impact in terms of economic activity but an increase in effectiveness in taming the black economy that is still heavily reliant on cash transactions.

Conclusion I spoke at length today about the responsibility that we have to combat crime and the ways to do so. Let me end by saying that eradicating financial crime makes good business sense. Financial crime is a cost and burden to all of society. Robust governance and greater transparency is good for business. It creates an environment of trust and a level-playing field for businesses to flourish. This is important as we seek to ensure longevity and continuity of businesses and the health of the economy as a whole. Therefore, let us be united in working for a better and brighter future for Malaysia. Greater governance and transparency will get us there. Thank you. 5/5  BIS central bankers' speeches
The media accentuated the exuberant mood, with reports of rapidly rising share prices, and the notion that quick money could be earned in the so-called new economy became the conventional wisdom. From the recent years’ experience I can identify some important and interesting issues. Although time does not allow me to expand on them, allow me nevertheless to mention some briefly. What can be done to make the stock market function better? What can be done to provide more support in the future for long-term saving by households? How could more education and knowledge be provided so that the inexperienced investor becomes experienced and well-educated instead. I’m sure that shareholders associations all over the world have an important role to play in this respect. Further, it goes without saying that prompt, up-to-date, correct and relevant information is crucial. However, we must remember that more information is not the same as better information. Quality is not the same as quantity. The inexperienced investor must be helped to interpret the information and pick out what matters most. An important role could be played by independent analysts, not to mention media. There have to be agents in society that can see through and criticise corporate managements that are unduly optimistic or provide information selectively. The argument for this is that international studies indicate that in the second half of the 1990s firms, banks and analysts had incentives to talk inexperienced people into investing in new enterprises on grounds that were not entirely sound.

Many new technology companies were not generating a profit and had to rely instead on paying for wages and equipment by issuing shares. For this to be feasible, stock market valuation needs to be high. In this sense there were incentives for managements to trim reports and statements about their firm’s future profits. At the same time, analysts and investment banks, with potential earnings from launching share issues, lacked incentives to take a critical look at these reports, so inexperienced investors did not get the assistance and support they needed. In order to reduce the risk of financial market imbalances, it is important that we have a well thought-out legislative, regulatory and supervisory infrastructure that functions properly and follows changes in the rest of the world. This is a never-ending task that requires the participation of all concerned. Today, households face what are sometimes very difficult risk-management decisions that were not called for or even possible before. Many people still lack the relevant knowledge for this and it may be asked whether people in general can be expected to have such knowledge in the future. Everyone cannot be a specialist in risk management and financial theory. Therefore, I think banks and other financial institutions should become more consumer-oriented, instead of today’s greater focus on products. The increased exposure of households to the stock market calls for tailor-made plans for the life cycle that take all important risks into account.
2  For a survey on the literature on speculators and their impact on price developments in the oil market, see Weiner, R, (2002): “Sheep in wolves’ clothing? Speculators and price volatility in petroleum futures”, Quarterly Review of Economics and Finance, 42 (2), 391-400. 2  BIS Review 69/2004  at 35 USD per barrel for WTI delivery in 5 years (see Figure 7). Moreover, despite the most recent sharp correction in spot prices from 55 to 46 USD per barrel WTI, long-dated futures prices have receded only marginally. Since 2002, prices of oil futures are generally quoted below expected spot prices - a state labeled backwardation. Backwardation implies uncertainty about production and supplies and effectively favors further inventory draw downs (see Figure 8). Price information extracted from the market appears to confirm that at least for the time being, average oil prices are likely to remain elevated compared to historical price ranges. Forecasting market prices is an inherently difficult endeavor. Immense uncertainties on the supply side make oil price forecasts particularly challenging. Reserve figures can be increased rapidly by the discovery of new oil fields or by exploitation at greater margins due to new technologies. Proven oil reserves in the Middle East, for example, increased from 16 billion barrels in 1944 to 116 billion barrels of meanwhile extracted or still available reserves in 1975.

In this period, countries with relatively stable financial markets and lower deterioration in risk premia had more room for maneuver in their monetary policy implementations enabling them to make larger policy rate reductions. Raised awareness regarding the relative soundness of Turkey’s financial system in this period, coupled with the expected decline in inflation, set the ground for rapid and bold rate cuts. Acting accordingly, the Central Bank of the Republic of Turkey lowered policy rates more than any other emerging market central bank operating within an inflation targeting framework (Figure 12). BIS Review 103/2009  7  Figure 12: Change in Policy Rates of Developing Countries and the Relationship between Policy Rates and Risk Premium Change in Policy Rates (Percent, 1 Sep 08 - 24 July 09)  0.5  Change in Risk Premium and Policy Rates 2 (1 Sep 08- 24 July 09)  -0.5  0  1.5  Macaristan  Change in Policy Rates (Percent)  -1.5  -2  -2.5 -3.5  -4  -4.5 -5.5  Rusya Romanya Malezya Çek Endonezy Cumh. Tayland a Peru Polonya G.Kore Meksika Brezilya G.Afrika Kolombiya  -6  -6.5  -8  -7.5 Turkey Chile Columbia South Brazil Israel Mexico South Peru Poland Thailand Iceland Taiwan Indonesi China Czech Malaysia Romania Ukraine Russia Hungary  -8.5  -10 -100  Şili Türkiye  -50 0 50 100 150 Change in CDS (basis points)  200  Source: Bloomberg and CBRT.
Some temporary retrenchment is probably not undesirable at this point, as cross-border banking – and perhaps financial globalisation more generally – far outpaced developments in public frameworks. The issue of global liquidity provision to banks needs further exploration. And finally, if countries are increasingly taking unilateral action to protect themselves, someone – probably the IMF – must monitor the process. Going forward, some ground rules might have to be considered so that we are not faced with too serious unintended consequences for the global system. Thank you very much. BIS central bankers’ speeches  5

2/8  BIS - Central bankers' speeches  Meanwhile, the high levels of government debt following the pandemic, alongside the tightening of financial conditions, represent a vulnerability and limit the space to adopt fiscal expansion measures. This setting is also subject to an extremely high level of uncertainty, stemming, above all, from the course of the war in Ukraine and its economic repercussions, which are hard to predict. However, inflationary pressures also pose a genuine risk. Whether they increase further depends not only on the course of the war, but also on internal factors, such as a possible persistent rise in inflation expectations, or higher-thanexpected increases in wages or mark-ups. More persistent inflation would require a sharper tightening of monetary policy, which would render those public or private agents in a less sound economic and financial position more vulnerable. This could have a greater-than-expected impact on their spending levels. 1. The economic policy response Against this backdrop, I would like to share my opinion on how economic policy should respond. First, I would like to underscore that the current situation is far different from that triggered by the pandemic. We then faced a temporary but highly adverse shock, in a setting free of inflationary pressures. That environment warranted a forceful monetary policy response, in order to create conditions that were conducive to an equally extraordinary fiscal expansion which would guarantee the income of households and firms and thus minimise the crisis-induced structural damage to employment, productive capacity and growth.
After several years’ moderate growth, the euro area has arrived at a favourable cyclical juncture. On the latest available figures, annual output growth is currently running at almost 2%. This rate exceeds the European Commission’s estimates of potential growth, which stand at around 1%. The soundness of the economic recovery is beginning to be reflected in the more dynamic behaviour of private investment. That breaks with a long period over which companies’ plans to increase capital were checked by uncertainty over future growth and the need to reduce their high levels of debt. Moreover, the recovery is extensive to the entire euro area, since all countries, including Greece, have attained positive growth rates. The improvement in economic activity has also enabled unemployment levels to be reduced to rates close to 9%, down from the levels of 13% observed at the worst points of the crisis. Significantly, this improvement in activity has come about against a difficult political background, marked by the start of the Brexit process and the rise in certain trends that are against free trade and the free circulation of people, freedoms that are the bedrock of the European project, and this without forgetting the permanent threat of terrorism. Returning to the positive economic developments, we should not forget two central matters. Firstly, these developments are largely the consequence of the extraordinary stimulus received from monetary policy.

Likewise, further headway would be needed in reducing sovereign-banking links, which contributed notably, as is known, to heightening the severity of the crisis in the euro area. In this connection, the banking union requires supranational support that would increase the financial capacity of the Single Resolution Fund in the event of a systemic crisis and which would afford it greater power during the transition process established for its full constitution. The European Commission’s proposal that the European Stability Mechanism should provide this support might be an appropriate solution. It is also necessary to create a common deposit guarantee scheme whereby depositors’ confidence in banks is irrespective of the health of their Public Treasuries. Progress on the set of initiatives encompassing the Capital Markets Union would also contribute to achieving greater financial integration, diversifying sources of financing and empowering to a greater extent private mechanisms geared to sharing the risks that originate through these markets. Conclusions In any event, it should be stressed that, although the recovery is providing for the correction of some imbalances, some fallout from the crisis remains at large. The high levels of unemployment and of public and private debt, low productivity growth and the weakness of the capitalisation process pose challenges that require greater reformminded ambition.