samchain/econo-pairs-v1 huggingface dataset:
Athanasios Orphanides: Interview with Reuters Interview with Mr Athanasios Orphanides, Governor of the Central Bank of Cyprus, by Michele Kambas and Sakari Suonimen, conducted on 19 April 2011. *  *  *  Q. Do you think that there will be any implications for the eurozone from putting US on credit watch negative? Overall, we should keep in mind that as a result of the crisis over the past three years, in a number of countries in the developed world, government debt has increased considerably. This is something that has affected a number of countries – including the United States and member states in the euro area. Governments around the world have recognised that continued increases in debt would be unsustainable and are taking steps to return the fiscal path towards sustainability. My interpretation of the decision by Standard and Poor’s is that it reflects the ongoing budget discussions in the United States. I have no reason to believe that the United States’ government and Congress will not live up to their responsibilities, as I have no reason to believe that euro area governments will not live up to their responsibilities and ensure that their fiscal situation is under control. Q. How do you see uncertainty and outlook? A number of reasons have contributed to increased uncertainty in the past several weeks. Let me remind you of the tragic events in Japan with the earthquake and tsunami as one example that has elevated uncertainty.

So had you told me then that 40 years later inflation would be around 1% having hovered around ½% for two years, that Bank Rate would be ¼%, having been stuck at ½% for eight years, I might well have replied that this was as likely as my being invited back here in 2016, to give a speech on economics. (I might also have looked to see what you had been drinking or perhaps smoking.) There are perhaps two lessons in this. The first is that life and the economy never quite turn out as you forecast – in the longer term at least. The second is that in life and in economics you should never stop learning. I want to talk today about some of the possible reasons why Bank Rate is at ¼% and has been stuck at what appears, by reference to history, to be exceptionally low levels in the UK and in other advanced economies. And why long-term interest rates are similarly low. In 1976, you would have had to pay 11% to borrow for a year whereas the long-term rate was 16%. Today, the equivalent figures are ¼% and 2½%. 1  Some of the difference, of course, is inflation and the inflation expectations I and everyone else had back in 1976. Bringing inflation under control in the UK in the 1990s and anchoring inflation expectations at around 2% clearly led to a material drop in nominal interest rates and a drop in the entire nominal yield curve.
As MAS’ regulatory framework has generally been regarded as conservative, we are in a good position to adopt these standards. We are mindful of maintaining a balanced approach and not over-swinging the regulatory pendulum. We will work closely with and consult the industry and the public. In the area of regulatory standards, we will review the Corporate Governance Regulations and Guidelines for locally incorporated banks and significant life insurance companies, introduced in 2005 and which were implemented in 2007. MAS’ review will focus on the effectiveness of risk management at the Board level, including the role played by Boards in safeguarding the safety and soundness of their institutions and in addressing market conduct risks. This would include a review of the Board’s role in setting remuneration policies to manage risks effectively. Giving further impetus to risk management, the locally incorporated banks are conducting more detailed stress tests internally as part of their Basel II implementation process and the results will be used in their capital planning. For foreign banks, MAS is continuing our close cooperation with home supervisors through regular discussions as well as participation in supervisory colleges. In the second area of ensuring well-functioning markets, several new measures, to enhance the MAS Standing Facility and strengthen the SGS primary auction system, will be implemented. The MAS Standing Facility has been a key channel of providing liquidity to financial institutions.

In the first quarter of this year, the financial sector grew by 7.7% quarter-on-quarter on a seasonally-adjusted annualized basis. Financial services employment has also held up reasonably well. Employment stock continued to increase in Q4 2008 and fell by 1,900 or 1.1% in Q1 2009. A recent poll 3 showed that the banking and financial services sector reported the biggest jump in hiring intentions, 32% this quarter, up from 19% in Q2. Strengthening resilience – new measures Going forward, we will remain vigilant and continue to focus on the three key pillars of resilience of our financial system. The main focus would be on shaping and adopting new international regulatory standards, strengthening the corporate governance of financial institutions, enhancing the Standing Facility and strengthening the Singapore Government Securities auction system, and bolstering investors’ confidence in our financial system. Reforming the regulatory framework has become a major issue internationally, and the emerging consensus is towards more stringent regulation. Under the first pillar of sound financial institutions, MAS is contributing to and helping to shape new regulatory standards being discussed at the Financial Stability Board, the Basel Committee on Banking Supervision and other international standard-setting bodies. For example, discussions on liquidity risk management standards and the capital framework for banks are at an advanced stage. Over the course of the next one to two years, we will be implementing changes to our regulatory framework to adopt these new standards.
In any field, financial, scientific or other, the most effective disclosures are: •  Consistent – in scope and objective across the relevant industries and sectors;  •  Comparable – to allow investors to assess peers and aggregate risks;  •  Reliable – to ensure users can trust data;  •  Clear – presented in a way that makes complex information understandable; and  •  Efficient – minimising costs and burdens while maximising benefits. Meeting these standards requires coordination, something the G20 and FSB are uniquely placed to provide. The logical starting point is a co-ordinated assessment of what constitutes effective disclosure, by those who understand what is valuable and feasible. One idea is to establish an industry-led group, a Climate Disclosure Task Force, to design and deliver a voluntary standard for disclosure by those companies that produce or emit carbon. Companies would disclose not only what they are emitting today, but how they plan their transition to the net-zero world of the future. The G20 – whose member states account for around 85% of global emissions 28 – has a unique ability to make this possible. This kind of proposal takes its lead from the FSB’s successful catalysing of improved disclosure by the world’s largest banks following the financial crisis, via the Enhanced Disclosure Task Force. The EDTF’s recommendations, published in October 2012, were the product of collaboration between banks, analysts and investors.

Research tells us with a high degree of confidence that: •  In the Northern Hemisphere the last 30 years have been the warmest since AngloSaxon times; indeed, eight of the ten warmest years on record in the UK have occurred since 2002; 3  •  Atmospheric concentrations of greenhouse gases are at levels not seen in 800,000 years; and  •  The rate of sea level rise is quicker now than at any time over the last 2 millennia. 4  Evidence is mounting of man’s role in climate change. Human drivers are judged extremely likely to have been the dominant cause of global warming since the mid-20th century. 5 While natural fluctuations may mask it temporarily, the underlying human-induced warming trend of two-tenths of a degree per decade has continued unabated since the 1970s. 6 While there is always room for scientific disagreement about climate change (as there is with any scientific issue) I have found that insurers are amongst the most determined advocates for tackling it sooner rather than later. And little wonder. While others have been debating the theory, you have been dealing with the reality: •  Since the 1980s the number of registered weather-related loss events has tripled; and  •  Inflation-adjusted insurance losses from these events have increased from an annual average of around $ in the 1980s to around $ over the past decade. 7  The challenges currently posed by climate change pale in significance compared with what might come.
And indeed, recent work in the Bank of England suggests that much of that fall could well be due to persistent structural factors (Chart 5).7 These factors include a slowing in the underlying global economic growth rate, the rise in saving due to demographic forces, lower desired investment given a lower relative price of capital, changes in the income distribution, excess saving in emerging markets and declining public investment. 7  4  Rachel and Smith (2015) attempt to decompose the substantial fall in real rates over the past 30 years. Although acknowledging significant uncertainty, they account for around 400 basis points of that fall, the majority of which they attribute to structural factors. In another piece of Bank of England work, Waldron and Zampolli (2010) calibrate a model of the UK household sector to examine the behaviour of household debt between 1987 and 2006 – their model can explain most of the rise in debt and house prices if households expected lower real interest rates to persist. BIS central bankers’ speeches  However, not all of these factors will support a higher level of debt. In particular a fall in the potential growth rate of the economy will lower the long-term real interest rate. But it will also lower long-term income so the overall impact on house values and debt sustainability is likely to be neutral.

It is nevertheless true that the implementation of Basel Pillar 2 on the basis of the regular supervisory review exercises has somewhat changed the situation. Pillar 2 allows specific requirements to be made of each bank on the basis of its risk profile so as to cover aspects not contained in Pillar 1 (minimum regulatory capital ratios). In that way the supervisor can regulate solvency requirements by adjusting them to each bank’s situation, thereby  BIS central bankers’ speeches  1  extending the supervisor’s discretion and reinforcing its role, while reducing commensurately the relative significance of the general solvency requirements set in the regulations. Likewise, the inclusion of stress tests as a supervisory tool extends the supervisor’s capacity to impose capital requirements or other constraints on banks when this is necessary to withstand adverse scenarios, even if such scenarios are rather unlikely. Once again, this tool broadens the weight of supervisory action. That said, in order to optimise the scope of supervision, supplementary instruments – that are not always available in accordance with the prudential regulations in force – are needed. For instance, not in all jurisdictions must the supervisor expressly authorise the eligibility of certain capital instruments, the acquisition of qualifying holdings in other financial institutions or dividend pay-outs charged to reserves. Above all, effective supervision should occasionally be based on discretionary actions rather than mere application of the instruments expressly provided for under the regulations.
The Government is there in the background as the last resort when conflicts arise, and, in consultation with market practitioners, it takes the initiative to reform regulatory systems when new conditions require it: the far-reaching reforms proposed for Hong Kong’s securities and futures markets in the recent budget are a good example of this. 19. Finally, the Government is prepared to intervene in isolated, clearly identified cases where markets appear to be malfunctioning. In this respect, the Hong Kong Monetary Authority has a special role to play within the financial sphere. One of its primary tasks is to promote the stability and integrity of Hong Kong’s financial system, and one of its tools – in addition to  5  BIS Review 35/1999  the linked exchange rate, banking regulation, and the financial infrastructure – is the Exchange Fund, our official reserves. The Exchange Fund, among other things, is available to be drawn on to maintain the stability and the integrity of the monetary and financial systems of Hong Kong. This is done rarely and sparingly, but it is necessary to have this provision for reasons that should be readily apparent. In addition to being a free market, Hong Kong is also an open market. This gives it one of its main strengths as an economy, for our links with overseas markets are a vital part of our success as a financial and commercial centre. But it also renders Hong Kong exposed, and therefore vulnerable, to economic and other forces that are entirely beyond its control.

A new Client Advisor Competency Standards (CACS) assessment for the Private Banking industry is also slated to be introduced in September this year. These two examinations will allow Relationship Managers – those dealing with either corporate clients or high net-worth individuals – to be independently tested on their product knowledge. We also want to raise the competency levels of professionals dealing with the broader retail investor base. IBF will roll out in the third quarter of this year, new Modules under the MASregulated Capital Markets and Financial Advisory Services (CMFAS) Examination. These  BIS central bankers’ speeches  1  new modules aim at raising the minimum competency standards for CMFAS representatives who wish to sell “structured products”. Despite these efforts, talent remains scarce in the industry. Bankers I speak to express concern about the sufficiency of skilled talent to sustain the growth of the financial industry. PwC’s 2011 Global CEO Survey conducted among 1,200 business leaders world-wide revealed that talent issues are topmost of CEO concerns. Every good CEO knows that it is not just business strategies, processes and technologies which drive new revenue streams. It is people with strong competencies and professional integrity, dedicated to serving the customer, who make the critical difference. Financial institutions must put in place policies and practices to ensure that their staff are well trained before they are allowed to deal with clients. Singapore’s financial sector headcount is expected to grow by 5 to 6 per cent this year.
But part of it is up to us. For banks, the tiering mechanism adopted last September reduces the cost of negative interest rates by nearly EUR 4 billion for European banks, of which around EUR 800 million for French institutions. These figures are significant enough to be worth quoting, feel free to do so as well. As regards insurers, two points should be stressed. First, the return on non-unit linked life insurance products needs to further decline. Second, the measures taken at the end of last year regarding the profit-sharing reserve. This reserve, which belongs and will continue to belong to policyholders, can henceforth be taken into account in the calculation of insurers’ solvency ratio. I supported the adoption of this measure because it brings French practices into line with that of the other countries concerned, in particular Germany. However, it will never be able to compensate for insufficient solvency. Adapting to the low interest rate environment also requires increased vigilance with regard to the quality and pricing of loans. This is the role of the Haut Conseil de Stabilité Financière (HCSF – High Council for Financial Stability), chaired by Bruno Le Maire; last December we issued a recommendation on the maturity of mortgage loans and associated debt burden. It applies to all new loans issued since January. This means, in short, no more excesses, and a rapid change in behaviour. Otherwise, we might see a capital surcharge for non-compliant loans, although that is not part of my wishes.

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.
And for much of the period since rates fell to the floor, policy has been actively changed – asset purchases have built up to now stand at around £ billion. Chart 1 Bank rate from 1694  % 18 16 14 12 10 8 6 4 2 0 1700  1800  1900  2000  So it is the level to which interest rates have fallen that is unprecedented. I believe it has been right to loosen aggressively the stance of monetary policy because of the scale of the deflationary and recessionary forces unleashed by the remarkably rapid downturn that followed the crisis in the banking sector. This crisis intensified dramatically in the autumn of 2008 when the banking system came close to total collapse. That would have been an outcome comparable in its impact to the failure of the system for electricity supply. Many now argue that monetary policy should be set in a different way so as to reduce the chances of this sort of banking crisis. That is one of the issues I want to discuss today. The argument that the aims of monetary policy need to be broadened beyond a focus on inflation is one  BIS Review 100/2010  1  that deserves to be taken seriously because the damage done by extreme financial instability is great. If there were no tools better suited to help preserve financial stability than varying interest rates then the case for broadening the goals of monetary policy would be strong.

Caleb M Fundanga: Zambia’s economic overview and its accountancy profession Remarks by Dr Caleb M Fundanga, Governor of the Bank of Zambia, at the 2010 Zambia Institute of Chartered Accountants Annual Ball, Lusaka, 24 April 2010. *  *  *  The President – Zambia Institute of Chartered Accountants (ZICA), Mr. Chintu Mulendema The President – Eastern, Central and Southern African Federation of Accountants, Mr. Koos Du Toit The President International Federation of Accountants, Mr. Robert Bunting The Secretary & Chief Executive – Zambia Institute of Chartered Accountants, Mr. Hapenga Kabeta The Chief Executive Officer – Eastern, Central and Southern African Federation of Accountants, Mr. Vickson Ncube Distinguished Members of ZICA Members of the Press Ladies and Gentlemen I am greatly honoured to have the opportunity to join you this evening and to say a few words on the important role that the accountancy profession plays in our economy. The importance of the accountancy profession has indeed been highlighted following the recent global financial crisis in which a lack of appropriate governance arrangements and clarity about the inherent risks taken by financial institutions contributed to the near collapse of financial markets in the developed economies. Clearly the accountancy profession has an important role to play in ensuring that the regulatory response to the crisis leads to more robust and transparent financial institutions that serve the needs of households and firms and avoids the build-up of systemic risks.
Rich countries can and will adjust more smoothly to these challenges, but it will be the poor in the developing world who are going to have to bear the heaviest burden. Naturally, changes in energy production and consumption as well as in energy markets structure have a special contribution to global action for coping with climate change. Second, surging energy demand worldwide makes us see the issues of energy security from a new perspective. A frantic search for energy sources by Asia's emerging economies, and the increasing concentration of production in the hands of sometimes unpredictable regimes, has deep ramifications for energy security in the advanced world, including and most notably in the European Union. Here, a forceful united approach is called for, based on integrated and well-functioning markets and European solidarity. Third, high and volatile energy prices constitute a challenge for macroeconomic management. Energy price developments have pushed up inflation in the advanced world with adverse effect on private demand and growth. On the other hand, windfall due to high energy prices poses challenges to fiscal, monetary and exchange rate management in the countries exporting energy. I am happy that the excellent list of speakers allows us to touch upon all these key challenges today. Ladies and gentlemen, before giving the floor to Mr. David Kotok from the Global Interdependence Center, the co-organizer of today's event, I would like to speak briefly about our cooperation with the Global Interdependence Center.

In my view, if we were faced with the same problem today now that we have a special resolution regime for banks, there is little doubt that Northern Rock could have failed in an orderly way under the resolution regime. But this wasn’t possible in September 2007. And given the number and size of depositors, Northern Rock could not be allowed to fail in a way that would have jeopardised the funds of those depositors. It was therefore a stark illustration of the need for a resolution regime. In February last year emergency legislation was introduced in the form of the Banking Special Provisions Act, or BSPA, which created a temporary resolution regime, temporary insofar as the BSPA had a one year sunset clause. The BSPA, which facilitated taking Northern Rock into temporary public ownership, also contained broad powers for the Treasury, as the lead authority in that regime, to protect financial stability and the public interest by statutory transfers of the property of UK banks. The Treasury was also able to override or modify contractual property rights in order to give itself more room for manoeuvre. Creating this regime turned out to have been prescient, because in September of last year it was used to resolve Bradford and Bingley by transferring part of its business, namely Bradford and Bingley’s deposit taking activities, to Santander, leaving the rest in public ownership. The BSPA therefore enabled a new home to be found for the deposits over the course of a weekend.