samchain/econo-pairs-v1 huggingface dataset:
It will reduce the procyclicality of the financial sector. Higher capital requirements are an important component of the new framework. The capital requirements are set in relation to banks’ risk-weighted assets. The risk weights in the calculation are therefore also important for the system’s robustness. This may give rise to challenges, particularly with regard to housing loans. Under Basel III, a bank must set aside about NOK 2.50 for every NOK 100 they lend if the regulation’s standard risk weights for residential mortgages are applied. This is to cover the equity capital and conservation buffer requirements. If the countercyclical buffer has been turned on at maximum, the bank must provide one additional krone for each hundred kroner of loans. However, Basel III also provides banks with the option of full use of internal models for calculating their risk weights. When banks calculate risk weights using internal models, only institution-specific risk is taken into account and not system-wide risk. Norwegian banks that use such models arrive at risk weights that in some cases are a third of the standard weights, and for some Swedish banks that operate in Norway they are even lower. The capital requirements are then reduced correspondingly. In the case of full use of internal models,  4  BIS central bankers’ speeches  these banks will only have to set aside 1 krone for every NOK 100 in residential mortgage loans, even when the countercyclical buffer is fully turned on.

  In addition, a number of targeted measures were implemented to mitigate the impact of tighter market funding. Long-term F-loans were provided for 108 banks, and 20 banks and 4 mortgage companies were supported through the swap facility. In addition, capital was supplied to a number of banks through the Norwegian State Finance Fund. These measures were not without financial risk for the Norwegian authorities when they were introduced, although it does not appear that the measures will ultimately prove costly. On the whole, the Norwegian economy fared well through the financial crisis. Nonetheless, the Norwegian economy and the Norwegian financial system were vulnerable in a number of areas. The continued existence of this vulnerability gives cause for concern. 2  BIS central bankers’ speeches  House prices are now rising rapidly again and have already passed the previous peak levels. Household debt growth in Norway has edged down, but the level of debt shows no signs of falling. Overall indebtedness in the economy is also higher than at the outbreak of the financial crisis and the proportion of market funding is still high. There is therefore every reason to keep a close eye on systemic risk going forward. Systemic risk and households In our view monitoring developments in the household sector and the housing market is particularly important. There are many reasons for this.   A good half of Norwegian banks’ loans are extended to households. The bulk of the loans is secured on the dwelling.
The developments in the pipe-line include the unique set of prudential regulatory and supervisory standards for Islamic banking operations by the Islamic Financial Services Board, tailor-made set of accounting standards for Islamic financial business by the Malaysian Accounting Standards Board and introduction of the Deposit Insurance Scheme in Malaysia. Having achieved the critical mass, Bank Negara Malaysia conducted a review in 2003 of the existing 'window' institutional structure of the banks to prepare an enabling structure that can assimilate future developments in the Islamic financial regulatory infrastructure over the longer term and thus strengthen the prudential regulatory and supervisory regime. This represents the third phase in the development of Islamic banking in Malaysia. The new institutional structure known as 'Islamic subsidiary' was introduced in 2004. It is envisaged that greater strategic focus and resources as well as higher autonomy and governance will be accorded to the Islamic banks. To-date, two Islamic subsidiaries of two banking groups have been set up. Integrating with international financial system Another significant milestone in the progress of Islamic banking and finance in the Malaysian banking system in its two decades of development is the issuance of three new Islamic bank licences to Islamic financial institutions from the Middle East. The new entrants with distinctive capabilities and strengths will have the opportunity to bridge the two regions, participate in the growing Islamic banking industry as well as tap new markets in Malaysia and in the region, and promote healthy competition thereby contributing to elevate the industry to new levels of dynamism.

Zeti Akhtar Aziz: Building a progressive Islamic banking sector - charting the way forward Speech by Dr Zeti Akhtar Aziz, Governor of the Central Bank of Malaysia, at the Seminar on 10-Year Master Plan for Islamic Financial Services Industry, “Building a Progressive Islamic Banking Sector Charting the Way Forward”, Putrajaya, 22 June 2005. *  *  *  "The Islamic financial services industry is now at the threshold of its next stage of development. This decade has seen significant progress being achieved. Islamic finance has now gained wide acceptance as a form of financial intermediation. The sustainability of this progress, however, demands due attention to the future - to look beyond the near term, and to take a longer-term perspective into the needs of the future and to evolve an Islamic financial system that will best serve these needs. An essential part of this process is the clarity of the vision and the objectives that are to be achieved. This provides the starting point for the formulation of a Master Plan which defines the blueprint for the future development of Islamic finance. While envisioning the future will provide the strategic focus and the common goal to be achieved, of greater importance will be the actions that need to be taken to make it happen."
From hot air to cold hard facts: how financial markets are finally getting a grip on how to price climate risk and return – and what needs to happen next Speech given by Andrew Hauser, Executive Director, Markets Investment Association, London 16 October 2020  I am grateful to Benjamin Bowry for his help in writing this speech, and to Andrew Bailey, Imane Bakkar, Bethany Blowers, Sarah Breeden, Mark Cornelius, Eleanor Eden, Amber Evans, Sarah Hall, Andrew Harley, Ronan Hodge, Sarah Kemmitt, Zane Jamal, Theresa Lober, Arjun Mahalingam, Tom McLaren, Jenny Owladi, Dave Ramsden, Andrea Rosen, Tom Silvester and Mathieu Vital for their comments and guidance. 1  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  Introduction 2020 is not the likeliest of years for the green revolution to have started paying off in financial markets. With a global pandemic raging, and economic uncertainty at historic highs, issuers, investors and intermediaries might have been forgiven for having their minds elsewhere. But, in fact, after many years of rhetoric from market practitioners, the temperature has changed noticeably. Hot air is turning into cold hard fact: -  Climate oriented equity indices have outperformed the broader market by 2-5% in 2020, as economic activity has shifted away from travel and other fossil fuel-intensive sectors, and towards online commerce and technology (Chart 1);  -  Green bonds also outperformed their conventional counterparts over that same period (Chart 2), and made up a fifth of total European investment grade issuance in September alone.

In short, the hot air is cooling. But some big challenges remain: -  On disclosures, to reach the goal of securing a fully consistent, decision useful and forward looking set of metrics requires standard setters to agree on a single framework; for it to be made mandatory; and for corporates to measure, model and disclose;  -  On instruments, we need to see a further scaling up in the range and depth of tools providing credible incentives for green investment and more effective transparency for investors on performance against climate goals. That will drive broader-based price discrimination between climate-positive and climate-negative assets, which in turn will provide powerful incentives for further adjustment; and  -  On asset allocation strategies, we need to coalesce more around terminology and approaches, providing a clear and credible choice for clients and investors, on that journey towards full integration. And we need more research on what works and what doesn’t! Many of the actions here are for the financial markets themselves to resolve – and rightly so, because we want the power of markets working to deliver climate change. But there are important priorities for the public authorities too: to ensure externalities are properly internalised, so markets can do their job; to help co-ordinate and set market-wide standards, and where necessary to make them obligatory; and to use our strength and influence as market participants in our own right to drive change, where doing so is consistent with our mandates.
Progress on the disclosure front, however, will be limited until accounting standards are enhanced to ensure proper valuation and to reflect innovations over the past decade, in terms of both new products and modern risk management techniques. Accounting systems serve a variety of purposes, but none is more important than helping creditors and investors make rigorous and clear-eyed decisions as to which enterprises meet the market tests of efficiency, competitiveness, and profitability. Sound accounting systems also enable investors to determine the value of enterprises. In so doing, the systems assist in attracting capital, both foreign and domestic. In my view, therefore, ongoing efforts to enhance and harmonize accounting standards worldwide should continue and even intensify. This past year brought widespread questioning of the quality and integrity of the information available to the market and the behavior of some corporate executives. Although the developments that gave rise to this questioning are regrettable, there has, in fact, been a positive side. The public uproar that these developments have created and the turmoil they have generated in the financial markets have been immensely powerful as forces for meaningful reform. I further believe that the painful experiences of this year will help educate a generation of younger managers about the importance of integrity and sound corporate governance based on independent oversight and strong internal checks and balances. The process of addressing these problems has clearly begun. In this country, we already have on the table a number of proposed changes from both private and public sector participants.

I also believe that the question of the general nature of the ECB’s monetary and exchange rate policies in pursuit of price stability, sustainable growth and low unemployment is of concern not just for those 11 countries. Since the ECB’s policies will have global effects, they are of global concern. As you all know, the general outlines of the monetary policies to be pursued by the 11 countries whose currencies are tied to the euro have already been determined. This has also created some new problems. But before discussing them, I would like to point out the four main characteristics of the ECB. First, it is independent. This independence means that it can decide on what monetary policy strategies to follow and what monetary instruments, especially short-term interest rates, to use in pursuit of its primary objective of maintaining price stability. BIS Review 1/1999  –2–  The ECB’s Governing Council, consisting of the governors of the national central banks of the euro area and the ECB’s Executive Board, will determine the basic outlines of the ECB’s monetary policy. The chosen strategy will be carried out by the ECB’s Executive Board, consisting of a governor, vice governor and four members appointed by the president or prime minister of countries in the European Monetary System. From the independence of the central bank governors on the Governing Council, one can infer a high degree of independence for the system.
Financial inclusion is a perfect example. Technology is helping thousands of families and business all over the world to gain access to financial tools that improve their day-to-day living. Yet, despite these many positive developments, digital transformation of the financial industry is also known to harbour significant risks. Some of them might be new but others have been long associated with the provision of financial services, such as operational, financial, legal and reputational ones. A telling example of this is banks’ -and Fin Techs’increased reliance on third and fourth parties. One such essential external partner are cloud and data service providers. In this context some of the more fundamental concerns expressed by central banks and supervisors have to do with issues such as the degree of concentration among a small number of dominant players, the potential loss of control over and visibility of whether a service is being delivered in line with laws and regulations, and the possible difficulties authorities may encounter to effectively access critical data held by third parties, if and when  2  Just in the case of Spain, a Banco de España led survey showed that by end-2019 about 89% of banks had already reached a high to medium degree of digitalisation of their internal processes; a figure that is close to 95% in the case of customer-related ones. In fact, the same study claimed that prioritisation was given to the retail segment (e.g. biometry, digital wallets, etc.).

In other words, we should be ready to review our ways of working to the extent of contemplating changes in organisational structures. Again, let me refer to a case in point in the area that I am best acquainted with: the ECB’s Single Supervisory Mechanism’s (SSM) SupTech agenda. This particular strategy rests on four key building blocks, namely: (i) implementing an innovation model based on open collaboration, (ii) fostering a shared digital culture among its staff, (iii) cultivating an innovation ecosystem that connects stakeholders from within the SSM with start-ups, academia and other institutions, and (iv) developing impactful tools and solutions. Lastly, central banks may want to take the opportunity to try out new resources such as regulatory sandboxes and innovation hubs and to assess their actual ability to foster the development of new ideas, so as to help move them closer to fruition. Similarly, central banks must upgrade the infrastructures and services that they themselves provide since these may constrain the type and depth of privately-led innovation that can take place, and will also having a bearing on overall competitiveness and competition across the industry. Central bank digital currencies are, perhaps, the most visible illustration of this trend but there are others such as the growing interest in exploring blockchain-based solutions for the settlement of payments and securities and the discussions regarding the issuance of a digital identity. 3  For a deeper insight into these topics, please see FSB (2019) “Third-party dependencies in cloud services Considerations on financial stability implications”, December.
If you’re not familiar with the Principles, I’m pleased to bring them to your attention today. BIS Review 27/2000  6  The Core Principles document brings together concisely all of the fundamental elements needed to carry out effective bank supervision - a remarkable achievement in its own right. Equally important, in my view, the document also balances the desire to set high standards for supervisory practices with the pragmatic recognition that not all countries are in the same stage of financial market development. As such, the Core Principles document is of particular importance for developing market economies, as it establishes a clear set of standards against which each country’s current approaches and progress can be measured. It should be emphasized that, in attempting to craft a document that would have the legitimacy, quality and flexibility to meet the needs of bank supervisors around the world, the Committee made a conscious effort to consult broadly throughout the various stages of the project, and particularly with supervisors from emerging market nations. Some might argue that such extensive consultation slows down the process and dilutes the final product. I strongly disagree. Only through this inclusive approach could we design comprehensive principles with broad applicability and support. Last October, the Basel Committee, in cooperation with the IMF and the World Bank, produced a follow-up document called the Core Principles Methodology. This report was initiated in response to requests from a number of countries for additional guidance on how to interpret and implement the Core Principles.

In recent months, Malta’s HICP inflation may have been biased upwards because of methodological changes related to the measurement of tourist accommodation. Meanwhile the RPI, which is unaffected by accommodation prices, stood at 2.9%. It is the RPI that determines with a lag the COLA increase. The core RPI inflation rate, which is a good gauge of persistent inflation, stood at 2.0%. BIS central bankers’ speeches  3  On the other hand, a number of labour market indicators remain positive. As seen in Chart 8, the most recent LFS unemployment rate is 6.5%, the same as it was on average in 2007, prior to the euro area crisis. In fact, Malta’s unemployment rate is at the lower end of national unemployment rates across the euro area. Meanwhile the latest registered unemployment rate stands at 4.2%, in June. Malta has avoided the two essential sources of the Euro area crisis: the deficit ratio has been moving in the right direction while the banking model followed by the core domestic banks remained prudent. In Malta, the core banks generally rely on traditional, domestic sources of funds, specifically retail deposits. Malta’s banks remained largely unaffected by the euro area crisis, averting the need for any government assistance and avoided what in other countries became a major source of fiscal overruns and distress. Malta must position itself in a way that builds on the strengths of the economy and minimises its vulnerabilities.
The Federal Reserve’s balance sheet is posted online weekly, with considerable detail, in what’s called the H.4.1 report. Finally, an additional accounting of the Federal Reserve’s emergency lending programs created over the last two years is available online in a monthly report. But my objection that GAO oversight would be broadened to include a review of monetary policy decisions is not based just on the fact that the Fed is already subject to considerable  4  BIS Review 6/2010  oversight. My principal concern is the damage that could potentially result to the Fed’s ability to achieve its mandate of price stability and maximum sustainable employment. The effectiveness of monetary policy depends most of all on the Federal Reserve’s credibility with market participants and investors. In particular, both groups need to know that the Fed will always act to keep inflation in check. That’s why Fed Chairman William McChesney Martin famously joked that the Fed would sometimes need “to take the punchbowl away just as the party gets going.” As you can well imagine, this may not always enhance our popularity, especially among those who were enjoying the party. But, the fact that markets know that the Federal Reserve will tighten monetary policy when needed helps keep inflation expectations in check. This, in turn, helps keep inflation low since inflation expectations affect actual inflation. The consequence is credibility with respect to the conduct of monetary policy.

They were also given a monopoly on issuing banknotes and coins, which gained a special status as legal tender. The fact that banknotes and coins now have less significance as means of payment does not means that the need for a state guarantor for the payment system has disappeared. I shall return to this shortly. I shall now describe in more detail what the Riksbank does in more concrete terms and how I view our responsibility for financial stability. Promoting a stable and efficient financial system – the Riksbank’s role The Riksbank has three core tasks that contribute to an efficient and stable financial system: issuing banknotes and coins, responsibility for the system for large-value payments and providing emergency liquidity assistance (being lender of last resort). Moreover, there is a close link between monetary policy and financial stability, which I will return to later. Let me discuss the different core tasks one at a time. 3 Jonung, L. (1989), “The Economics of Private Money. Private Bank Notes in Sweden 1831 – 1902”, Research  Report 282, EFI, Stockholm School of Economics. 3 [12]  Issuing banknotes and coins One fundamental function that must work if a financial system is to be regarded as stable is payments. And a first important central bank task to facilitate payments is to issue banknotes and coins.
This can in turn give rise to an acute threat to financial stability and ultimately to the economy as a whole – not only in Sweden but also in our neighbouring countries, where Swedish banks have operations. Via FX swaps which have maturities of different lengths. These must be renewed gradually and their prices alter. 6  5 [14]  There is a process consisting of many stages behind the lending for Swedish mortgages and corporate loans. In this process, both the Swedish banks and their counterparties on the foreign exchange market are dependent on the funding in foreign currency functioning constantly. Different currencies in the banks’ balance sheets (a simplified example)  How can we then best manage the banks’ increased liquidity risks in foreign currency? A natural starting point is that the banks – just like other private commercial actors – should manage their liquidity risks themselves. They therefore need to insure themselves by having enough liquidity reserves and sufficiently stable funding in foreign currency. This reduces the risk that the government will have to intervene in the event of a crisis. Hopefully, it also gives the authorities a little more time to take in the whole situation and to find an appropriate solution if problems nevertheless arise. A liquidity buffer can to some extent also be regarded as a “deductible” that can at least on the margin reinforce the banks’ incentives to manage their liquidity risks.

Over a period of time there may be marked shifts in relative income levels between different locations – hopefully as the living conditions of the poor advance more rapidly than those of the rich, although sadly there has been less evidence of that than one might have wished for – but there is no reason to expect the great cities of the world to sink out of sight. And if you add Hong Kong to that list, you will see the point I am trying to make. BIS Review 33/2001  1  I'm not sure whether anyone a quarter of a century ago accurately predicted how important a contribution the financial and business services sectors would now be making to the Hong Kong economy. Looking ahead, I am definitely reluctant myself to make any prediction about the mix of activity twenty-five years from now. Ask anyone involved in financial services what path for this particular sector in the years ahead would be best for Hong Kong and he would probably answer that continued expansion would of course be best. Ask the same question to a neutral economist and he would probably decline to commit himself, saying only that the optimal strategy would be to allow the forces of comparative advantage to play out. Whether that favours further development of the financial sector, or of something completely different, who can tell?