samchain/econo-pairs-v1 huggingface dataset:
Zeti Akhtar Aziz: Launch of the Investment Account Platform in Malaysia Keynote address by Dr Zeti Akhtar Aziz, Governor of the Central Bank of Malaysia (Bank Negara Malaysia), at the Launch of the Investment Account Platform (IAP), Sasana Kijang, Kuala Lumpur, 17 February 2016. *  *  *  It is my great pleasure to be here this morning for the launch of the Investment Account Platform (IAP), a centralised multi-bank platform that is likely to have significant implications on the role of financial intermediation in the Islamic financial system. This platform is more than just a new and innovative medium for Shariah-compliant investments and fund raising initiatives. It signifies a fundamental shift towards providing solutions that addresses the prevailing gap in the current risk-transfer financial regime to one that now allows for financial institutions to include a wider range of investment intermediation activities that emphasises risk-sharing and thus facilitate a stronger linkage of finance and the real economy. Islamic finance in Malaysia has journeyed through different phases of development and has now evolved into a complete Islamic financial ecosystem that operates alongside the conventional financial system. Underpinning its growth has been the infrastructure and institutional development, product development that is reinforced by increased competition, and supported by a robust Shariah, legal and regulatory framework. Its development has also been strongly anchored by the investment in human capital development.

As a contributor, we will share with others the climate solutions that we have developed and may be of relevance to them. Let me highlight three key themes at the Singapore Pavilion: decarbonisation technologies transition finance carbon markets  First, innovating decarbonisation technologies. The transition to net-zero will require us to transform how we live and work. It will transform how we power our homes and offices, travel, grow our food, and construct our cities. As a densely populated metropolis in the tropics, Singapore is a living lab to develop, testbed, and commercialise green solutions for urban living. Let me highlight two areas. One, decarbonising land transport. 1/3  BIS - Central bankers' speeches  In many cities, land transport accounts for a substantial portion of carbon emissions; in Singapore, it is about 15%. The solution lies in electrifying transportation. This is why, from 2030, Singapore will allow only registrations of cleaner-energy cars – namely, electric, hybrid or hydrogen fuel cell cars. Infrastructure solutions for charging electric vehicles on a massive scale will need to be developed and Singapore can be a good test bed for such solutions. Two, decarbonising power generation. Globally, while the growth in renewable energy has been spectacular, fossil fuels continue to account for more than 80% of global primary energy consumption. This is why the production, deployment and research into low-carbon hydrogen, as well as carbon capture, utilisation and storage solutions are so critical and why Singapore has focused heavily in these areas.
Their reactions provide economic incentives for banks to strengthen their management of risk and hold at least adequate levels of capital against their risks. One might say that Basel II seeks an “efficient frontier” of policy objectives through the three pillars. Each pillar provides something that the other two cannot. Each is essential to achieving our overall objective of financial stability. I realise that this analogy of the three pillars as a portfolio of policy options is an oversimplification. But it helps us to visualise why we think that the most “efficient frontier” involves a mixture of minimum rules, tempered by supervisory discretion, and supplemented by market-based incentives. IV. Consistency of accounting standards and a three-pillar system  Of course, our three-pillar supervisory system is highly dependent on a firm’s internal measures of risk exposures. “Basel II,” for example, looks at a bank’s own measures of risk in Pillar 1. Supervisors then engage bank managers in a dialogue on their interpretations of those measures - and the steps managers take in response - in Pillar 2. Finally, Pillar 3 is intended to give the market greater insight into those measures of risk exposures and what the bank may do to control them. Because the three pillars are so dependent on the internal measures, neither supervisors nor bankers can ignore the mechanics that define how financial data are recorded and reported. Those mechanics, as you know, are governed by national accounting standards, which is the last topic I would like to address.

If we want to slow the growth of the financial sector balance sheet, and most of the expansion of credit in recent years was within the financial sector, we can surely do better than raising Bank Rate to a level that undermines the real economy and our commitment to the inflation target. BIS Review 32/2009  5  As Chairman Bernanke rightly emphasised last week, one of the causes of the crisis was the impact of the growing current account imbalances on financial intermediation in the main deficit countries, the US and the UK. The large and persistent inflows of capital lowered market interest rates to extremely low levels and encouraged the “search for yield”. In response, the financial services industry rediscovered the time-honoured way of raising rates of return – increasing leverage and taking more risk while finding ways of making the degree of risk less transparent. The crisis resulted from the interaction between the “micro” behaviour of banks and other institutions in creating new financial assets and the “macro” economic strategies pursued by the world’s major countries. If we are to make crises less likely in future we will need to concentrate on policies covering these interactions. The size to which the current account imbalances were allowed to grow reflected the fact that the international monetary system, such as it is, placed no pressures on surplus countries and that the main debtor country issued the world’s reserve currency.
At the same time, inflation is expected to rise gradually on the assumption that the repo rate will be increased roughly in line with market expectations. •  Falling energy prices contribute to inflation being expected to be slightly below target two years ahead. However, inflation will then rise. •  Monetary policy is expansionary. To ensure an inflation rate close to the target and to contribute to balanced development of the real economy, we decided yesterday to raise the repo rate by 0.25 percentage points to 2.75 per cent. 6  BIS Review 101/2006

Here in the UK, the Bank of England has adopted a new code for banks prescribing deferred variable performance payments, introducing the ability to reduce deferred bonuses when subsequent performance reveals them not to have been fully deserved, and paying bonuses in stock rather than cash. The deferral of bonuses awarded today allows them to be reduced before they are paid if evidence emerges of employee misconduct, error, failure of risk management or unexpectedly poor financial performance by the individual, their team or company. We are continuing to refine our approach. The Bank has just completed a consultation on a requirement for variable remuneration to be clawed back after payment and will consult later in the year on new standards for bonus deferrals. These provisions will apply not only to employees who are judged culpable directly, but also to others who could reasonably have been expected to identify and manage risks or misconduct but did not take steps to do so, and senior executives who could reasonably be deemed responsible by establishing the culture and strategy of the organisation. Where problems of performance or risk management are pervasive, bonuses should be adjusted for whole groups of employees. Of course, no compensation package can fully internalise the impact of individual actions on systemic risks, including on trust in the system. 19 To do so, market participants need to become true stakeholders. That is, they must recognise that their actions do not merely affect their personal rewards, but also the legitimacy of the system in which they operate.
31  All speeches are available online at www.bankofengland.co.uk/speeches  31  Table 1: Growth in the firm-level productivity distribution (aggregate, by region and by sector)  Aggregate  Annualised growth in average firm-productivity between 2004 and 2014 Top 0.1% Top 1% 12% 8%  99% of firms 1%  Region North East North West Yorkshire & Humberside East Midlands West Midlands East of England London South East South West Wales Scotland  7% 6% 12% 30% 19% 16% 9% 11% 23% 0% 13%  5% 4% 3% 15% 10% 8% 8% 6% 12% 4% 7%  0% 0% -1% 1% 0% 0% 2% 1% 1% 1% 0%  Sector Manufacturing Electricity Water Construction Wholesale trade Transportation and storage Information and communication Real estate activities Professional, scientific and technical activities Administrative and support service activities Education Health Arts and entertainment Other services  12% -10% 25% 14% 4% 41% 32% 5% 9% 25% 20% 17% 9% 10%  7% -14% 8% 8% 4% 28% 18% 3% 6% 14% 13% 7% 4% 0%  -1% -13% 1% -2% 0% -1% 3% -1% 4% 4% 0% 2% -5% -5%  Sources: ONS Research Database and Bank calculations. Note: Data refer to non-financial business sector. Calculations over the ten-year period in question are only possible for firms that exist for entire decade period and sampled throughout; these are likely to be larger firms.

This achievement should be saluted as citizens of both  BIS Review 15/2009  1  countries will now be able to pay for goods originating from the other country with the currency of that country, hence eliminating the need for currency conversions by citizens. Distinguished Ladies and Gentlemen, this agreement is also a step towards further strengthening trade and financial cooperation between the two countries. It provides the legal basis for commercial banks, bureaux de change and other financial institutions to freely accept each country’s currency and repatriate it through the banking system with full accountability. The agreement will not only enhance trade cooperation but will also increase cooperation between our two central banks. Furthermore, the agreement provides a platform for sharing information on the bank notes in use by the two central banks. This information exchange initiative should not only end at central banks, but be extended to all economic entities that will use and benefit from this development, especially our hard working farmers who should be paid genuine currencies when they sell their produce. Once again, Governor, let me thank you most sincerely for initiating this agreement. Indeed, the signing of this agreement is a testament of the cordial relationship that has existed between Mozambique and Zambia since the days of the liberation struggle. I must add here that, for us, it marks a key milestone towards enhancing regional integration and macroeconomic convergence. As you are aware, Governor, this is our main goal as member countries of the Southern Africa Development Community.
For a start, let us stop blaming others for our woes and, as Brutus was enjoined to do, let us accept that “The fault …… lies not in our stars but in ourselves.” We should then work together to build on our past achievements, which are not negligible, in order to secure the objectives of greater material wellbeing and social cohesion which, after all, we all profess to share. BIS Review 84/2005  5

The more promising approach is to invest in the complement of institutions and policies that enable an economy to live more comfortably with openness. Focusing on those measures that will enable an economy to be more flexible and to adapt more quickly to change ultimately will be a more effective policy strategy. It is politically more difficult, but economically more effective than those solutions that seem to offer protection from competition and volatility. Crisis resolution A fourth lesson, or series of lessons, comes from our experience in crisis resolution. The strategies adopted to stabilize markets and then to foster recovery varied significantly across the crisis economies. Each involved a somewhat different mix of policy reforms and temporary financial assistance, tailored to the different conditions that prevailed. Where there was success, the common feature was what Larry Summers called the Powell Doctrine applied to international finance – the overwhelming use of force, with a clear strategy for resolution. The “force” in this sense applied both to the scale of financing made available relative to the need and to the quality of the policy measures. Very substantial resources were deployed in support of the recovery efforts, and a large share of the resources was made available upfront, in order to try to mitigate the liquidity problem and to stem the loss of confidence.
The third reason I believe that Basel II will promote financial stability is that it reinforces the need to implement sound policies in both capital and provisioning. I have already mentioned that no bank can maintain public trust for long if it lacks sufficient capital. One of the fundamental tenets of risk management and banking supervision is that banks need to create provisions to absorb expected losses and to have sufficient capital to absorb unexpected losses. Let me add here that given the unique positions of banks at the crossroads of businesses and consumers in every economy – and their special role as intermediaries of credit to both – nothing threatens financial stability more than the presence of poorly managed and poorly capitalised and provisioned banking institutions. I believe that Basel II will contribute to a more resilient and stable banking system that is capable of promoting sustainable economic growth. Adoption of Basel II: who and when? Let me turn now to my second point, which is the timing of adoption of the new framework in different countries. Whenever I speak with colleagues from other countries, I stress that only national authorities can decide when to adopt Basel II. While the Committee believes that the framework is appropriate for all economies and banks, no country should adopt Basel II until it is ready. This view has been expressed consistently by not only the Basel Committee, but by the IMF and World Bank as  2  BIS Review 45/2006  well.

We are all in agreement that if a country decides to adopt Basel II, the timing should be determined by its own circumstances, not the timetable for Basel Committee members. Unlike the 1988 Accord, which was relatively simple to adopt, Basel II is more complex and demands more of banks and supervisors. Therefore, we don’t expect Basel II to be adopted as widely and quickly as the 1988 Accord, at least at the outset. However, we expect and hope that the number of countries that adopt the new framework will grow over time. We believe that countries should adopt the options and approaches contained within the framework that are most appropriate for the state of their markets, their banking systems, and their supervisory structures. Basel II is not a “one size fits all” framework. Supervisors can adopt the framework on an evolutionary basis and use elements of national discretion to adapt it to their needs. For any country that is considering adopting Basel II but may not yet be ready, I like to suggest a three-stage approach towards building a foundation for the new framework: (1) strengthening the supervisory infrastructure; (2) introducing or reinforcing the three pillars; and then (3) making the transition from the 1988 Accord to Basel II. The first stage is strengthening the supervisory infrastructure. Basel II is not intended simply to ensure compliance with a new set of capital rules. Rather, it is intended to enhance the quality of risk management and supervision.
Smith, R (2010), “Is HFT inducing changes in market microstructure and dynamics,” working paper. Stoll, H (1978), “The supply of dealer services in securities markets”, Journal of Finance, Vol. 33, pp. 1133–51. Vaughan, D (1996), “The challenger launch decision: risky technology, culture, and deviance at NASA,” The University of Chicago press. Zhang, F (2010), “High-frequency trading, stock volatility, and price discovery”, mimeo. 16  BIS central bankers’ speeches  Chart 1:  Chart 2:  Market capitalisation by region, relative to GDP  Equity market turnover by region  Ratio  North America  1.8  Europe and Russia Asia  Ratio 6  North America  1.6  Europe and Russia  1.4  Asia  5 4  1.2 1.0  3  0.8 0.6  2  0.4 1  0.2 0.0 2001 02  03  04  05  06  07  08  09  Source: World Federation of Exchanges. 0 2001 02  03  04  05  06  07  08  09  Source: World Federation of Exchanges. Chart 3:  Chart 4:  NYSE-listed trading volume shares, January 2005  NYSE-listed trading volume shares, February 2011  0%  16%  0%  24% 80%  2% 2%  33%  11%  15%  9% 9% NYSE NASDAQ DirectEdge  Source: Fidessa.

The Bank Support Authority hired experts on valuation of various types of assets to ensure that the banks did not over- or underestimate the value of their assets with the aim to motivate requirements for more support. In addition, the rules on when to identify a loan as a non-performing loan and how much to write-off were made stricter and with less room for the banks’ own judgement. 5. The Swedish government did not take any specific measures to rescue or reconstruct the non-financial companies, neither did it instruct the banks on how to use the support they had received. All support was provided via the banks and the state-owned asset management corporations, leaving them to negotiate the best terms for themselves and their non-financial customers. There was a wave of bankruptcies and restructuring of non-financial companies, primarily in the domestic sector due to weak domestic demand. 6. The extensive use of Asset Management Corporations (AMCs) in Sweden has become well known abroad. AMCs had, in fact, been established in other countries before the Swedish crisis, so this was nothing new. The special feature in our case is the emphasis on splitting an ailing bank into a good bank and a “bad part” and transferring the bad assets to the AMC at carefully assessed market values. Once in the AMC, the assets are regrouped and improved in order to become attractive to potential buyers. As soon as a reasonable price can be obtained, the asset was sold.
Shortly afterwards, we decided to create the Securities Markets Programme (SMP) to start purchasing government bonds of several countries. That was an important moment. And, of course, at the same time, there was then the big loan to Greece, the creation of the European Financial Stability Fund, so those months of May, June 2010 were crucial. We were very active and it was the first big manifestation of the crisis. The peak of concern was more in the second half of 2011, first half of 2012, because that was when the markets, without any change in economic fundamentals, started to attack heavily the government debt of Spain and Italy. There was contagion and, at the end of 2011, I spoke about the ECB’s analysis of this, which showed it was already influencing, for instance, the price of French debt. So indeed, it was a development that was quite dangerous. We decided on a second round of the SMP, ended up with the OMT decision and injecting a big supply of liquidity, € trillion. It wasn’t particularly the French contagion that forced it, more the continuation of the pressure in the bond markets throughout the first months of 2012. We had to do something more significant than just a second round of the SMP. It clearly seemed that was not enough. These decisions, plus the decisions of the European summit of June 2012, ended the acute phase of the euro area’s existential crisis.

Vítor Constâncio: Interview in the Financial Times Interview with Mr Vítor Constâncio, Vice-President of the European Central Bank, in the Financial Times, conducted by Ms Claire Jones on 11 May and published on 16 May 2018. * * *  People have become concerned about a slowdown in growth, and we’ve recently seen a poor print for core inflation, which is now just 0.7%. What can the ECB do if growth and inflation continue to disappoint? And is there a risk that you don’t have enough ammunition left for the next downturn if the journey to the exit of the non-standard measures is slower than you currently anticipate? First, let me say that I don’t consider that the slowdown is such an unexpected or serious matter. We knew there would be a deceleration of growth from 2018 onwards. Perhaps some indicators in the first month have been more disappointing than expected, but very slightly so. I still believe that we will have the kind of growth that is forecast in our staff projections, so I am not worried too much about that as long as there is no extraordinary international event that derails world growth. So it’s not an immediate question what the ECB could do next. But it is, of course, to be expected that some time down the road there will be another recession. There is this concern that perhaps, then, monetary policy, with its standard measures, would not have enough policy space to respond to that.
The swaps were priced at rates that were well below those available in the market at that time, causing usage of the swap lines to rise dramatically to a peak of nearly $ billion in December 2008. In the current circumstances, although the swaps have been priced in the same manner as during the crisis, this pricing is less advantageous relative to the funding rates available in the market, limiting the usage of the swap lines at this time. The swaps were essentially put in place in a preemptive manner, under the view that their presence would provide a backstop for dollar funding markets and help to bolster market confidence. Reflections on the TALF I am now going to switch gears and discuss the TALF, which is a liquidity program of a very different nature. Later this month, we will be holding our final subscription for the TALF. However, because no deals have been presented for review for the final subscription, we know that the extension of new credit under the TALF has effectively come to an end. Although the structure of the TALF differed considerably from the other liquidity programs initiated by the Federal Reserve, its basic role was similar in many ways to the traditional  2  BIS Review 80/2010  central bank function of providing liquidity to the financial system and encouraging the flow of credit. In this case, however, the program was geared toward providing support for marketbased credit intermediation, as opposed to the traditional banking sector.

As a somewhat nerdy child, I attended an inspirational maths and computing club at Homerton College where we learned, amongst other things, how to do recursive coding using a robot turtle. We purloined one of the earliest Local Area Networks for our ramshackle school computer shed. And I had a holiday job at the Cambridge Science Park – right at the start of its astonishing growth story. I recall one particularly memorable experience working on a robot designed to extract the meat from shellfish: let’s just say the results were messy! FinTech and the Bank of England Nearly three decades on, my current role in charge of the Bank’s banking and payments infrastructure gives me a bird’s eye view of how technology is transforming financial services. From the very visible application of the latest mobile technology in retail banking, to the much less visible but just as important application of cloud computing, cryptographic techniques and ultra-high speed processors to the wholesale and back office functions that keep the financial markets running. Some say there is nothing fundamentally new here: technology has always played an important role in driving change in the financial sector: from the telegraph to the ATM (celebrating its fiftieth birthday this year); from screen-based trading to online banking. Harsher critics even suggest the very phrase ‘FinTech’ is little more than a marketing tool, promoting hype over substance.