samchain/econo-pairs-v1 huggingface dataset:
Consequence refer to the impact or harm that money laundering or terrorist financing may cause and includes the effect of the underlying criminal and terrorist activity on financial systems and institutions, as well as the economy and society in general. Contrary to the  BIS central bankers’ speeches  3  impact of other type of risks such as credit or market risk, the impact of money laundering and terrorist financing risks are difficult to quantify. For the purpose of this NRA, we used perception surveys conducted among reporting institutions, supervisors, regulators and LEAs as our sole data-point of assessing the impact or consequences. In summary, the key point in conducting the NRA, is that whatever the approach is, it should be able to distinguish the extent of different risks to assist with prioritising mitigation efforts. Findings of risk and more importantly the effectiveness of risk mitigation measures is key to our mutual evaluation reports and the ratings. Scope of the NRA Based on the understanding of what the NRA entails, the scope of this NRA is broadly categorised under 2 broad elements; i.e. threats and vulnerabilities. In assessing threats, the extent of money laundering and types of prevailing crimes in Malaysia were analysed based on statistical data provided by law enforcement agencies and intelligence data from the FIU.

The growth in international trade, inter-linkages of the global financial system and advancement in technology have presented both the risks and opportunity to the private sectors. From the business perspective, this development provides for greater access to the wider global market. From the money laundering perspective, this also means that criminals have greater means and tools to launder their illegal proceeds into a form which appears to be legal. Using the tools provided via the advancement in technology such as the internet banking and wire transfers, these proceeds could subsequently be transferred out and layered into another transactions either in Malaysia or abroad. Changes in the business and economic landscape present a challenge to law enforcement agencies, financial regulators and supervisors. To ensure that we are effective in protecting the financial system and the broader economy from the threats of money laundering and terrorist financing, cooperation and collaboration is not an option but a vital requirement. In this regard, there must be strong working partnerships between all the law enforcement authorities, regulators, supervisors and the private sectors. Without that, our efforts will be futile. In terms of the legal framework, concerted efforts have been taken to ensure that our AML/CFT law and policies are comprehensive. On this note, I am happy to inform that the main law governing the AML/CFT has been passed by the Parliament and gazetted into a law on 29 August this year.
In my remarks today, I will review the performance of this new framework and discuss key insights from those new data collections. Before 2008, bank reserves were scarce, and the Federal Reserve influenced overnight interest rates by making small adjustments in the supply of reserves. The expansion in the Federal Reserve’s balance sheet during and after the financial crisis means that reserves are now abundant, and small adjustments in the quantity of reserves will not have much influence on overnight interest rates. Instead, the Federal Reserve’s new framework is premised on the payment of interest on reserves and on ensuring sufficient competition in money markets so that the rate of interest paid on reserves is passed through to other money market rates and thus to deposit rates offered to households and firms.2 Implementing policy in this new way has required a significant shift in the staff’s analytical focus, toward quantitative, data-driven analysis of money market structure. This work was accomplished by a large roster of highly talented staff at the Board of Governors, the New York Fed, and elsewhere in the Federal Reserve System. Of course, the development of this new framework entailed frequent interaction with the Board of Governors and the Federal Open Market Committee (FOMC), which are responsible for the tools used to implement monetary policy. I’ll focus my remarks on a few key questions. First, what is this new framework and why was it necessary?

In fact, we can have world-class policies, but if we don’t have a culture where people feel comfortable bringing their whole selves to work, rules alone won’t get us to where we need to be. This is true of every element of diversity and inclusion. In a culture where taking extended leave damages your career prospects, a generous parental leave policy won’t make up for that. In a culture where people don’t feel that their voices are welcome, few will speak up. In a culture that fails to embrace differences, we won’t reap the benefits of diversity. 1/3  BIS central bankers' speeches  The data are clear. Nearly half of LGBT people are closeted at work, and the top reason LGBT workers don’t report negative comments they hear about LGBT employees is they don’t believe that anything will be done about it.3 This gets to the heart of why the “inclusion” piece of diversity and inclusion is essential, and a personal priority. Obviously, there’s a moral imperative for diversity, and numerous studies have shown the benefits to both productivity and the bottom line.4 But for me, it’s my experiences as both an academic and a policymaker that have made inclusion so important. Economics is a profession that has a glaring diversity issue. As economists, we have not done enough to create a diverse profession or an inclusive culture. When I’m sitting in a room and see a bunch of people who look and sound the same, I know it’s a problem.
For instance, it would be useful to clarify that the Riksbank is expected to contribute to discussions on risks which may threaten the stability of the financial system. Given its central role in the supply of liquidity, not least the role as lender of last resort, it would be natural for the Riksbank's voice on liquidity issues to carry special weight. It is also essential to take into account the international perspective when formulating the Riksbank's task. In addition, it is essential that the revised Sveriges Riksbank Act gives the Riksbank sufficient flexibility to carry out its tasks in a financial system that is under strong pressure to change. For instance, one should ask whether there is really a need to divide up the Riksbank’s instruments with regard to different purposes (as in the current Sveriges Riksbank Act). A broad responsibility for financial stability and increased flexibility in the use of the instrument also mean that the evaluation of the Riksbank's work in this field may need to be strengthened. Just as for monetary policy, such evaluations could be made by the Riksdag Committee on Finance. With this, I shall round off my speech. I hope it has provided a good idea of what the Riksbank does to contribute to a stable and efficient financial system, and also given an insight into some of the challenges faced by the Riksbank in the coming years. Thank you. 12 [12]

In principle, banks should allocate capital to individual business units based on the marginal capital requirements of those activities to the bank as a whole – so if a bank overall is constrained by risk-weighted capital requirements, it will allocate capital based on risk-weighted assets even to business units for which the leverage ratio or stress test is binding on an individual basis. But as banks move closer to the critical point at which the leverage ratio rather than the risk-weighted ratio becomes binding – an average risk weight of 35% based on a Tier 1 leverage ratio requirement of 3% and risk-weighted requirements and buffers of 8.5%3 – they will need to be increasingly mindful of both constraints. The banking system will be substantially better capitalised in future than it was pre-crisis. But regulators will need to follow closely how banks are adapting to tougher bank capital standards and identify any adverse unintended consequences. Those might take the form, for example, of loopholes that provide an opportunity for regulatory arbitrage, an unexpectedly significant impact on financial markets or a conflict with other regulatory priorities, such as shifting derivatives markets towards central clearing. Where appropriate, we will need a snagging process to review and adjust through the international regulatory bodies. Securities financing transactions One example of a market where tougher regulation was both needed but might have wider consequences is securities financing.
And the terrorist attacks on September 11 2001, and the wars in Afghanistan and Iraq, added to uncertainty. So the environment in which the MPC has had to operate has not been without excitement. But did the economy respond to that excitement in a self-regulating way? It is clear from the performance chart that the supply side of the UK economy has undergone substantial change – the average rate of growth of output per head has increased from 2.1% between 1950 and 1996 to 2.4% in the past decade. It could be argued that the structural reforms of recent decades have made the UK economy and, in particular, the labour market, more flexible. Greater flexibility has enabled unemployment (and its natural rate) to fall steadily. Structural reforms also led to more stable growth of employment and output. If businesses are to stabilise employment in the face of changes in costs, employees must accept fluctuations in the real value of their take-home pay. When import prices fell sharply, employees benefited from rapid growth in real take-home pay. More recently, however, businesses have faced higher energy costs and employees have accepted somewhat weaker growth of real take-home pay. The acceptance of necessary adjustment in real take-home pay has helped to stabilise employment growth which, over the past decade, has been four times less variable than over the previous five decades. That has shifted the “stability possibility frontier” faced by the MPC inwards, enabling the MPC to keep inflation more stable than in the past.

Yet in a setting where credit accounts for a significantly lower proportion of assets than it did then, these expenses should also be lower given that the costs associated with the management of non-credit assets are lower. The consolidated statements show that, despite the deterioration in efficiency levels, the Spanish banking system’s efficiency ratios remain better than those of the main European banking systems and also than those of banks in the United States and Japan, although they are worse than those observed in other jurisdictions such as, for example, the Nordic countries Once again, to illustrate the potential gains, in terms of rates of return, of an improvement in efficiency, in a scenario in which banks achieved their best (lowest) efficiency ratio since 2000 (43.2% in 2009), it is estimated that the profit attributed to the dominant institution would have been almost € billion higher than the figure actually recorded in June 2019. In consequence, ROA would have increased by 17 bp and ROE by 2.2 pp. If we combine this hypothetical scenario with that of the non-performing loan ratio at record lows, annual profit could have been almost € billion higher than the actual figure, with ROA 27 bp higher and ROE 3.5 pp higher. Thus, ROE would be comfortably above the statistically viable upper range for estimation of the cost of equity.
Despite the strong growth, however, inflationary pressure was unusually weak, even in Sweden. The usual explanatory variables - resource utilisation, import prices and inflation expectations - were not always enough to explain or forecast the low inflation rate that was established periodically – which was also something that affected many forecasters and analysts around the world during this period. When the economic upturn began, there were still plenty of free resources, which had a dampening effect on inflation. At the same time, inflation expectations had stabilised around our inflation target of 2 per cent and wage agreements were moderate. However, apart from this we had to seek explanations for the low inflationary pressure in increased competition on internationalised and deregulated markets supported by developments in information technology. We appeared able to live with a lower growth rate than before, without this endangering price stability. The low inflationary pressure meant that the Riksbank could be content with cautiously slowing down the economy during 2000, despite the high growth rate. The steering interest rate was raised only twice from the end of 1999 up to November last year. Before that the rate had been reduced from almost 9 per cent in autumn 1996 to as low as 2.90 in March 1999. The Swedish repo rate was low in comparison with the corresponding steering interest rates in, for instance, the USA and the euro area.

At the end of last year, however, resource utilisation in the Swedish economy was beginning to be strained and inflation was estimated to rise to the extent that it would exceed the target level two years’ ahead. The Riksbank therefore raised the repo rate by a quarter of a percentage point to 4.25 per cent. The assessment of the risk spectrum indicated at the same time that a weaker economy in the USA could dampen growth in Sweden. As we now know, this is what happened. Developments during the spring During the first half of the year, the economic climate continued to weaken both in Sweden and other countries, but the signals regarding the strength of the downturn were mixed. The weakening in the economic climate was concentrated to the manufacturing industry, while household confidence remained strong, despite an undermining of household wealth in the form of falling share prices. Property prices were not affected in the same way as share prices, which probably contributed to keeping household’s confidence in the future strong. This applied both to the Swedish economy and the US economy. In the USA the Federal Reserve lowered interest rates gradually by 2.75 percentage points during the first half of the year, while tax reductions provided stimulation for households. For the Riksbank the picture was complicated by the fact that import prices rose unexpectedly rapidly in May. Later, the statistics showed that consumer prices had also risen more rapidly than expected.
I recognise, of course, that more progress has been made in the corporate context than in the area of financial institutions or sovereign debts; and I think that reflects great credit on many individuals and organisations represented at this Congress. So I will start by offering a few thoughts on corporate workouts, linking these to the Bank of England’s long-standing involvement in the London Approach and our responsibility for the maintenance of financial stability. I will then turn to look at how the desirable features, incorporated into the agreed principles governing international corporate workouts, might be applied to financial restructurings; and finally in a similar way look to whether these principles can be carried across into the field of sovereign workouts. This raises the issue of the role of the various different parties to debt restructurings, including the official sector. By drawing out some common themes, I hope to put INSOL’s work on the corporate sector into the broader context of differing approaches to resolving debtor difficulties. Corporate workouts Let me start then with corporate workouts; and let me begin by saying a few words about the Bank’s interest in this issue. As I noted a moment ago, it arises mainly from our financial stability responsibility, although I would argue that our role in promoting the efficiency and effectiveness of the financial system is also relevant.

In both cases, he is able to capture the macroeconomic implications of decisions made at the firm level, linking micro and macro questions. I conclude by extending my congratulations to Professor Bloom. BIS central bankers’ speeches  1
Minimum regulatory requirements for banks’ “core” (common equity) capital have been raised from 2% under Basel II to 4.5% under Basel III, even for the smallest banks. And allowable deductions to core capital have been reduced. On quality of capital, the types of financial instrument eligible as loss-absorbing capital (including for Tier 1) have been tightened considerably. For example, certain hybrid capital instruments are no longer eligible, as they were shown during the crisis to be incapable of absorbing loss in situations of stress (Tucker (2013), Moody’s (2010)). These reforms to capital standards have, encouragingly, been implemented in full by nearly all countries internationally (FSB (2017a)). Comparing regulatory capital, pre- and post-reform, is not straightforward. But taking together changes in both the quantity and quality of capital, it has been estimated that Basel III raised risk-based capital standards for globally systemic banks by a factor of around ten (Cecchetti (2015)). One of the new elements of the Basel III package was to supplement risk-weighted capital standards with a risk-unweighted leverage ratio. Because this measure does not require banks or regulators to form a 4  All speeches are available online at www.bankofengland.co.uk/speeches  4  judgement on the riskiness of banks’ assets, it is in principle simpler, more transparent and less subject to risk-weight arbitrage (Haldane and Madouros (2012)).

That is why we dropped 6 zeros from the currency during the implicit inflation targeting period. Meanwhile, economic agents adjusted to floating exchange regime and the short-term interest rates were set as the only policy instrument. And finally we established the Communication Department, which is a must for IT implementations. Having fulfilled the necessary groundwork, the Central Bank adopted fullfledged IT in 2006. At the beginning of my speech I said that the divorce between paper money and the gold was the reason for some countries setting up central banks anew and broadening the mandates of the existing ones. We must then ask why people are willing to hold and use paper money. This is a very important question, and the answer is they expect the future value of the money to remain stable because the future price level will remain stable. This is a matter of great trust. But to whom do the people trust? They trust to the body, which is responsible for the stable prices: the central banks. Therefore the bottom line of the inflation-targeting regime is the management of the expectations. If expectations are anchored to the target, wage earners and price setters will behave in such a way that, at the end of the period, the target will be reached. Then the question is, how can we anchor expectations? The answer is: by building credibility through delivering what is promised. Once this is achieved, the volatility in interest rates, inflation and output would be lower. How do we build credibility?
Taken at face value, the increase since the start of the year might suggest some pass-through from nearterm to longer-term UK inflation expectations. Indeed interpreted literally it would imply markets expected inflation to be a full 15 basis points higher on average over the five-to-ten year horizon relative to the start of the year. And stepping back from the month-on-month variation, it is noteworthy that the UK measure, unlike those for the US and euro area, stands above rather than below its historic average (shown by the dashed lines). This indicator is, however, a difficult one to read. UK inflation markets are sensitive in general to non-fundamental factors – although it is less obvious that these have played a role this time.5 Bank staff also estimate that the increase this year reflects an increase in inflation risk premia, which could in turn reflect a reduction in the risk of disinflation; that would be a more benign development than the alternative of an increase in underlying expectations. And the recent fall-back in rates makes me somewhat less concerned than I might have been before. Nonetheless, the increase in this measure since the start of the year does suggest all else equal there may be some risk of more persistent inflation than the MPC had factored into its central expectation.

As late as 2008, the year 2006 was still being seen as one of wasted resources. But by 2009, with revised estimates, the experts were telling us that three years earlier, the euro area was overheated and output exceeded its potential by a significant amount. Mismeasurement of the output gap can lead to errors not only in monetary policy – if and when central banks incorrectly rely on this information – but can also lead to mistakes in fiscal policy. In 2006 we had a fiscal deficit in the euro area as a whole. Alarms about fiscal soundness should have sounded before the crisis. But the alarms would have sounded much louder if the EC, the IMF and others had not suggested that the economy was running below potential. Inappropriate reliance on mismeasured output gaps can lead to complacency during good times. 2  BIS central bankers’ speeches  I recount this example about how the output gap can be misused in policy debates because once again, as we are coming out of the crisis, some voices are stressing the extent of the output gap that the euro area is facing today, perhaps drawing conclusions about policy that could again be reversed as time goes by. The focus on price stability must remain unrelenting. *** That said, another lesson is the following: the central bank focus on price stability is insufficient to maintain overall stability in the economy.