samchain/econo-pairs-v1 huggingface dataset:
Zeti Akhtar Aziz: Asia School of Business – meeting Asia’s increasing demand for talent Remarks by Dr Zeti Akhtar Aziz, Governor of the Central Bank of Malaysia (Bank Negara Malaysia), at the Signing Ceremony of the Collaboration between Asia School of Business and Massachusetts Institute of Technology, Cambridge, Massachusetts, USA, 8 April 2015. *  *  *  President Rafael Reif, Dean David Schmittlein, And dear colleagues from MIT and the Asia School of Business It is my very great pleasure to be here in Cambridge at this ceremony today, for the formalisation of the collaboration between Bank Negara Malaysia and MIT for the establishment of the Asia School of Business in Kuala Lumpur. Bank Negara Malaysia has for more than a decade now, been involved in extensive investment in education – not only for the financial sector, but for the broader economy. Our reach has also not only been for the development of talent from our own country, but it has also extended to the Asian region and beyond. This is based on our conviction that the next generation of talent – whether in the private or public sectors – needs to recognise and understand the dynamics and interconnectivities of the new regional and international environment. In particular, as the pace of economic and financial integration that is now taking place in Asia intensifies, the talent needs to appreciate the implications of the new inter-linkages and its implications.

Our aspiration is to contribute to the development of future leaders that are able to effectively operate in this new environment. The establishment of the Asia School of Business is, therefore, a complementary initiative to meet the increasing demand for talent with such leadership and management capabilities. Bank Negara Malaysia is most honoured to partner with the MIT Sloan School of Management in the establishment of the Asia School of Business. The Bank is very much drawn to the education philosophy of MIT Sloan that emphasises on both analytical rigour and practical application to real-world challenges through project-based, action learning, and the focus of its relevance to the different economic sectors. The Bank also shares MIT Sloan’s dedication to encouraging innovation and entrepreneurship. The increasing importance and influence of Asia in the global economy has increased international interest to better understand Asia – the economies, businesses and people that comprise the region. Being home to a significantly diverse group of businesses – from multinational corporations to large home-grown conglomerates and vibrant small and medium-sized enterprises, Asia provides unique educational and research opportunities to advance thought leadership in a wide range of activities. The Asia School of Business will offer two key differentiating value propositions: the emphasis on the practical application of business management education, to apply theories of the classroom in a broad range of organisational and institutional settings; and to be a global knowledge and learning centre that focuses on insights, perspectives and expertise from the emerging world, especially the Asian region.
At the same time, issuers are assured that their financing needs, especially the long term ones, will be met in an orderly and timely way. By providing such an assurance, a secondary market ensures that savings are pooled and invested in the economy in a cost efficient manner. In this respect, a vibrant secondary market is therefore an important aspect of the price discovery process. Chairperson, an active secondary market is important to central banks as it facilitates the efficient conduct of monetary policy. This is because, to effectively implement monetary policy, central banks depend largely on the ability to influence financial markets. Therefore,  BIS Review 26/2008  1  with a vibrant secondary market, monetary policy effects are transmitted to the rest of the economy in a more transparent manner, which in itself contributes to price stability. At this point in time, it is opportune for me to outline briefly the efforts Government has made towards developing our secondary markets. Since the early 1990s, the government has taken steps to develop the securities market. There has been good progress made on the developing the primary market, though further refinements can be made to the structure. As for the secondary market, it has barely evolved beyond the elementary levels.

The first report (Climate-related Risk Drivers and their Transmission Channels) explores how climate-related risk drivers, including physical risks and transition risks, can arise and affect both banks and the banking system via micro- and macroeconomic transmission channels. 3/6  The second report (Climate-related Financial Risks – Measurement Methodologies) provides an overview of conceptual issues related to the risk measurement, as well as practical implementation by banks and banking supervisors. While echoing the existing research that climate-related financial risks do entail unique features, such as uncertainties associated with the nature of climate change, much longer time horizon for climate risks to manifest, lack of commonly accepted risk measurement methodologies etc, these two analytical reports conclude that traditional risk categories used by financial institutions and reflected in the Basel Framework (eg credit risk, market risk, liquidity risk, operational risk) can be used to capture climaterelated financial risks. This conclusion is important, as it provides a strong conceptual foundation for the Committee’s next phase of work. Instead of treating climate-related financial risk as a new separate risk type, the Committee will explore possible measures within the current structure of the Basel Framework to address such risks. And this is where we are now. We are analysing the extent to which these risks can be addressed within the existing Basel framework, identify potential gaps in the current framework and consider possible measures to address any gaps. I view this as a key value-add to the various international initiatives that are underway.
Customers, especially the more sophisticated ones, will take their business to the foreign banks already in Singapore. The local banks cannot rely on government protection forever. Even if we had not liberalised the banking industry, the foreign banks here would still have been able to use technology and new delivery channels to compete for retail business. In fact, the most innovative foreign banks have been growing their market share despite the restrictions that we have placed on them. Over time, local banks that cannot compete would become marginalised. This would not be a good outcome. In the event of a crisis, we want to be able to count on strong institutions with a major stake in the country, whose interests will be aligned with those of the long term interests of the Singapore economy. Banks which are tied more closely to Singapore will be more likely to act in support of financial and economic stability. That is why MAS remains committed to building strong local banks with a significant share of the domestic market. This is the reality that Singaporeans must understand and accept, as we debate the pros and cons of bank mergers. If small banks were economically viable, we would not be meeting tonight with every Singaporean bank either a bidder or a takeover target. The fact that they are bidding and being bid for proves not just that the smaller local banks are vulnerable, but also that the bigger ones themselves feel insecure, and rightly so.

Two, the strategic partner must be a sound and well-managed entity. The alliance should not result in a higher risk profile for the Singapore bank through, for example, increased contagion and reputation risks; and  c.  Three, the Singapore character of the bank must be retained. Foreign parties cannot become controlling shareholders, even if the controlling stake is less than 50%. To allow this would circumvent a key objective of our liberalisation programme, that is to build strong local banks which can underpin the stability of the banking system. Some of the local banks have already had initial discussions with prospective foreign partners, although so far nothing has materialised. These proposals have not failed because of regulatory objections. MAS' stand is clear: as long as the foreign partner is not seeking to take control of the local bank, we are open to discuss all possibilities. Banking liberalisation – the second phase The consolidation being played out among the local banks is a clear indication that they understand the urgency of strengthening their competitiveness. Overall, the local banks have responded well to the liberalisation programme, upgraded their capabilities and maintained their market shares. This has given us confidence to proceed now with the second phase of liberalisation. The second package of measures has three main components: freeing up entry to domestic wholesale banking, enhancing competition in retail banking, and instituting prudential safeguards necessary for a more liberal banking environment.
In April of last year, the Fed launched the FR 2420 Report on Selected Money Market Rates, a mandatory daily collection of fed funds, Eurodollar, and CD transactions from around fifty domestic banks and one hundred U.S. branches of foreign banks. 24 The goal of initiating this data collection was to better understand institutional behavior in money markets, and indeed, as indicated in observations shared with you this evening, our findings have already helped us analyze results of our operational tests to prepare for normalization. These data also present an opportunity to make additional improvements in light of the recent international focus on identifying best practices for reference rates. 25 Earlier this year, the Fed announced plans to improve the process for calculating the fed funds effective rate by transitioning the data source from data supplied by federal funds brokers to data reported directly by banks through FR 2420. 26 The new data source includes more activity and transaction-level data, which will make the calculation process more robust. The Fed also announced it would begin daily publication of a second, broader measure of unsecured bank borrowing activity based on transactions in both federal funds and Eurodollars. This rate, called the overnight bank funding rate, will provide increased transparency on broad overnight funding costs for U.S.-based banking offices.

The first years of monetary independence were years of hyperinflation, recession, insufficient foreign reserves, permanent depreciation of domestic currency and general macroeconomic instability. I would like to mention, as an illustration, that just after the monetary independence, the exchange rate depreciated almost on a daily basis, which along with the high monetary and fiscal expansion led to hyperinflation. In 1993, for instance, the average inflation reached nearly 350%, which was devastating for the economy. With the joint efforts of policy makers and scientists, policies for managing the exchange rate volatility as well as inflationary spiral were quickly adopted, which together with the support of the international financial institutions enabled the economy to stabilize and market principals to function. In October 1995, a monetary strategy of stable exchange rate of the denar against the Deutsche mark was adopted and against the euro since January 2002 – a strategy that then as well as now is considered to have been one of the supporting pillars of the stability of the Macedonian economy. Today, after 28 years of monetary independence, it is my pleasure to note that the National Bank is an institution whose credibility and integrity are being permanently reaffirmed. Maintaining price stability is the ultimate objective of the National Bank’s monetary policy.
Another factor of importance is the new capital adequacy rules that are planned for introduction in 2006. Put simply, capital adequacy rules are rules governing how much capital a bank is required to hold for various borrower groups for each krona lent. In the new rules, it is intended that the risk weighting will better reflect the actual credit risk. This means that the banks will be more careful in assessing the relationship between the risk of a loan and its return. It will therefore be possible to observe increased risk in the banks' interest rates. The new capital adequacy rules have both advantages and disadvantages. The proposed rules require the banks to hold more capital if the risks in their loans increases. If they do not have more capital than that prescribed by the rules, they must either acquire more capital or reduce the risk in their lending. In such a situation, a bank can decide against renewing loans, which of course would entail severe consequences for its borrowers. There is therefore a risk that the new rules will reinforce cyclical developments. Nevertheless, the new rules entail several advantages: a more all-round, individual risk assessment that better protects savers' funds and reduces the risk of tax payers via the Government having to step in, opportunities for cheaper loans to low-risk borrowers as well as increased interest expenditure for high-risk companies. Consequently, the pricing of loans will be fairer.

Financial Times: And what about temporary suspension of membership or even expulsion of a member that is systematically breaching this...? Jean-Claude Trichet: No, I don’t call for expelling members, but a temporary suspension of voting rights is something that should be explored. Financial Times: In retrospect, shouldn’t Europe have undertaken bank stress test earlier? Jean-Claude Trichet: I think so. The ECB and the Bank of England were very much in favour of this stress test. Of course, we have a very complex institutional environment, involving cooperation in real time among 27 EU capitals. It was really essential to have this exercise undertaken on a unified basis, simultaneously. You know that we particularly welcomed the detailed publication of the results for the 91 banks involved. Financial Times: Are you worried about deflation in Europe? Jean-Claude Trichet: No, I do not see the materialisation of a risk of deflation, or either of inflation, at present. We went through the heat of the crisis without any materialisation of deflationary risks. Our successful and solid anchoring of inflation expectations has protected us, I trust, very well against the materialisation of inflation risks – but also against the materialisation of deflation risks. Financial Times: And what about deflation in the United States, is that different? Jean-Claude Trichet: I fully rely upon the analysis of the Federal Reserve. Financial Times: But how serious do you think is the present weakness of the American economy?
Although policies have now been in crisis management mode for five years, the interbank market has yet to return to its normal state, reflecting the extent of the lingering damage within the financial sector. To a considerable extent, the common currency masked vulnerabilities related to the build-up of various imbalances, since such imbalances could no longer be addressed by exchange rate corrections. BIS central bankers’ speeches  1  These factors have raised questions on the viability of the European single currency model as this has perhaps failed to achieve the targets it was primarily set-up for. The extent of these fragilities is reflected in Chart 1, which shows a convergence in sovereign yields in the run-up to the formation of the monetary union, followed by a decade-long stability. In retrospect the low yields were clearly not consistent with the underlying fiscal positions or economic fundamentals at the national level. Indeed, low interest rates enabled governments to pile on additional debt at relatively cheap interest costs. This period coincided with deterioration in competitiveness and wider current account deficits as peripheral countries continued to finance such deficits via capital inflows. Eventually, when markets switched their focus to economic sustainability, the flow of capital reversed direction, sovereign debt was downgraded and yield spreads widened dramatically, as seen in Chart 1. Chart 2 provides a contrast between two groups of countries.

Josef Bonnici: The changing nature of economic and financial governance following the euro area crisis Introductory remarks by Professor Josef Bonnici, Governor of the Central Bank of Malta, at the Malta Financial Services Authority, Attard, 17 January 2013. *  *  *  The success of the European monetary union was always contingent on three considerations. The first requirement is the maintenance of fiscal discipline; the second is effective financial regulation and the third condition is the management and minimization of macroeconomic imbalances. In reality, these requirements were often not met. In fact, there was a general lack of awareness of their importance. For the past several years, the headlines have been dominated by the ramifications of the European crisis, which was first manifested in the banking system and then in sovereign debt markets, and subsequently in the economic slowdown and related problems that followed the introduction of fiscal consolidation. The European Central Bank has engaged in a wide range of policy measures that seek to expand liquidity and restore normal conditions in the banking sector and in the financial markets. These monetary policy measures include conventional or standard measures, which have reduced policy rates to very low levels. In addition the ECB has adopted various non-standard measures, which have included long term refinancing operations that inject ample liquidity into the financial system. The ECB has gone a step further by announcing an Outright Monetary Transactions (OMT) programme.
Scope of permitted activities MAS will determine the scope of activities which the bank or FHC will be permitted to undertake. Besides financial activities, they will include activities which have clear synergies with the bank’s financial business. We will not have a fixed list of permitted activities. Instead we will exercise flexibility to allow banks to undertake business ventures that are related to their core competencies, such as e-commerce activities that are changing the banking industry worldwide. These include providing payment services in support of e-commerce, and leveraging on banks’ IT competencies to provide IT services, especially in building infrastructure and applications for B2B e-commerce. Banks will also be allowed to undertake equity portfolio and venture capital investments. We will define an equity portfolio investment to be one where the bank and its financial affiliates do not have control over the investee company, e.g. by being the largest shareholder. An equity portfolio investment should generally not exceed 10% of the investee company’s capital. Furthermore, each equity portfolio investment will be subject to a single security limit of 2% of the bank’s capital funds. We will amend Section 31 of the Banking Act to remove the existing aggregate limit on portfolio 5  BIS Review 53/2000  investments, and replace it with this new single security limit. We will also exclude debt instruments from Section 31 because they are generally less risky than equities. Venture capital investments will be treated separately.

What businesses banks chose to be involved in, and what business entities chose to own a bank, would be matters for themselves to decide. Over time, banks with the right configuration and mix of activities would succeed, while those without would fail or be eliminated by the competition. But regulators cannot leave it entirely to the market to sort out such matters, especially where the banks involved are not peripheral players but perform key roles in deposit taking and the payments system. Strong banks are important to the health of the financial system and to the entire process of credit intermediation. Regulators cannot guarantee that individual banks will never fail, but they have a duty to minimise the chances of a mishap and to maintain the integrity and overall stability of the financial system. A clear source of potential problems in this regard is the commingling of financial and non-financial activities within the same corporate group. Many regulators regard it as good banking and sound supervisory practice to require clear separation of the two. Firstly, separation will limit the risk of contagion from non-banking businesses to the bank. Banks with significant interests in non-banking activities are exposed not just to credit and market risks which are the primary risks of their business, and which the banks should assess and manage as part of their core competence. These banks will also be taking on the business risks of their non-financial activities.
Urban Bäckström: In the wake of financial turmoil Speech by Mr Urban Bäckström, Governor of Sveriges Riksbank, at the Conference on WorldCom and Enron - aftermath in the US and lessons for Sweden, held in Stockholm, 5 September 2002. *  *  *  Thank you for the invitation to discuss this interesting topic. The circumstances connected with WorldCom and Enron unquestionably raise some burning questions to do with the roles of the owners, the boards and the auditors, as well as with construction of the rule system. There is a risk, however, that a drive for quick solutions will result in hasty conclusions. Experience shows, in my opinion, that when dealing with complex problems, there is often much to be said for reflection and closer consideration. In many cases it is not until some time has passed, enabling us to gain a better understanding of what happened, that we are in a position to take the steps that are truly important and crucial. My starting point here is that the events to do with WorldCom and Enron are a part of a broader context. In the first place they are, of course, directly connected with the recent years’ stock-market bubble. But at a deeper level I believe they stem from two major processes and that, as so often happens when things go quickly, our current institutions - in a wide sense - have not quite kept up with the course of events.

What is good for the client is presumably good for the bank as well. The structure of internal incentives also needs to be adapted to encourage a longterm relationship. It seems reasonable to suppose that some newspaper managements are likewise thinking about how their readers’ interests can best be served. Without in any way claiming to be exhaustive, these examples illustrate the major forces that are at work in many parts of our society with a view to making things function better than they did in the recent stock market boom. In addition there are of course the deliberations of economic policy decision-makers, authorities and international institutions. The message I want to put across today is primarily that there are no simple solutions that would prevent a repetition of what we have been through. We must also realise that the spontaneous healing mechanisms in a market economy can take time to work. They probably need the support of better institutional rule systems, for example in accounting practice. At the same time, I would be cautious about intervening too much, for instance by complicating matters with rule systems or unduly detailed supervision by authorities. It is a question of striking a balance so that the sound forces in the economy are free to act while tendencies that may develop into a crisis are held in check. How this is to be achieved is something that market players and the competent authorities continuously have to consider and try out in the light of experience.