samchain/econo-pairs-v1 huggingface dataset:
In addition, these shocks have shown a greater tendency to spread rapidly to other financial markets. The rapidity with which the Asian crisis spread across East Asia in ’97-’98 is a good example. Many of us here today may wish that we have the ability to predict with certainty when the next crisis will strike. It is, however, far more fruitful to adequately prepare ourselves for the inevitable. And that, in short, means enhancing our risk management capability. BIS Review 7/2002  1  Risk Management Initiatives in Singapore MAS will introduce three risk management initiatives to help financial institutions in Singapore better manage the challenges ahead. The first initiative is a MAS guideline that aims to help banks prepare themselves to meet the ill effects of financial crises and shocks. One of the ”defining” features of a financial crisis is that it strikes suddenly and once it has struck, it gives very little time for financial market participants to react. How then can we better prepare ourselves for a crisis? Stress testing offers financial institutions a systematic methodology to prepare for financial crises. Stress testing is based on the old military saying, “the more you sweat in peace the less you bleed in war”. That is, financial institutions that have a comprehensive programme to stress test their portfolios will be better prepared when a stress event occurs.

The Basle Capital Accord of 1988 was a landmark document for the banking industry. It helped increase the capital held by internationally active banks, and created a more level playing field for banks under different jurisdictions. However, there were some weaknesses in the Accord. The most important of these was the practice of assigning the same risk weight to all counterparties in each class, irrespective of the differences in their credit-worthiness. These issues led regulators to propose a more risk sensitive framework. The proposed new Capital Accord will have a great influence on the risk management practices of banks. The new Accord, however, poses challenges to Asian banks and regulators alike. Banks will have to develop more sophisticated risk management capability while regulators will need to build up technical knowledge as well as supervisory resources to validate banks’ risk management systems. As financial markets progress towards greater transparency, the market disciplinary mechanism will reward banks that manage their risks effectively, and penalise those that do not. Good risk management practice is thus even more essential for banks to maintain their competitiveness over the long run. The frequency of shocks has increased. In the past 10 years there has been an average of one shock every year starting from the Gulf War in 1991 to the Latin American crisis of the early nineties and so on down to the Asian Economic Crisis in 1997, the Russian Bond Default Crisis in ’98 and most recently last month, Argentina’s default. The causes of these stress events are wide-ranging.
Monetary policy: achievements and challenges Már Guðmundsson, Governor of the Central Bank of Iceland. Monetary policy meeting of the Iceland Chamber of Commerce, held at Gamla Bíó in Reykjavík on 16 November 2017 Madame Chairman, honoured guests, Once again, we gather here at the Iceland Chamber of Commerce’s monetary policy meeting, which for years has been held after the Central Bank has published its autumn forecast and, in latter years, the Monetary Policy Committee’s interest rate decision. I would like to thank the Chamber of Commerce for continuing this tradition and for giving me the opportunity to talk to you about monetary policy. In my speech at this same meeting last year, I noted that the Icelandic economy had seldom been stronger, as we were experiencing the combined effects of robust GDP growth, full employment, large rises in real wages, below-target inflation, a current account surplus, a strong international investment position, and lower private sector debt than had been seen in years. At that time, we had also achieved a historical milestone in bringing inflation expectations back to target by most measures. The outlook was positive as well, with the prospect of continued strong GDP growth, a current account surplus, and target-level inflation throughout the forecast horizon. But there were concerns, too: the potential for overheating, the possible overvaluation of the króna, and the uncertainty about what would happen after the general liberalisation of the capital controls.

Given how widespread this phenomenon is, and given that it is in some respects independent of domestic conditions and economic policy, there are a number of indications that global factors such as increased cross-border mobility of labour and other production factors, international value chains, and the existence of a large excess labour force in some emerging market economies play an important role in it. An underestimated slack in the labour market is hardly a factor in Iceland, as the labour participation rate is at a historical high and wage rises are substantial. Labour importation and indirect pressures from an unutilised lower-income labour force in other countries have clearly had a dampening effect on wage increases, however. Even so, inflation is low. This is true of 4  other economies as well. But it is less of a puzzle than wage developments in industrialised countries overall: global trends have been favourable to them, as can be seen in improved terms of trade and rising exchange rates. It is well known that this can create conditions where strong GDP growth and sizeable pay rises can coincide for a time with low inflation. And one difference between Iceland and many other industrialised economies is that in other countries there have been concerns that inflation expectations would fall too steeply and become anchored below target. In order to place Iceland in this context, let us look at Chart 4, which gives some relevant metrics for several small and medium-sized inflation-targeting countries.
I am pleased to say that January’s report points to some firming in manufacturing and a pickup in hiring – a big improvement from late last year, when this survey consistently signaled little or no growth. Nonetheless, ongoing weakness in the housing market, coupled with a sluggish jobs recovery has increased financial pressures on families. Attendees at previous press briefings may recall that at the New York Fed we have a special consumer credit panel that allows us to track these trends closely.3 Since the beginning of 2008, many regional households have been reducing their per-person debt for mortgages, credit cards and auto loans quite consistently. However, the last three to four quarters show signs that households may have reached the end of this deleveraging process. Debt levels have been flat to slightly increasing in both New York and New Jersey – as they have also been for the United States as a whole. Only in Puerto Rico have debt levels continued to decline, suggesting that households on the island may not be finished with their deleveraging. The picture for debt delinquencies is similar. Although still quite high by historical standards, as of the third quarter of 2011, delinquencies were subsiding in New York and New Jersey, as they were for the nation as a whole. Unfortunately, Puerto Rican households stand out as now having a higher delinquency rate than the mainland, New York and New Jersey – and one that is continuing to rise.

Based on the latest microeconomic information available,17 it is estimated that the increase in interest rates since the start of this year (of 1.6 pp for the 12-month EURIBOR,18 the main interest rate to which the stock of mortgages in Spain is linked) will lead to a rise of almost 2 pp in the proportion of households with a high net interest burden.19 This effect would be most pronounced among indebted households between the 20th and 40th percentiles of the income distribution.20  17  This exercise was conducted drawing on information from the 2017 Spanish Survey of Household Finances (EFF by its Spanish abbreviation). The latest Financial Stability Report includes the results of the exercise for various interest rate hike scenarios. It was found that the proportion of households with a high net interest burden would rise by 1.2 pp, 2.3 pp and 3.9 pp, respectively, if interest rates were raised by 100 bp, 200 bp and 300 bp. 18  The 12-month EURIBOR has risen from -0.501% at 31 December 2021 to 1.091% at 20 June 2022. 19  The net interest burden is considered to be high when the ratio of (debt service expenses - interest income from deposits) to household income is over 40%.
Therefore, we ask you to authorise the Central Bank to promptly block websites advertising illegal financial operations, among other things. We have already forwarded the respective bill to the State Duma and look forward to your support. In order to reduce the chances of the public getting trapped by illegal lenders, since last year, we have been working together with Yandex on a joint project aimed at labelling websites of legal trustworthy microfinance organisations registered with the Central Bank with special symbols. We are discussing similar projects with other search engines. Development of the Mir card Currently, as many as 59 million cards have been issued; the share of the Mir card has been growing both in issue volumes and cashless operations. Countrywide, people use cards on a daily basis; in more than half of Russian regions, transport cards, and in some regions, also 4/7  BIS central bankers' speeches  social cards are attached to the Mir card. We hope this trend will continue. Mir cards are accepted in member states of the Eurasian Economic Union and Turkey (last year we told you we were conducting negotiations). In the near future, we are planning to ensure that these cards are accepted in non-CIS countries popular with Russian tourists, and to expand their acceptance in CIS countries. The development of cashless payments is not restricted to the use of Mir cards. Last year, we completed the development of the Bank of Russia’s special project, Faster Payments System (FPS), which we launched early this year.

These are complex projects, but we believe that they are essential to technology development, and among other things, to raising financial inclusion, so that we could bridge that gap between advanced cities and regions and ones where services are unavailable. To conclude, I would like to say that we are continuing consistent efforts in all areas of the Central Bank’s responsibility – monetary policy, financial market resolution and strengthening, encouraging competition, the development of the national financial infrastructure, and raising quality and reducing costs of financial services for households and businesses. I would like to repeatedly thank the State Duma for its cooperation with the Bank of Russia and massive efforts to improve financial market-related laws. This is a tangible contribution to strengthening our financial system, and its capability to foster economic growth and raise public well-being. Thank you for your time. 7/7  BIS central bankers' speeches
For this to be the case, however, an individual who is convicted of illegal activities, or who violates a firm’s code of conduct would need to face the risk of being permanently denied employment in the financial industry. Rather than paying for the performance bond upfront, the bond is posted in terms of the privilege to continue to work in the industry. There are several steps that can be taken to implement this concept. The first step is to make it more difficult for employees in finance who cross ethical boundaries to be able to move from one firm to another in order to escape the consequences. Currently, lenders who are considering making a loan to a borrower can look up the borrower’s credit score which reflects the borrower’s performance on past loans. In a similar manner, it would be helpful if financial firms, prior to making a hiring decision, could look up a candidate’s “ethics and compliance score” that reflects the individual’s past performance at other financial firms. Along these lines, one approach would be to create a central registry that tracks the hiring and firing of traders and other financial professionals across the industry. There would be many details to sort out regarding how to do this in a manner that was both transparent and consistent with due process. The database could be maintained by the official sector – specifically, by financial institution supervisors – based on information provided by supervised financial institutions.

The submitter says “no way,” tells the trader that this request is inappropriate and that the trader will be reported to compliance. The submitter reports the trader’s attempt at manipulation to legal and compliance. Compliance investigates to confirm the facts. The trader is fired and is fully prosecuted for any criminal actions. For this all to happen, a firm doesn’t just have to have the right rules and procedures in place, but it also needs the right culture to ensure that those rules and procedures are followed, that the bad behavior sees the light of day immediately and that the transgressors are punished in a way that is known broadly throughout the firm – that is, a clear example of the consequences is demonstrated to others. How can better incentives help? In my example, for matters to work properly, I think it is important that all the players – traders, compliance, risk and legal, have the right incentives to behave in the way that is appropriate and that aligns their interests with the broader interests of the firm in rooting out bad behaviors. One way in which incentives can be shaped is through the structure of compensation. I believe that a proper compensation system can be an important tool for enhancing culture, promoting financial stability and rebuilding the public trust in the financial industry. Incentives matter for individual behaviors and decisions in all industries, including the financial industry.
[7] Chart: Regulation on Monetary Policy In line with the Regulation on Monetary Policy, inflation targeting shall be forward-looking and flexible so that it can contribute to high and stable output and employment and to countering the build-up of financial imbalances. Under a flexible inflation targeting regime, the differences between stabilising CPI inflation and stabilising the rise in another price index are very small in practice. In the long run, there is no conflict between low and stable inflation and high and stable employment – rather the contrary. The best contribution monetary policy can make to high and stable employment over time is to keep inflation low and stable. In the short run, however, a conflict may arise between how quickly we should seek to return inflation to target and the aim of high and stable employment. In the day-to-day conduct of monetary policy, we must therefore weigh these two considerations against each other. The greater the weight the central bank puts on high and stable employment, the longer it will normally take to bring inflation back to target after a deviation. In principle, the aim is for employment to be close to a level that represents full employment, where everyone who wants to work has a job. But even in a well-functioning labour market with low unemployment, there will always be persons looking for a new job and employers searching for new employees. Even before employment has reached a level that represents full employment, wage and price inflation will tend to accelerate.

Therefore to apply technology to the payment system, a realistic interim target is to aim for cheque truncation. Cheque truncation means that the physical cheque is scanned at the point of deposit, and thereafter the electronic image of the cheque, rather than the paper cheque itself, is transmitted to the clearing house for sorting, and then onwards to the paying banks. In other words, the flow of the physical cheque is fully truncated at the point of deposit. The Singapore Clearing House Association, together with the Association of Banks in Singapore, is currently developing a cheque truncation system. This should be much faster and cheaper than handling paper cheques. We are also considering a national image archive to centralise the storage of cheques. The consolidation of such shared back-end services will yield economies of scale at an institutional level. To the customer, cheque truncation will mean faster processing of cheques deposited, thereby increasing the customer’s liquidity and reducing settlement risk. The system will be implemented nationwide by 2001, making Singapore the first country to implement cheque truncation on such a scale. BIS Review 130/1999  2  Development of capital markets Besides the need for strong banks, a second lesson from the Asian crisis is the importance of deep and liquid capital markets. There is now widespread recognition that Asian countries depended too heavily on bank loans for financing. Domestic banks lent excessively.
Chart 3: Price impact of individual trades in GBP/USD on 24 June and 7 October  Chart 4: Change in gilt yields-to-maturity and OIS  (a)  curve on 4 August 2016  Amihud measure (5 min moving average) 16  Greater price impact  14 12 10 8  6 4 2 0 00:00:00  00:30:00  01:00:00  01:30:00 Hours (BST)  02:00:00  24-Jun  3-6 Oct avg  07-Oct  02:30:00  03:00:00  (a) The Amihud measure of price impact calculates the  Note: The Bank of England does not purchase gilts with  ratio between price moves and volumes traded. maturity below 3-years. Sources: Bloomberg and Bank calculations  Sources: Thomson Reuters and Bank calculations.

As the level of competition in the corporate bond market is much lower, a key priority in the design of these operations was to encourage strong participation from market makers. Accordingly we decided to adopt a uniform pricing method for these auctions, in which the Bank pays the same (highest) price for all the accepted offers to sell us a given bond. Our judgement, was that this approach would help incentivise participation and therefore competition, as participants do not need to make firm judgements about the overall market level, but can instead focus on their own valuations. This effect may be particularly important for increasing the likelihood of smaller or less informed market participants taking part. This increased participation should in turn increase the likelihood of the Bank achieving competitive pricing in its purchases. By contrast our gilt auctions allocate on a receive-your-offer (‘discriminatory pricing’) basis. This works well when broad participation is assured. Third, the relative value of offers is judged in a different manner in our corporate bond operations. For gilts, we allocate relative to representative market yields at the end of our auctions – this enables participants to accurately anticipate the competitiveness of their offers. If a similar approach had been applied to our corporate bond operations, where there is considerably less certainty around the prevailing executable market price , the Bank would have risked allocating against stale market prices, or prices that could easily be influenced by participants in the auction.
Although decisions on interest rates still resided with politicians, the Bank now had a better-informed voice. That voice became louder as a result of two great leaps forward in monetary policy transparency: the publication by the Bank, from 1993 onwards, of a quarterly Inflation Report; and the publication of monthly minutes of the meetings between the Chancellor and Governor at which monetary policy was decided – the “Ken and Eddie Show”. Both put the Bank’s analysis and judgements on the economy and monetary policy in the public domain, for the first time ever. This did not give the Bank a vote on monetary policy, but did give it a public voice. That voice became increasingly influential in shaping external debate on policy through the 1990s, constraining somewhat the Chancellor’s hand. It also re-shaped the Bank’s own processes, which became more rigorous and resource-intensive. Transparency plus a clear target imposed discipline on the Bank as well as the Chancellor. Whereas before Bank forecasts went into the bin, now they went into the quarterly Inflation Report. 4  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  4  During this time, I was lucky enough to work on the issue I had joined the Bank to pursue – design of the UK’s monetary framework, inflation-targeting. Having been introduced in haste, there were a wide range of design issues to be researched and agreed.

Such opportunities are available not only in Malaysia but also in the region and globally. The time is opportune for tapping into the Islamic finance market. Malaysia has had a head start in Islamic banking and finance. While we have the largest Islamic banking market in the world, the largest Islamic capital market and largest takaful market, still the potential generated by the unprecedented growth in the global Islamic finance industry is yet to be fully harnessed by the players in the Malaysian financial sector. As Islamic financial products increase in sophistication, a higher level of competencies, skills and structuring abilities of the merchant banking community would be needed. If Malaysia could emerge as a supplier of these high-end services, the nature of merchant banking would change significantly. On the part of the Government, major initiatives have been taken to create the enabling environment and create resources for the next phase of development of Islamic banking and finance. These include  BIS Review 83/2005  3  our efforts to build Shariah expertise, promotion of convergence of Shariah understanding, promoting and hosting IFSB, the international Islamic standard setting body and more recently work is being undertaken to streamline the regulatory regime for Islamic banking and Takaful. These cumulative efforts are aimed at promoting a more conducive environment for enhancing Malaysia's position as a hub for Islamic finance. Law reform work on these matters has already begun and is expected to be completed by next year.