samchain/econo-pairs-v1 huggingface dataset:
Bank of England Future Forum 2017 Opening remarks given by Mark Carney Governor, Bank of England  St. George’s Hall, Liverpool 16 November 2017  1  All speeches are available online at www.bankofengland.co.uk/speeches  Good afternoon. Welcome to the Bank of England’s Future Forum to everyone here in beautiful St George’s Hall, and to those viewing on our webcast. My colleagues and I are delighted to be here in Merseyside. It’s been three decades since I first visited. Back then, I discovered my favourite band the Lightning Seeds, who would later pen England’s football anthem. We’ll learn next year whether the Three Lions can end what’s become fifty years of hurt. 1987 was the Life of Riley for local football. Everton and Liverpool were top of the tables, with the Toffees beating the Reds to win the Championship – sadly their most recent of their 9 titles. How things change. It’s not pure and simple all the time. Just like footballing fortunes, economic conditions in Liverpool have waxed and waned. The de-industrialisation of the 1970s and 80s affected the region particularly badly, with unemployment ultimately rising to above 20%. With the 1990s came revival and regeneration, with particular emphasis on the city’s rich cultural and economic history – a heritage rightly celebrated when city centre riverfront was designated a World Heritage Site in 2004 and when Liverpool became European Capital for Culture in 2008.

Its purpose was to determine what should be done with prudential standards to safeguard recovery. This was no ordinary regulatory convention. Marriner S Eccles, Chairman of the Federal Reserve, called it “guerrilla warfare”. In one corner were the regulators, the Comptroller of the Currency and FDIC. Scarred by their regulatory experience, and fearing further bank failures, the Comptroller and FDIC pushed for high prudential standards, including preservation of fair values for banks’ assets. In the other corner was the Fed. Scarred by their monetary policy  2  Pacioli (1494). 3  Goethe (1796). 4  Simonsen and Hempel (1993) provide a fascinating account of this episode. 2  BIS Review 28/2010  experience, and fearing a further collapse in lending, the Fed argued for laxer prudential standards and the abandonment of fair values. Battle commenced. The tussle lasted two months, often played out in public through the New York Times. In the end, the Fed prevailed. On 26 June 1938, Franklin D Roosevelt announced (without so much as a hint of irony) the Uniform Agreement on Bank Supervisory Procedures. Banks’ investment grade assets were to be valued not at market values but at amortised cost. And banks’ sub-investment grade assets were to be valued at a long-run average of market prices. In the teeth of crisis, and in the interests of macroeconomic stability, the first phase of fair value had ended. This pattern was to be repeated half a century later – the second wave of fair value.
The other investment component, that linked to construction, has undergone a most significant adjustment in the past decade. This means that, in 2018, following several years 4/7  of recovery, this GDP component was still at around 16% of its pre-crisis level. The downscaling of investment in housing entailed a decline in its weight in GDP to levels close to 5% in 2018, in line with Spain’s peers, compared with 12% pre-crisis. The reduction in housing investment activity came about in parallel with a decline in house prices which, despite the growth observed in recent years, remain in real terms some 32% below the nationwide levels observed in 2007, albeit with some cross-regional dispersion. All these developments better position this sector to support economic growth, as indeed has been the case in 2018. The weight of non-residential construction, for its part, has also diminished considerably, largely reflecting the impact of the reduction in public-sector investment spending. Beyond these improvements, as I stated in my introduction the Spanish economy remains prone to certain vulnerabilities and faces significant challenges, which I shall now set out. First, despite the notable above-mentioned reduction in private debt in recent years, on the latest available data for 2018 Q3 the negative net International Investment Position (IIP) of the Spanish economy stood at 81% of GDP, and that of gross external debt at 168% of GDP, levels that are high in relation to other advanced economies and which mark a factor of vulnerability for the economy as a whole.

Secondly, banks should strengthen their capital and the liabilities susceptible to be used in the event of bail-ins in order to face on an optimal footing the regulatory challenges still pending, particularly in respect of resolution. Thirdly, the financial sector should strive in particular to enhance its reputation and to introduce measures mitigating the risk of misconduct. Fourthly, banks should address the challenge of increasing their profitability, although this cannot be at the expense of an undue easing of lending standards. Finally, and clearly not least importantly, the new technological environment, while a major challenge for the sector (in particular because of the emergence of new competitors and services), is also an opportunity that Spanish banks should take advantage of. Allow me to conclude by pointing out that, with a view to furthering the current growth phase and entrenching the Spanish economy’s potential, it is essential in my opinion to harness the still-favourable cyclical juncture to create budgetary space ahead of future recessions and introduce reforms to take over from the expansionary demand-side policies of recent years. It is likewise vital to address the challenges the banking sector has still to face, such as the reduction in non-earning assets, the improvement of its capital structure and profitability, the strengthening of its reputation and the optimal harnessing of technological developments.
Capital and liquidity requirements, and the enhanced testing surrounding them, have made banks and the financial system more resilient to stress. But those new laws, regulations, and standards have done little to curb banker misconduct. Each post-Crisis episode demonstrates a narrow cultural focus on short-term gain and disregard of broader social consequences. Last year the New York Fed challenged the industry to consider many factors that have contributed to recent, widespread misconduct. There are no simple answers and that discussion is continuing. This year, by contrast, our focus has been more on solutions-what’s working, and what is not. In both years, we have offered three messages to the industry. First, cultural problems are the industry’s responsibility to solve. The official sector can monitor progress and deliver feedback and recommendations. In fact, many individual supervisory findings are often symptoms of deeper cultural issues at a firm. But the banks themselves must actively reform and manage their cultures. Second, a bank’s implicit norms-especially those reinforced through incentives-must align with the public purpose of banking. Gerald Corrigan, more than three decades ago, presented a theory of banking based on the principle of reciprocity.6 Banks receive operating benefits unavailable to other industries because they provide important services to the public. For example, financial intermediation is enhanced through deposit insurance and access to the discount window. Public benefits, though, are not a gift. They are part of a quid pro quo.

Of course, this evolution is closely connected to the introduction of the euro and the creation of a single capital market. Some major players are emerging in each country of the EEC. Clearly, we have new and exciting challenges ahead of us on the way to European banking consolidation. The bodies in charge of banking regulations, along with those responsible for the supervision of credit and financial institutions, keep a close eye on these developments. The stance of national regulators in Europe is based on the strong and efficient coordination of banking and financial supervision, with ongoing flows of information and, where necessary, coordinated actions which may lead to the designation of a lead regulator. Recently, several examples of such coordinated supervision between European banking authorities, such as that between the Belgian and French authorities for the DEXIA group, have shown that national supervisors are well prepared to cope with large cross-border groups. 2.3  Finally, let me say a few words on the situation of the euro in the foreign exchange market. BIS Review 52/2000  4  We have heard quite frequently during the recent months, and especially when the euro weakened against the dollar, that the cause for this situation was to be found in the supposed absence of structural reforms that disadvantaged the euro zone vis-à-vis its main competitors. In the same vein, it is often said that the poor performance of the euro reflects the growth differential between the euro zone economy and the US economy.
This year, it appears that wage increases will be especially high in the public sector and in parts of the private service sector. Although it is too early to draw final conclusions, there are some indications that wage formation in Norway is changing: •  The social partners do not appear to be placing as much emphasis as previously on developments in wage growth among our trading partners. •  There are also signs that the social partners may be placing less emphasis on the impact on total unemployment when negotiating wages. •  Some features of this year’s wage settlement point to a somewhat greater degree of decentralisation in wage formation. An example of this is the municipal sector, where the Federation of Professional Associations will, as from this year, hold local negotiations on pay increases. On the other hand, centrally negotiated pay increases were very high this year. •  In public sector wage settlements, little emphasis appears to have been placed on the assumptions concerning wage growth on which government allocations are based. This has a negative impact on service production in many areas of the public sector. The experience of this year’s wage settlement also indicates that profitability in the internationally exposed sector has been given less emphasis in wage negotiations than earlier. A shortage of labour in more sheltered industries may thus have a greater influence than previously on overall wage growth. Inflation would then be determined by domestic factors to a greater extent than in the past.

Annual wage growth1) and unemployment2) Per cent 8  8 Annual wage growth  6  6 4  4 Unemployment rate  2 0 1993  2 0  1995  1997  1999  2001  1) Average for all groups, including the cost of additional vacation days 2) Registered unemployed and on labour market programmes as a percentage of the labour force  Sources: TRCIS, Directorate of Labour and Norges Bank Fafo og Makt- og demokratiutredningen 6. september 2002  High wage growth affects the exposed business sector in two ways. First, it erodes earnings and reduces employment. Second, monetary policy has to be tightened. This leads to an appreciation of the krone, with a further reduction in earnings and employment. BIS Review 50/2002  7  Annual wage growth in enterprises in the Confederation of Norwegian Business and Industry 8  8  Salaried employees1)  6  6 Total employees1)  4  2  2 0 1993  4  0 1995  1997  1999  2001  1) Includes costs of additional vacation days  Sources: TRCIS and Norges Bank Fafo og Makt- og demokratiutredningen 6. september 2002  It is combined wage growth for all groups that influences the outlook for inflation. However, substantial wage increases for some groups can trigger wage spirals. Wages for salaried staff in the business sector have exhibited sharp growth over several years.
Yet, in coherence with my observations above, I judge that the banking sector should pay more attention to lending. This judgement is based on two theoretical premises and is enabled by an important precondition. First, a more proactive approach to lending is beneficial for the sustainable and long-term development of the banking industry. Low return on assets is one of the problems facing the banking sector in Albania, in the region, and beyond. Such low rates of return – which in Albania are induced also by ample foreign currency liquidity and will continue to be favoured by the reduction trend of the public debt and domestic borrowing by the Government – increase the vulnerability of the sector to shocks. Against this backdrop, the banking sector should increase its orientation toward lending as an instrument to enhance asset profitability and boost its longterm stability. In the same vein, leaving potential sectors or clients outside the focus will push them to turn to other segments of the financial market. This implies less income for the banking sector not only in the form of less income from lending, but also in the form of less income from other products in the package of services that banks offer to clients. Second, a more proactive approach to lending is beneficial for the sustainable and long-term development of the Albanian economy. Our analyses, based on the available information and the bank lending survey for Albania suggest a divergence in the pace of improvement in loan demand and supply.

Gent Sejko: Role of the banking industry in the future development of Albania - challenges and opportunities Address by Mr Gent Sejko, Governor of the Bank of Albania, to the discussion meeting with senior banking sector officials, Tirana, 29 May 2019. * * *  Dear banking system executives, Dear guests, dear colleagues, I have the pleasure of welcoming you to this event, which brings us together to address some issues of particular importance to the banking sector and the Albanian economy as a whole. Today, we will be discussing the role of the banking sector in the development of Albania’s economy, from short, medium, and long-term perspectives. This is, in our opinion, a matter of both private and public interest. I am confident that the discussions around this table will yield a tangible product. Our aim is to adopt a common development philosophy that will guide the banking industry into the future, as well as to agree on a concrete and detailed plan of measures for improving the quantity and quality of lending and enriching the array of financial products. This meeting takes place only two weeks after the Third Conference of the Albanian Association of Banks, which was dedicated to the sustainable development of the banking sector in the future.
My address today will focus on three issues. The first is the lessons learned from past crises. The second is the post-crisis environment and their implications for emerging markets. And, the third is the challenge for central banks going forward. First, the lessons learned. Those of you who have been at central banks fifteen years or more will by now have witnessed at least two major financial crises that put the task of central banks in managing the economy under the spotlight. The first is the Asian financial crisis of 1997–98, and the second is the current global financial crisis. Although the two crises share many similarities as well as exhibit important differences, they both have a common origin in globalization and in the inability of the global financial system to deal effectively with the consequences of globalization. In the Asian crisis, the origin was in external imbalance of individual economies, private sector indebtedness, currency mismatch, and a sudden reversal of capital flows. In the current crisis, the origin lay in a large global imbalance, excessive-risk taking by financial institutions, and the accumulation of large systemic risk. In the context of policy, the two crises have produced many useful lessons on what needs to be done to prevent the recurrence of crises. While there is no shortage of lessons learned, having been at the Bank of Thailand through the two crises, my own list of lessons learned comes down to four important lessons. The first is that nobody is above crises.

Nonetheless, much more can still be achieved in the context of financial market development, enhancing competition, and putting in place the needed financial infrastructure to help facilitate better risk management by banks and the private sector. In the Thai case, we are moving in this direction with the launch of our Second Financial Sector Master Plan last year that focuses on improving efficiency, access, and the comprehensiveness of the Thai financial sector. In general, apart from lowering the risk to financial stability through better risk management, a robust and efficient financial sector will also raise the capacity of emerging economies to generate investment from their local savings. This, in my view, is where the real issue lies in solving the problem of global imbalance. So, this very much concludes what I plan to say to you this morning in my address. I hope it has been useful. Again I want to thank SEACEN, the CCBS of the Bank of England, and Ministry of Finance, Brunei Darussalam, for the invitation, and wish you all a successful seminar as well as a full and rewarding career at your respective central bank. Thank you. 4  BIS Review 36/2010
Problems with the global financial safety net  Hume himself recognised that the nature of sovereign flows created an incentive to insure against a sudden stop, lamenting: “There still prevails, even in nations well acquainted with commerce…a fear, that all their gold and silver may be leaving them 7.” There are different ways for countries to insure against the risk of sudden stops in capital flows: (i) individually through the stockpiling of foreign exchange reserves, (ii) via collective arrangements with other countries, for example regional reserve pooling or swap arrangements or (iii) through the International Monetary Fund (IMF). This multi-layered global safety net has some advantages but it seems to me that the current configuration is suboptimal: it is fragile, costly and fragmented. Fragile The aggregate size of the global financial safety net had been in decline before of the financial crisis, despite rapid reserve accumulation. There has been some recovery since then, as the size of the IMF and Regional Financial Arrangements increased in response to the crisis and central bank swap agreements were put in place. But the composition of the global financial safety net is now more fragmented [Chart 1] and it is unclear whether it would be sufficient during a systemic crisis. The IMF element is fragile, with borrowed resources accounting for an unprecedented three-quarters, around $ billion of which are temporary loans due to start rolling off next year with no agreement in place to extend them [Chart 2]. 7  See Hume (1758).

Strengthening countries’ resilience through advice on better financial sector reforms or ways to reduce excessive debt would also help. Though, I should note that the IMF’s job of assessing sovereigns’ fundamentals is made more difficult by the fact that they have no formal supervisory role in relation to sovereigns. Stress testing The Bank of England carries out an annual stress test 12 for major UK banks to assess their ability to withstand shocks in a range of scenarios and takes pre-emptive measures to enhance resilience if necessary. This not only reduces the likelihood that banks will require liquidity support from the Bank of England, but also provides an ongoing assessment of their solvency. This informs the difficult judgement of insolvency vs illiquidity in the event that a bank does require access to the Bank of England’s liquidity facilities. There is scope for the IMF to strengthen its surveillance toolkit to include stress testing. The 2014 Triennial Surveillance Review 13 highlighted the importance of national balance sheet analysis in detecting risks and identifying spillover channels. The IMF could extend debt sustainability assessments to cover external liquidity risks and analysis of how balance of payments flows are likely to respond in crisis scenarios. This ex ante analysis would provide greater assurance on the economic fundamentals of countries seeking liquidity support from the IMF and enable countries to take pre-emptive measures to increase their resilience.
Favourable labour market conditions, as reflected in a further decrease in unemployment since late 2018, and a dynamic, albeit gradually normalising housing market, should continue to support household income and private consumption. Moreover, growth in government consumption will remain elevated, as Government is expected to use some of its fiscal space, while investment is expected to maintain a high share in GDP, reflecting the substantial upgrade to Malta’s infrastructure. Nevertheless, growth is set to moderate compared with 2018, reflecting two main factors. Firstly, given the less favourable external environment, we foresee lower contributions from exports. Secondly, it is to be expected that an economy that has been growing very fast to gradually return to rates that are more in line with its long-term growth. The balance of risks is tilted to the downside. This mainly reflects the risk that economic conditions abroad deteriorate further, in which case the recent slowdown in some of our closest trading partners could develop into a more severe downturn, limiting the expansion in our exports. These risks are seen as more elevated than the upside risks associated with domestic factors. For example, the labour market’s resilience and strong liquidity position of households could be reflected in higher than expected private consumption. Government expenditure could also surprise on the upside. Indeed, Malta is one of few countries in the euro area which has the fiscal space necessary to mitigate the effects of weaker foreign demand. Ideally Government should utilise this space to enhance the economy’s capital stock and potential growth.

For example, all jurists in the region could agree that the tawarruq contract can be used in certain circumstances, and cannot be used in other circumstances;  ii. This Dialogue could agree to disagree on specific Shariah issues, and not only taking respect those of different views, but also to defend the right of a jurisdiction in the region using arguments that may be seen controversial to others. Let’s assume Malaysia allows the use of Bai ‘Dayn in certain circumstances, but another jurisdiction disagrees with this decision. Nevertheless, the decision made by the Malaysian jurists to allow Bai ‘Dayn is respected and in the spirit of Nusantara, will defend Malaysia’s right to use such contract as it is made in accordance with the culture, tradition as well as existing economic system and legislation. iii. This Dialogue should explore a collaborative approach to develop a Shariah framework that is standardised at the regional level. Malaysia has embarked on this initiative with the development of 13 Shariah standards. It would be desirable if other countries in the region can also develop equivalent standards that could eventually be consolidated as Shariah standards that are applicable to the whole region and to even serve as benchmarks to other Muslim countries. Conclusion The rapid transformation of the Islamic financial sector will certainly affect the ascertainment of Islamic law on contemporary issues.