samchain/econo-pairs-v1 huggingface dataset:
The Bank has been conducting an industry-wide benchmarking exercise since 2001, in line with recommendations of the Financial Sector Master Plan to drive performance improvement. I believe the industry has benefitted from this initiative to improve the standard of services provided to its customers. Going forward however, it is timely and economically sensible for the industry to collaborate and assume this role to develop its own range of indicators. If we were to strive for quality, the benchmarking should be against the world’s best, and not confined to our domestic market alone. The benchmarking could cover a wider range of indicators including financial and operating statistics, distribution channels as well as customer service indices that will benefit every member company. In many countries, it is the industry associations that undertake this role. In this regard, I call upon the associations present here tonight to give this matter a serious thought. Collaborate and cooperate with others as synergy drives efficiency for the ultimate benefit of customers Synergy creates new value and has a multiplier effect on outcomes that would not be possible, individually. Studies have shown that even the best individual efforts cannot stack  4  BIS central bankers’ speeches  up against today’s complex and interconnected problems. The challenges of market liberalisation will require players to achieve more despite limitations in individual resources. But having to do more with less, simply means having to do it together. The industry through pooling of capacity, expertise and resources can addressed, perennial issues faced by individual companies, collectively.

Muhammad bin Ibrahim: Building trust in the insurance industry Speech by Mr Muhammad bin Ibrahim, Deputy Governor of the Central Bank of Malaysia (Bank Negara Malaysia), at the Malaysian Insurance & Takaful Industry Distinguished Partner Awards Dinner 2015 “Building Trust in the Insurance Industry”, Kuala Lumpur, 23 October 2015. *  *  *  It brings me great pleasure to be here tonight at the inaugural Malaysian Insurance and Takaful Industry Distinguished Partner Awards Dinner. Since the Central Bank assumed regulatory role of the industry 27 years ago, the insurance and takaful landscape has transformed significantly. The insurance and takaful penetration rate, measured by the number of policies per population, has increased four-fold from 11% in 1988 to 56% today, and the total paid-up capital of direct insurers has grown twelve-fold from RM635 million to RM8 billion over the same period. Today, the industry has emerged much stronger than when we first started the journey together in 1988. We should take pride in our historical track record the various changes that we had made, the difficult but satisfying journey that we embarked on to realise the full potential of the industry. It is indeed a transformational change that enable the industry to be in the strong position they are now. But at the same time we should not believe that the same thinking and strategy that drove yesterday’s solutions will be as effective tomorrow.
As long as the banking system was – or at least appeared to be – sound, as central bankers we did not need to worry too much about what happened elsewhere in the financial system or the condition of the corporate sector or the structure of household balance sheets. But this is no longer true, if it ever was. I have already mentioned the role of the corporate sector in the Asian financial crises of a decade ago. The fact that it was the corporate sector rather than the banking sector that had assumed foreign exchange risk ultimately didn’t matter from the point of financial system stability. The effects were the same – or possibly were greater as the corporate sector was less well able to handle the risks than the banking sector might have been. From a macro prudential policy perspective this means that we must pay attention to conditions in the corporate sector and the soundness of corporate balance sheets. And given that so many banks in Asia have followed those in the rest of the world in looking to develop their consumer credit business, the condition of household finances is also important to understand from a financial system stability perspective. In addition, the experience of the last decade has also taught us that non-bank financial intermediaries matter for the soundness of financial systems. For example, there is plenty of evidence that insurance companies have been major sellers of credit derivatives. This passes credit risk from the banking system to the insurance sector.

This type of crude stress test is quite helpful for a sense of how solid the system’s capital buffer might be, but it doesn’t allow you to take into account second and third round effects. If NPLs have risen to 20 percent of total assets, then there are likely to be a lot of other things happening in the economy at the same time, all of which could have additional implications for banks’ financial soundness. As a result, stress testing is moving increasingly in the direction of scenario analysis. This involves economists constructing scenarios for the outlook on GDP, interest rates etc. and tracing through these changes in terms of their impact on the key measures of banking system soundness including profitability and capital adequacy. This approach involves some quite advanced economic modelling techniques and is still in its early days. However, the recent revamp of the Bank of England’s financial stability report that I mentioned earlier was designed to give a larger role to this type of analysis. A final issue that I’d like to discuss is that macro prudential analysis cannot stop with the banking system or at the borders of a particular jurisdiction. In the past it might have been reasonable to think that systemic risk was something that began and ended with the banking system.
To help deal with capital inflows and their effects on the macro economy, we have the flexible exchange rate, macro-prudential measures, and various forms of capital account regulations as our tools, while the policy rate is preserved for its primary objective of domestic price stability. Each of the tools has its own advantages and disadvantages. To deal with this challenge, as you may already notice, a balanced use of tools is needed, and that balance could very well evolve over time. BIS central bankers’ speeches  3  Ladies and Gentlemen, To live successfully with capital flows will require not only the central bank to do its work properly. For all of us at this Forum, I believe that we can make it easier for Thailand to cope with capital flows, at least partly, through capital market development. An efficient capital market is like a good irrigation system that helps channel flows into productive uses. Such a market, with enough breadth, could also become a shock-absorber towards capital inflows, quantity-wise, and would be a complement to the flexible exchange rate that acts as a “pricewise” shock absorber. A market that has a wide variety of products and instruments, varied types of investors, as well as competitive services will likely be more stable by itself and benefit us all. An efficient capital market is thus one we should aim to strive for.

Exchange rate adjustments in the face of large capital inflows, however, are not without costs. An excessively rapid appreciation of the currency could be disruptive to the real economy, since there often are constraints in the adjustments of the real economy, from labor market frictions to pricing behaviors. Here we have a challenge and need to balance well. In general, we would allow the currency to appreciate to the extent that the movements are broadly consistent with the economic fundamentals and that they would not cause undue disruptions in the real sector. Let me note here that I think the Thai economy, over the years, has become more capable in coping with exchange rate movements. We see more risk protection via financial market instruments on the part of the private sector. Exporters, in particular, have been able to diversify in terms of product lines and market destinations. Nevertheless, from time to time there is still a need to dampen the pressures on the exchange rate, and central banks often resort to exchange rate intervention. While such intervention could help contain excess exchange rate volatility, its focus is at the end of the process. In other word, FX intervention is a “passive” mechanism in dealing with capital inflows. By the time of intervention, capital would have already flowed into the economy. Imbalances could have already built up.
The score is in turn mapped onto a particular range of capital ratios. Among the factors that this process will consider are the Pillar 1 and Pillar 2 risks that I have already mentioned. In addition, the SRP will take into account a variety of other factors such as reputation risk, strategic risk, and the quality of corporate governance. The inputs into this process will be derived primarily from our existing supervisory arrangements, such as off-site and on-site examinations. We believe that the SRP is capable of replacing the current, relatively subjective, approach to setting AI-specific minimum capital ratios with something more rigorous and objective. Like all good credit scoring systems, there will still be scope for expert judgement and, in my experience, there is no substitute for the supervisory smell-test. On the whole, however, we intend to base each AI's capital ratio on the output of this process. Once we have derived a score, and thus a corresponding capital ratio, for an individual AI, we will discuss the results of the SRP with the AI. Again, as in the review of IRB systems, the concept of supervisory dialogue will be important. It will be our aim to understand how each AI approaches the range of risks that exist outside Pillar 1, and to understand the mechanisms they have in place for identifying, monitoring and controlling those risks.

In theory, Pillar 2 requires banks to have a formal process for allocating internal capital against the wide range of risks that are not explicitly part of Pillar 1. This formal process is sometimes referred to as the Capital Allocation Assessment Process or "CAAP". However, it has to be acknowledged that very few banks currently have such a process in place, and only the largest and most sophisticated institutions have been able to devote the resources necessary to building these types of formal capital allocation systems. Consequently, as a regulator, we do not plan to require all banks to develop internal capital allocation models, at least initially. The need for such models must be commensurate with each institution's scale and sophistication. In place of requiring all AIs to develop these models, the HKMA has developed its own internal Supervisory Review Process, or "SRP". As you may know, the HKMA has for a long time set capital ratios on a bank-by-bank basis. This has been with the aim of trying to ensure that the capital ratio reflects the risk profile of an individual AI, taking into account the full range of risks to which it is potentially exposed. We intend to use the SRP to bring greater rigour into the process of setting AI-specific minimum capital ratios. In effect, the SRP is our own credit scoring system. It takes a large number of variables, each carefully chosen to reflect a different aspect of risk, and combines them to produce a single overall "score" for each AI.
Jean-Claude Trichet: Overview of recent euro area developments and the effects of globalisation on prices and real estate Speech by Mr Jean-Claude Trichet, President of the European Central Bank, at the meeting of the Management Board of the CDU, Wiesbaden, 5 January 2008. *  *  *  It is a great pleasure for me to be invited as a guest speaker here today. Let me briefly sketch out the main topics I want to address. First, I will present to you our views on the current economic situation in the euro area. Then, I will explain the ECB’s liquidity operations following the tensions in the money markets since August last year as well as our views on the stability of the euro area financial system. To conclude, I will say a word upon the effects of globalisation on price developments and on developments in the real estate sector. Economic and monetary developments Let me first say that we are presently in the purdah period, namely within a week before the next decision meeting of the Governing Council. Nothing in what I will say should be interpreted in terms of our future decision next Thursday. I will stick to explaining what has been our diagnosis and judgment on the occasion of our last meeting.

The second area of improvement for the macroprudential framework in Europe involves keeping pace with developments in the financial system. That requires broadening the range of macroprudential instruments beyond those currently available, which focus almost exclusively on the banking sector. For the insurance sector, the contours of such instruments are taking shape. They include solvency instruments such as symmetric capital requirements for cyclical risks; liquidity instruments for insurers with a vulnerable liquidity profile; and instruments to target bank-like activities to ensure macroprudential policy is consistent across sectors.11 The third area for improvement in macroprudential policy involves establishing a clearer conceptual framework to govern policy discussions and interventions. Such a framework would facilitate communication with market participants and the general public, as well as help mitigate any risk of inaction bias. 2/4  BIS central bankers' speeches  For monetary policy the framework is well known and the reaction function of central banks is normally well understood by markets. By contrast, the framework that governs macroprudential policy interventions is much less developed, due in no small part to our limited experience of using these tools. The objective of financial stability is broader than the objective of price stability, so is less easily defined by a single numerical measure. Developing the policy framework is challenging and will take time.
Today I intend to give my views on these issues. I shall concentrate on the role played by elevated asset prices and indebtedness with regard to developments in demand and thereby price stability. Let me begin with a brief summary of my speech: •  Many central banks are worried by rapidly growing house prices and lending over long periods of time. The historically very low interest rate levels could create unrealistically low expectations of interest rates in the future. However, it is difficult to determine whether this development actually increases the risks to demand and inflation and whether – and how – monetary policy can in this case take these factors into account. •  These risks cannot be captured by the traditional models and forecasting methods normally used by central banks, which means that opinions differ as to how the central banks should act. Should we react in advance to subdue possible negative effects, or should we wait until a possible correction takes place? •  My opinion is that we must make the best possible assessments and act in advance to try to prevent the risk of large corrections leading to significant falls in demand and to lower inflation further ahead. •  There are both cyclical and structural factors which could motivate high growth figures for loans and house prices in Sweden over a period of time.

While dealing with short-term issues, we need to pay attention to long-term challenges that could restrain our competitiveness, productivity, and growth potential. The rising trend of disruptive technology will also come into play as it brings both opportunities and 3  threats. To tackle these long-term challenges, structural reforms are underway to upgrade and unlock our economic potential in the long term. The government has made structural reform a national agenda and has launched several important initiatives. One of our main focuses is to upgrade connectivity infrastructure within Thailand and within the region, including roadways, railways, waterways, power lines, air networks, and digital networks. This strategy will establish Thailand as a center for regional transportation and logistics, connecting the Indian Ocean with the Pacific Ocean, as well as connecting Thailand with South China and neighboring CLMV countries. Beyond building physical infrastructure, the government is pushing forward to restructure the Thai economy towards a high-value and innovation-driven economy under the ‘Thailand 4.0’ theme. This policy focuses on promoting targeted industries, including the ‘new S-curve’ industries. As many of you are well aware, the Board of Investment (BOI) revised the criteria for investment promotion privileges to be based on the value added content of the project rather than on its location as in the past. Thailand’s economic model will be geared towards sophisticated high-valued manufacturing, innovative manufacturing, and modern services. This can be done by focusing on promoting technology, creativity, research and innovation, especially with respect to IT-based services.
The main responsibility for financial stability rests with the Government, while the Ministry of Finance, the Financial Supervisory Authority of Norway and Norges Bank are responsible for the use of the various instruments delegated to them. Norges Bank is among other things lender of last resort and operates the interbank settlement system. The overriding responsibility for macroprudential policy rests with the Ministry of Finance. Norges Bank holds the view that a clearer framework for setting and using macroprudential instruments is needed in Norway. Time-varying macroprudential instruments could to advantage be delegated to an independent authority. Delegating instruments to an independent authority could facilitate implementation and enhance predictability over time. It could also ensure that the decision is taken in the interests of financial stability. Today Norges Bank draws up the decision basis for the countercyclical capital buffer and advises the Ministry of Finance on the level of the buffer. The Commission proposes that decision-making responsibility for the level of the countercyclical capital buffer be delegated to Norges Bank. Norges Bank supports this proposal. The Commission also suggests that it may be appropriate for Norges Bank to assume responsibility for other instruments to mitigate systemic risk in the financial sector. The Commission refers in particular to the residential mortgage lending regulation. This regulation also serves other purposes in addition to the mitigation of systemic risk.

In the view of the President Van Rompuy’s Report, a stable EMU needs to be built on four pillars: financial union, fiscal union, economic union and political union. Member States have been able to decide a remarkable sequence of reforms in the past few years and there is now a much clearer vision of what rules and institutions are essential for monetary union to function more effectively. The single currency needs strong common institutions. Strong institutions to supervise and stabilise the financial market; to guide fiscal policies; to coordinate economic policy, guarantee competitiveness and encourage sustainable growth. This is the vision that should guide us in all our endeavours to definitely overcome the European crisis. Thank you for your attention. 6  BIS central bankers’ speeches
Jaime Caruana: Overview of the Spanish economy in 2004 Address by Mr Jaime Caruana, Governor of the Bank of Spain and Chairman of the Basel Committee on Banking Supervision, to the Governing Council of the Bank of Spain on the occasion of the presentation of the Annual Report 2004, Madrid, 10 June 2005. *  *  *  Ladies and gentlemen, The performance of the world economy in 2004 was exceptional: growth exceeded 5%, the highest rate for the last quarter of a century; inflation remained under control, with the exception of slight rises in some emerging countries; and the climate on international financial markets was relatively relaxed, allowing generous financing conditions in most countries. No headway was made, however, in correcting the world economy’s main disequilibria, which tended to worsen. Adding to these imbalances was the shock of higher oil prices, which look more permanent than in previous episodes. There are thus persistent risks and vulnerabilities which, if not corrected, might endanger the continuity of growth. Underpinning the buoyancy of the world economy was, above all, the contribution of US and, to a greater extent, Chinese demand, along with that from other emerging Asian economies. There was also a marked rise in activity in other emerging regions, such as Latin America and the central and eastern European countries. Conversely, the economic performance in the euro area and Japan was disappointing, with rates of expansion running below initial forecasts.

In the private sector or in civil society, institutions and fora engaging in thorough assessment of public policies in Spain are also thin on the ground compared with our European peers, and their opinions have little influence on the 2/6  BIS central bankers' speeches  public debate. Accordingly, I consider that we, the independent public authorities, can and must play a pivotal role in assessing public policies thoroughly and impartially. At the Bank we are committed to this assessment culture, both in terms of our duty to advise the Government under the Law of Autonomy of the Banco de España and when evaluating our own actions. Aside from the Banco de España’s actions, the recent creation of a government spending assessment division at the Independent Authority for Fiscal Responsibility (AIReF by its Spanish initials), after the failure of the Public Policy Assessment Agency (AEVAL), is a step in the right direction. There is therefore ample room for improvement in decision-making on public policies in Spain, from which both the government (when it comes to designing and applying public policies) and the legislature (in its control of the government) could benefit. Equipping the legislative chambers with powerful bodies that provide independent, technical and evidence-based advice would thus markedly enrich the public debate in Spain. Setting this issue against the current background, the massive roll-out of European funds, for example, with the stated aim of transforming the economy and boosting its growth potential, is an ideal time to bolster the assessment of public policies.