samchain/econo-pairs-v1 huggingface dataset:
Another route would be to seek to address banks’ perverse incentives via idiosyncratic, riskbased capital requirements; ie active use of Pillar II of the Capital Accord, which is desirable in any case. One can argue that the two routes could be equivalent for the banking system as a whole. In a system of risk-based premia, the ex ante levies on “safe and sound” banks would obviously be lower than those on their riskier peers. In a system of variable capital requirements, the burden on the FSCS and so the ex post levies on the surviving “safe and sound” banks should crystallise less frequently, and perhaps also be smaller, the greater the amount of capital a riskier, failed bank had to carry. But it is not so straightforward. Unlike the US, the UK does not have a regime of “depositor preference”, which means that the FSCS ranks alongside (rather than ahead of) ordinary wholesale creditors and so shares losses with them. The risk-reducing benefits of extra risk-based capital would, therefore, be spread over  3  The FSA Consultation Paper, “Financial Services Compensation Scheme: Review of limits” (CP08/15), estimated that (based on BBA data for two large banks) the share of accounts covered by the increase in deposit insurance from £ to £ would rise from 96% to 98%, while the share of the overall value of deposits insured would rise from 52% to 60%.

Looking at the wider prudential framework let me mention two specific areas where the European Commission is currently reviewing the existing EU regulation. The first area relates to deposit guarantee schemes. Although the deposit guarantee directive of 1994 was useful in setting common minimum requirements for national schemes, the current level of harmonisation is low, with different levels of protection and different structures in place across the EU. This is not only inefficient but may hinder further integration. As many of you will already be aware, the European Commission is currently undertaking a wide-ranging review of Deposit insurance arrangements, and I would encourage it to be ambitious in this respect. The second relates to the work being carried out by the Commission with the aim of ensuring that EU financial services legislation and supervisory practices do not pose barriers to cross-border mergers and acquisitions. Consolidation processes should be market-driven phenomena that respond to market needs, such as economies of scale, IT synergies, the benefits of diversification, access to a larger client base, etc. I think that supervisors do have a crucial but limited role to play in fulfilling their responsibility to ensure that banks are not taken over by shareholders that are not suitable on prudential grounds. But this is as far as we should go. The Supervisory framework Let me now turn to the supervisory framework. I believe that we need to think in terms of a European system of banking supervision. I am not talking about a single European supervisory authority.
As the largest source of foreign direct investment in the mainland, and as China’s main financial conduit and funding centre, Hong Kong will stand to benefit considerably from the increased demand for banking services in China. There are, however, potential diversion effects that Hong Kong, and in particular Hong Kong’s banks, will have to consider and address if they wish to make the best out of their competitive advantages. Size will be an issue for banks wishing to enter the banking market on the mainland. Although size is not necessary a good indication of quality, it is a convenient regulatory tool, and I do not see, at least in the foreseeable future, any likelihood of relaxation in the size criterion of USD 20 billion. I have been in regular dialogue with the People’s Bank of China on this, and I can understand and appreciate the constraints imposed by the terms of the WTO negotiations on any relaxation which may facilitate the consideration of entrance by smaller Hong Kong incorporated banks, along with foreign banks of similar size. So the question of consolidation - which already has other advantages to commend it arises again. It is also quite natural that foreign banks will find it attractive to deal directly with the mainland, rather than through Hong Kong. But there should still be factors that encourage them to continue to use Hong Kong as a base.

Zeti Akhtar Aziz: ASEAN – towards a more integrated market Keynote speech by Dr Zeti Akhtar Aziz, Governor of the Central Bank of Malaysia, at the 19th ASEAN Banking Conference 2012 “ASEAN – towards a more integrated market”, Kuala Lumpur, 7 November 2012. *  *  *  As we enter a new phase of globalisation, Asia’s role in the world economy is being significantly transformed both in terms of its significance and influence. ASEAN economies are very much a part of this process. This trend has become more pronounced following the global financial crisis. Five years into the crisis, the world economy continues to be challenged to hold a sustained recovery. The financial sector restructuring and reforms, and the structural adjustments being undertaken by the crisis-affected economies will not only take time to produce results, but in the more immediate term, these efforts will involve costs to the economy. While emerging markets such as those in the ASEAN region are not insulated from these developments, the region has displayed remarkable resilience during this period. The region has benefitted from the decade of restructuring and financial reforms following the Asian financial crisis. In addition, structural adjustments undertaken during this period and have resulted in more diversified economies, in which domestic sources have become increasingly important in sustaining growth performance. The region’s more favourable growth prospects are also underpinned by the relatively sound fundamentals that include strong external and fiscal positions, stable macroeconomic conditions, low unemployment and resilient financial systems.
But even this combination, which can only be temporary, cannot in the long run prevent a sharp rise in prices if the gap between demand and supply is too wide - as demonstrated by the rise in prices after 1980.” In Norway, the efforts to develop an economy under strong centralised coordination and control culminated in the 1973 proposal to establish an incomes policy council.5 According to the proposal, the social partners would undertake a commitment through the council to keep negotiated wage increases within specific limits. It was also stipulated that demand management policy should be included as part of incomes policy. The proposal to establish an incomes policy council did not receive support. There was ultimately too much control and coordination. Now, only 30 years later, virtually nothing of this system remains. The structure was not solid enough. We know from experience that fiscal policy alone cannot ensure a high level of employment. The structure of the labour market and wage formation are probably of greater importance. The direct regulation of credit, interest rates and capital movements collapsed and was phased out in the 1980s. The krone is floating. Price regulation no longer plays a role as a macroeconomic instrument. The scope of business policy has become more general. State ownership in the Norwegian business sector remains extensive, but ownership management has been reorganised following the negative experience of companies in Kongsberg, Mo i Rana and Syd-Varanger. The economic policy of the 1970s and 1980s contributed to wide fluctuations in the Norwegian economy.

9 Board of Governors of the Federal Reserve System, Federal Reserve Board invites public comment on the  framework that would more closely match regulations for large banking organizations with their risk profiles, October 31, 2018. 10 Basel Committee on Banking Supervision, 2010. 11 This assumes the official sector preferences reflect society as a whole and does not consider potential gaps  due to issues such as principal agent problems within the official sector or regulatory capture. 12 Consolidated Supervision Framework for Large Financial Institutions, SR 12–17, December 17, 2012. 13 Federal Reserve Board, Federal Reserve Board seeks comment on proposal to simplify its capital rules for  large banks while preserving strong capital levels that would maintain their ability to lend under stressful conditions, April 10, 2018. 14 For a discussion of how rationalization of excessively complicated regulations could “morph” into a more  deregulatory posture, see Daniel K. Tarullo, “Financial Regulation: Still Unsettled a Decade after the Crisis,” Journal of Economic Perspectives, 33(1), 2019 Winter, 61–80. 15 6/7  BIS central bankers' speeches  15 Board of Governors of the Federal Reserve System, Supervision and Regulation Report, November 2018. 7/7  BIS central bankers' speeches
It is only through such collaboration and consultation involving key stakeholders that we are able to improve our local situations as we seek to have a stable macroeconomic environment and an inclusive financial system. These are preconditions for achieving economic development and accordingly, one of the principal tenets of economic development is access to financial services. in this regard, a national payment systems development has a fundamental role to play to enhance access. Chairperson, I have noted that the theme for this year’s conference, “Setting New Standards for Cellphone Banking” is very fitting for Zambia as we face the challenge of ensuring that the majority of our adult population has access to formal financial services. As you may be aware, a large component of the work being undertaken under the Financial Sector Development Plan (FSDP) and the National Payment Systems Vision and Strategy 2007–2011 is focused on improving financial access and contributing to the establishment of inclusive financial markets in general. The recent Finscope Survey revealed that only 37.3% of the adult population have access to formal financial services leaving 62.7% of adult population financially excluded. Although significant strides have been made to improve financial access and introduce more convenient services, more work needs to be done. Ladies and Gentlemen, this state of affairs hinders people’s ability to establish financial transactions. Effectively, lack of financial access stifles entrepreneurship and holds back the country’s economic growth. For instance, as at June 2010, there were only 258 bank branches and agencies in the whole country.

In my mind, there are three key imperatives that can facilitate ihsan in Islamic finance to ensure that it continues to provide strong support for "value-based growth" – one that is balanced, progressive, sustainable and inclusive. The first is the need for a whole-of-ecosystem alignment to the values of Islamic finance. In a beautiful hadith narrated by Abu Musa in the Sahih al-Bukhari, Prophet Muhammad (peace be upon him) said, "A faithful believer to a faithful believer is like the bricks of a wall, enforcing each other." This hadith reminds us that it is not going to be the work of one, but the work of many to reap the positive outcomes of Islamic finance. This would involve not only Islamic financial institutions, but also shareholders, investors, businesses, households, regulators and all players in the ecosystem. All stakeholders must understand and accept the fundamental goals of Islamic finance to fully harness its "beyond profit" proposition. The Shariah Advisory Council of Bank Negara Malaysia has identified seven fundamental values of Islamic finance. These are: (1) prevention of harm and attainment of benefit; (2) money only as a store of value or medium of exchange; (3) attainment of profit from accepting or sharing risk; (4) balanced wealth creation with wealth transfer and circulation; (5) assurance of transparency and traceability; (6) Shariah compliance, and (7) fairness and attainment of excellence.
Such developments can create difficulties for emerging markets through spillover effects, large and persistent capital inflows, and the risk of sudden stop and capital reversals. So, it is in this context that IMF surveillance on emerging markets, in addition to the new directions that we have discussed, should pay attention to the sources of the externally-induced risk and vulnerabilities, and to assist members, through Fund policy advice, on how best to prepare. To help emerging market members become better prepared for these risks, I have a few suggestions to make on the Fund’s current efforts. First, for the new direction on financial sector surveillance to be relevant for crisis prevention, it is important that the key systemically important economies participate. As with FSAP, this is an area that is likely to be a challenge. Ideally, most systemically important economies and those with potential financial vulnerabilities should participate if the new direction were to have a strong relevance to the global surveillance objectives. The second suggestion is in financial markets surveillance. Again, if surveillance is to have a strong relevance for emerging markets, we will need to have a more policy-oriented surveillance of the global financial markets, focusing on the key financial flows, and on keeping members informed of what the Fund sees as the current trends and risks in the global financial markets.

Bandid Nijathaworn: Financial sector surveillance – what have we learned? Speech by Mr Bandid Nijathaworn, Deputy Governor of the Bank of Thailand, at the IEO Seminar on “Strengthening IMF Surveillance: What have we learned from Independent Evaluation?” IMF – WB Program of Seminars, Singapore, 18 September 2006. *  *  *  First, let me thank the Independent Evaluation Office of the IMF for inviting me to speak today on strengthening IMF surveillance. We, at the Bank of Thailand, have been a keen supporter of the Independent Evaluation Office ever since its inception in 2000. In particular, efforts on the Fund’s advice on capital flows management as well as its recent review of FSAP, have been useful for us in shaping our own policies. I wanted to mention this at the outset, as a way of registering our support and appreciation. My task today is to speak on the financial sector dimension of surveillance. Given time limitations, I want to cover just two issues. The first is to comment on the new direction of Fund surveillance on financial sector, as embedded in its medium-term strategy, particularly on the issue whether the new direction is adequate vis-à-vis what remains to be done in crisis prevention. And the second is to comment on a few additional areas that should be emphasized going forward in the context of surveillance for emerging markets. But before doing that, let me start first with the key issue of this seminar - that is the lessons learned.
Early identification of difficulties is fundamental in this context. Banks must proactively identify those customers who, despite temporary difficulties, have a viable business, for whom debt restructuring may be an appropriate option. 7  For those cases of non-viability, it is clearly necessary to promote ways of ensuring an orderly exit from the market. It is vital that banks envisage sufficiently prudent scenarios in their capital projections and be conservative when setting aside impairment provisions. In this respect, I have already pointed out that the easing in the third quarter in provisioning by Spanish banks does not seem prudent in the current circumstances. Allow me to conclude. The exceptional situation caused by the pandemic continues to evolve and, thus, so do the public support measures and the focus of our activities as supervisors. Without a doubt, the development of an effective vaccine would contribute decisively to clearing the medium-term horizon, eliminating the most extreme economic scenarios, although the short-term remains beset by uncertainty. As long as this uncertainty persists, our responsibility is to remain prudent. Thank you very much. 8

We are currently working on legal issues, on identifying systemically important banks within the euro area, on the supervisory model, on the future data reporting and, of course, on the asset quality review that will be undertaken before we take on the responsibility of supervision. The governance structure we have adopted will guarantee that, while the Governing Council will keep the decision power, there will be no conflict of interest between monetary policy and banking supervision. On the contrary, more consistent  BIS central bankers’ speeches  3  supervision across the euro area should allow for the early detection of potential risks and imbalances and, ultimately, improve the transmission of monetary policy. This is a fundamental first step and its rapid implementation will be a major success for the euro area. But, alone, it cannot achieve the objectives of a banking union. That is why we must rapidly construct its two other pillars: a supranational bank resolution authority and a unified deposit insurance scheme. In this respect, the recent progress made by the Eurogroup both on the future ESM direct recapitalisation instrument and on a common position on the Bank recovery and resolution directive is very positive and reaffirms the determination of European leaders to finalise these decisive steps towards a genuine banking union as soon as possible.
-  On the labour market, reforms should aim at protecting the persons, rather than the jobs. Professional mobility can be accompanied without blocking changes, while further progress can be made at improving risk sharing among employers and employees and fostering education. The gains from taking such steps are only reaped in the long run, while the costs are paid in the short run. In addition the gains can be seen as small from an individual point of view because widespread across a large number of agents, while the costs are more visible, concentrated on fewer beneficiaries who lose their position. This means that the reforms have to be well explained and well designed. Besides, a healthy public finance situation is seen as one of the prerequisites for the success of structural reforms: the degrees of freedom are also limited in that respect. In this regard, modernising public administrations can be a key element to ensure control over expenditure and budgetary consolidation. Appropriate monetary policy has a limited, although essential, role, insofar as it can help create favourable conditions for reform by insuring a stable price environment and therefore reducing overall uncertainty. Taking into account the achievements and the prospects for further reform in the present Euro area, what are the challenges facing the New Member States in the process of convergence and what are the prospects for a successful Euro area integration? In contrast with some gloomy predictions made ten years ago, the Euro is a success story.

I have already mentioned in my intervention how the financial crisis has blatantly revealed the flaws with this measurement and how in certain circumstances, namely when markets are dislocated, applying full fair value accounting to the financial statements of the banking sector raises financial stability concerns and does not provide decision-useful information to investors. Just to re-emphasise, the ECB strongly opposes a full fair value approach. In this context, convergence should not come at the expense of high-quality accounting standards. Finally, with regard to recent assertions made by the IASB and FASB that convergence is on track, I would like to highlight that we are not so optimistic. In this regard, putting in place a reconciliation mechanism that simply discloses figures at amortised cost and fair value for each item on the balance sheet would certainly not achieve the aim of convergence. As regards governance, which improvements do you envisage in relation to the elaboration of accounting rules? First, I would like to stress that the ECB fully supports the concept of “independent accounting standard setting”. In their April 2009 DECLARATION ON STRENGTHENING THE FINANCIAL SYSTEM, when identifying the main areas of concern in the accounting area, the Leaders of the G20 never challenged this concept. Second, the ECB very much welcomes the recent efforts of the IASB with a view to enhancing their public accountability. We appreciate the open dialogue between the IASB and various stakeholders, including prudential supervisors, on various accounting issues.
This cannot be left to random and piecemeal initiatives; strong leadership at the industry level is required to drive a more organised industry effort to develop and strengthen core competencies of the industry workforce across the board. As a way to accelerate the breadth and depth of our talent pool, the Bank would support the establishment of regional functions and centres of excellence by insurers and takaful operators in Malaysia to serve the regional and international markets. In addition to deepening the domestic insurance market, this will have positive spillovers in lifting the quality of jobs in the industry more generally and reversing the brain drain of insurance talent. Secondly, insurers need to stay ahead of the curve in leveraging new technologies to be more accessible, more efficient and more agile. Many forces will be driving insurers to be more innovative. The removal of tariffs and changes introduced under the LIFE Framework will drive the growth of new products and delivery channels. As social media and other forms of communication change the way insurance is accessed, traditional business models will be at risk of being “Uberised”. Even where face-to-face contact remains important, for example in the purchase of long term life insurance, the effectiveness and cost efficiency of agents will be transformed by enhancements in productivity arising from better data analytics. The Bank will continue to pursue the innovation agenda. Technology advancement is here to stay. Revolution in business brought about by technological advancements will change the way we live and do business.

Transparency is assured by the publication of detailed minutes of our monthly meetings just two weeks after the event, and by the publication of our quarterly inflation report. These publications, and the continuous stream of speeches and interviews all around the country by members of the MPC, ensure broad accountability to the public at large. We see this as very much in our own interest, as monetary policy is likely to be more readily accepted - and more effective - if people generally understand what it is we are doing and why. But, beyond this, we publish each individual MPC member's voting decision each month - which they can then be expected to explain. Our procedures (though not our decisions) are regularly reviewed by the Bank's Court of Directors, and reported on to Parliament through the Bank's Annual Report. We regularly appear before the Treasury Select Committee of the House of Commons and the Economic Affairs Committee of the House of Lords. And, as Chairman of the MPC, I am required to write an open letter to the Chancellor if inflation strays by more than 1% either side of the 2½% target,  2  BIS Review 23/2002  explaining why inflation was adrift, how long the divergence might last, and the action we propose to take to bring it back on course. So far as I am aware, taken as a whole, these arrangements provide far greater transparency of, and greater accountability for, the monetary policy process than anywhere else in the world.