samchain/econo-pairs-v1 huggingface dataset:
Encik Abu Hassan Alshari Yahaya: Future proofing compliance – responsibility and response-ability Speech by Mr Encik Abu Hassan Alshari Yahaya, Assistant Governor of the Central Bank of Malaysia (Bank Negara Malaysia), at the 9th International Conference on Financial Crime and Terrorism Financing (IFCTF) "Future proofing Compliance: Responsibility and Response-ability", Kuala Lumpur, 5 October 2017. * * * It is a great pleasure for me to be here today among industry leaders and experts. As we approach the end of this conference, I would like to thank all of you for your participation and contribution in making this year’s IFCTF a success. I believe that the various sessions and the topics discussed in the past two days have provided significant insights and understanding towards strengthening our risk management and capabilities to mitigate the vulnerabilities from threats of money laundering and terrorism financing. I would like to commend CONG and AIF for the continuous effort and initiatives in enhancing the capacity and capability of the financial industry, to improve the industry’s response to financial crime and terrorism financing. As highlighted yesterday, countries are still facing fundamental challenges towards effective implementation of AML/CFT measures. Weak legal, regulatory and supervisory framework and inadequate risks understanding would have cascading effects, not just on compliance with international standards, but towards effective implementation of AML/CFT measures in achieving the intended outcomes.

In fact, public accounts kept improving, so that fiscal surpluses, of around 2% of GDP, were achieved in the years previous to the crisis. But the temporary nature of those revenues and the underlying fragility of the fiscal situation became evident when the housing sector started to adjust. As a result of this adjustment and the depth of the crisis, the surpluses have turned into large and persistent deficits, reaching –11% in 2009, a shift of more than 13 percentage points of GDP in just two years. Could this build-up of imbalances have been avoided or mitigated? With hindsight, no doubt it could, but the economic and policy incentives were not there at the right time. On the one hand, financial markets failed to provide enough ex-ante market discipline: European and global investors were eager to finance countries with higher expected short term returns, dismissing underlying vulnerabilities. Investors tend to ride the waves of sentiment, reacting only – but dramatically – when weaknesses become evident. In this way, they act procyclically, inducing large swings in capital flows. Our Latin American colleagues are acquainted with these experiences, because they have suffered this type of “sudden stops” several times over the last decades. On the other hand, economic policies did not respond adequately to the underlying dangers. In a context of apparent economic and financial stability, and with the European project sailing in full swing, complacency was difficult to avoid, and there was little incentive to address – or even assess – underlying problems.
In the first place, our judgments about the pass through of the exchange rate depreciation could prove to be wrong. Second, we are vulnerable to further upward shocks to commodity prices if, for example, Asian growth remains robust, although I draw a degree of comfort from OPEC’s excess capacity at present. Third, we cannot rule out that there has been a greater destruction of supply capacity than suggested by survey evidence, in which case underlying disinflationary pressures would be weaker than thought. And fourth, it is possible that, given still-tight credit conditions and an uncertain outlook for demand, some firms will take opportunities to raise prices in order to buttress cash flows, notwithstanding their operating within their potential capacity. As ever, we must therefore interrogate the data and surveys, and we must be especially sensitive to medium term inflation expectations (Chart 10). So far they have remained broadly consistent with the target. Judging from options prices, financial market participants seem to think that there has been a rising probability that inflation will overshoot substantially on the upside. But there seems to be a perception of a roughly similar probability of an overshoot on the downside (Charts 11a and 11b). The big picture is that the risks on both sides are tangible. The upside risk no doubt owes something to perceptions of the scale (and manner) of our monetary stimulus. I must therefore underline that there is no dilution in our commitment to the inflation target.

When information on risks is provided to the public, it is often in a form that is hard to assess. Thinking carefully about communication is important to the level of public debate. The quantity of information is less relevant than its quality - sometimes less is more. And managing risk means making choices - collective choices - on the basis of a rational shared assessment of the risks involved. We cannot avoid uncertainty. So let us face up to it. 25  The question of who should bear collective longevity risk has been discussed by Blake and Burrows (2001), Blake (2003), Dowd (2003), Cox and Lin (2004a, 2004b), Willets (2004), Auerbach and Hassett (2002) among others. BIS Review 73/2004  9  10  BIS Review 73/2004  BIS Review 73/2004  11  12  BIS Review 73/2004  BIS Review 73/2004  13  14  BIS Review 73/2004
At this time, the Thai bond market has a strong potential to become the important third pillar of Thailand's financial structure next to the credit and the equity markets. At present, the size of the bond market in terms of market capitalization to GDP is about 50 percent. Hence, there is considerable scope for the local bond market to grow and expand. Thai bond market in 2004 Last year, the Thai bond market grew by about 9 percent in terms of the amount of bonds issued, while activities in the secondary market increased by about 12 percent. The growth reflects mostly transactions in government securities, particularly treasury bills and Bank of Thailand bonds. Last year was also an important year for bonds as it was the year that we saw a shift in the stance of monetary policy. The policy interest rate was raised three times in the second half of last year in response to increased pressure on prices and economic stability. Looking back, one has to say that the bond market adjusted very well to the shift in the monetary policy stance. Bond market interest rates responded in an orderly manner and moved in line with policy signal. This smooth adjustment reflects two important qualities that we are now seeing in the local bond market. The first is greater market liquidity which has allowed the bond market to adjust to the change in monetary policy without difficulties.

Moreover, in the case of European banks, their return on equity is not only well below that seen prior to the crisis; their ROE is also lower than their cost of equity. Needless to say, this may have negative implications for financial stability. Put simply, low profitability limits banks’ capacity to generate capital buffers internally and therefore their ability to absorb negative shocks. At the same time, low returns may push entities towards risky search-for-yield strategies. My second message is that caution is required when drawing a simplistic and causal relationship between low profitability and monetary policy. Take for instance the case of Sweden, where the Riksbank has pursued a negative interest rate policy from 2015 until very recently; yet, banks’ profitability ratios in that country are relatively high. More broadly, low or even (mildly) negative interest rates tend to have counteracting effects on bank profitability: while they may exert downward pressure on unit intermediation margins, they 4  also promote loan demand, improve credit quality and produce capital gains in banks’ securities portfolios. We may well appreciate the different channels through which low (and even negative) interest rates help boost economic growth and repair banks’ balance sheets. But we cannot ignore the possibility that, if persistent enough, such a scenario may ultimately impair bank profitability and the bank-based transmission of monetary policy. Precisely for this reason, the ECB introduced last September a two-tier system for the remuneration of bank reserves.
9 Finally, our decision to publish our own forecast for the repo rate is of course a further step towards greater openness, clarity and more efficient communication. This all means that there are good opportunities for the general public to find out how monetary policy decisions are made. This openness from the Riksbank makes it possible for all those who are interested to follow our policy and see whether we live up to our principles. I am convinced that transparency has been a central issue in gradually building up confidence in the Riksbank and the inflation target. Conclusion In conclusion, let me note that it is difficult to say anything else than that the changeover in economic policy in Sweden at the beginning of the 1990s has on the whole been successful. The inflation target for monetary policy has contributed to providing a stability in economic policy that was lacking in the Swedish economy during the 1970s and 1980s. The consolidated public finances are another very important factor. 6  Chapter 1 of Blinder, A. S. (2004), The Quiet Revolution – Central Banking Goes Modern, Yale University Press, contains a discussion of political and economic arguments in favour of transparency in central banks. 7  See, for instance, Eijffinger, S. and P. Geerats, (2006), “How transparent are central banks?” European Journal of Political Economy, vol. 22, 1-21. 8  See Leeper, E. (2003), ”An Inflation Reports Report”, Sveriges Riksbank Economic Review, 2003:3, 18-42, for an evaluation of the Riksbank’s Inflation Reports.

The measures that can still be used are often described as unconventional in order to distinguish them from the customary instruments. Most central banks in advanced economies make use of these unconventional measures. While the Federal Reserve and the Bank of England are chiefly focused on ensuring a more expansionary monetary policy, the goals of the European Central Bank (ECB) and the SNB are somewhat different. In the case of the ECB, its unconventional measures are directed against disruptions in the transmission mechanism of monetary policy arising out of the deterioration in government finances and credit conditions in the single currency area. The SNB, for its part, took a stand against an unwarranted tightening of monetary conditions as a  BIS central bankers’ speeches  1  result of the strength of the Swiss franc – a strength whose origin was to be found in international developments. Unconventional measures mainly take one of the following three forms – forward guidance regarding the future path of policy interest rates, quantitative easing (QE), or foreign exchange market interventions.1 What is involved here, and what do we hope to achieve? In the case of forward guidance, the central bank provides explicit information on the expected movement in short-term interest rates. To a certain extent, central banks had already provided such indications previously. This applies, in particular, to countries that communicate their monetary policy on the basis of an inflation forecast conditioned on a given interest rate path.
More than 25,000 life and health insurance policies now enjoy a six month premium deferral while maintaining coverage. Close to 600 individual general insurance policies, such as for vehicles, are under flexible instalment payment plans to help ease policyholders’ cash flow burden. More than 240 SME applications for flexible instalment plans for general insurance have also been approved. These various relief measures have meaningfully helped to ease the cashflow pressures faced by individuals and SMEs. But deferred payments provide only temporary relief and come with longer term costs. Bank loans and insurance policy premiums will eventually have to be paid. Deferment incurs interest cost, which means larger outstanding balances at the end of the deferment period. MAS is actively discussing with the banks, finance companies, and insurers on how to ease borrowers and policyholders into gradually resuming repayments, when the relief measures expire towards the end of the year. We want to avoid “cliff effects” of a sudden withdrawal of these reliefs. The pace of resuming repayments needs to balance between two things: The cash flow situation of the borrowers; and The accumulation of more debt which could increase the risk of default further down the road. REGULATORY RELIEFS FOR FINANCIAL INSTITUTIONS  MAS has provided regulatory reliefs to financial institutions to enable them to continue supporting the economy without undermining their safety and soundness.

Prasarn Trairatvorakul: Monetary policy in an interconnected global economy Opening remarks by Dr Prasarn Trairatvorakul, Governor of the Bank of Thailand, at a conference co-hosted by the Bank of Thailand and the International Monetary Fund, Bangkok, 1 November 2013. *  *  *  Distinguished Participants, Ladies and Gentlemen, I am delighted to welcome you to this conference on “Monetary Policy in an Interconnected Global Economy,” co-hosted by the Bank of Thailand and the International Monetary Fund. I would like to especially thank our international guests who have travelled a long way to be with us today. This conference will focus on several issues pertaining to cross-country linkages, international shock transmission, and how monetary policy should be conducted in response to global spillovers. One of the most important trends over the past decades is the rapid integration of international trade and finance. Trade in goods and services, as a share of world GDP, increased from around 15 percent in the early 1980s to around 25 percent before the start of the crisis in 2007. These developments reflect, in part, the increasing internationalization of production through vertical trade linkages. We have also seen a significant increase in financial integration. While the annual growth in world trade over the past 40 years has exceeded the growth in world GDP by around 2.6 percent on average, growth in international external positions outpaced growth in world GDP by almost double that – around 4.8 percent. What are the implications of these tighter trade and financial linkages?
When it comes to the question of which payment instruments should become the credit transfer and direct debit schemes used for euro payments in the EU, for me it is obvious that the answer is the SCT and SDD. This is, in fact, the position of the Eurosystem, which was clearly communicated in the seventh SEPA  1  The survey involved 42 European banks in nine countries. See the press release (in German) available at: http://www.bearingpoint.de/PMI_SEPA_081110.pdf  BIS Review 159/2010  1  progress report. Of course, it is one thing to set a goal, but it is far harder to achieve it. However, I am confident that the European Commission will make this possible through a legislative proposal. Despite the debate surrounding the end date in the past few weeks, we should not forget that we all share the same goal: we all want to make SEPA a reality. Of course, SEPA will only be a success story if it goes beyond credit transfers and direct debits. This brings me to my next New Year’s resolution: New Year’s resolution number two: let’s establish the requirements for a competitive cards market Any cards market should meet a number of requirements in order to facilitate competition and efficiency. The principle of separating card scheme management from processing entities is one of the core elements of SEPA that aims to guarantee open access. The SEPA credit transfer and direct debit schemes are built on this principle; it should be applied in the cards market too.

All of us have contributed to and are familiar with what has been accomplished in 2010. I will therefore refrain from listing our past achievements but concentrate on the things that remain to be done. Let us therefore start to think about our New Year’s resolutions for 2011. New Year’s resolution number one: let’s define a SEPA migration end date There is a consensus that an end date is needed for the migration to the SEPA credit transfer (SCT) and SEPA direct debit (SDD). Throughout 2010 representatives from almost every stakeholder group have been calling for a defined end date. Just recently a study conducted by BearingPoint revealed that more than 80% of the banks surveyed consider a binding SEPA migration end date to be necessary. In fact, the majority are in favour of an EU regulation to set one. 1 Of course it is no secret that, despite this general agreement, the details of such a regulation have been widely debated since the summer. For this reason, I had welcomed the European Commission’s decision to organise a public hearing on the issue, which took place last Wednesday. We in the Eurosystem have been very explicit in our comments on this topic and we have been calling for a regulation setting a migration end date for SCT and SDD. Indeed, we have gone one step further and have announced preferred dates, i.e. the end of 2012 for credit transfers and the end of 2013 for direct debits.
Despite the significant shifts in macro-economic relationships and in policymakers’ preferences arising from a rise in market power, the net effect on the (level and variability) of the optimal interest rate path is more modest. At root, that is because of the trade-off inducing nature of mark-up shocks. Third, the presence of market power and higher mark-ups also has implications for the level of output in the economy which could provide additional incentives to generate inflation. Monopolistic competition implies that output is inefficiently low relative to its (perfectly competitive) social optimum. For sufficiently small deviations from the steady state, the policymakers’ loss function can be re-written to reflect that inefficiency:  16  All speeches are available online at www.bankofengland.co.uk/speeches  16  𝐿𝑡 = 𝜋𝑡2 + 𝜆𝑥𝑡2 − Ʌ𝑥𝑡  (14)  where  Ʌ=  1 (1 − 𝜃)(1 − 𝛽𝜃) 1−𝛼 2 𝜖 𝜃 1 − 𝛼 + (𝜍 + 𝜑)𝜖  (15)  The optimal targeting rule is also then altered to become:  𝜋𝑡 =  1 𝜑 + 𝛼 −1 1 −1 (𝜎 + ) − 𝑥𝑡 𝜖2 1−𝛼 𝜖  (16)  The additional constant term reflects the well-known inflationary bias under discretionary policy, first articulated by Barro and Gordon (1983). Output at a sub-optimally low level increases the incentives of a discretionary policymaker to run looser monetary policy to push output towards its social optimum, thereby generating an inflation bias.

The future of augmenting protection with prevention can be distilled through three pillars: First, by creating awareness of current risk levels Second, by suggesting a change in behaviour And third, by offering incentives for changes in behaviour The first two pillars are closely linked and is typically in the form of real-time risk mitigation as well as early warning systems. For instance, prevention triggers such as missed safety task notifications and water leakage alerts to activate emergency repair services can help prevent accidents. Telematics can also connect insurers and farmers to data from weather systems for potential safety warnings. However, raising awareness of risky behaviour and how to address them are not enough. It is also fundamental to encourage people to instigate real and sustainable changes in behaviour. Jonas Salk, one of the first successful medical researchers to develop polio vaccines once said that "the reward for work well done is the opportunity to do more". Insurers and takaful operators can leverage consumers' perception of the value of rewards by nudging them to adopt safer and healthier behaviours. Elements of  4/6  BIS - Central bankers' speeches  gamification and behavioural economics can also be integrated – for example, a driving score leader board can motivate drivers to collect higher scores by adopting safer driving behaviours. We recognise that many of these successful models require tie ups and expertise beyond traditional business lines. To cater to these new digital realities, the Bank has been proactive in ensuring our regulations are adapted regularly.
Here, a more stringent implementation of rules and procedures to check and correct excessive deficits and debts will be essential, among other things by increasing the automaticity and speed of procedural steps. Ultimately, the process needs also to comprise non-pecuniary forms of deterrence. In the most severe cases of persistent non-compliance, a limitation or suspension of voting rights should be considered. The second area of institutional reform tackles one further aspect of the crisis: the fact that seemingly sound public budgets can sometimes reflect an overheated economy. When rising asset prices boost revenues from financial and housing market transactions, the budget looks sound; but when asset prices fall, the budget can go into profound distress. So for all its critical importance, reinforced fiscal surveillance is not enough. We need reinforced macroeconomic surveillance. There is one indicator that can reveal underlying weaknesses as they are forming: losses of competitiveness. Within a monetary union, the relative competitiveness of economies measures the sustainability of national price and cost developments, the compatibility of national nominal trends with those that are likely and appropriate for the union as a whole. The third area of institutional reform will be a crisis management framework. This framework has to respect strict conditionality and minimise moral hazard. It is an issue that has not yet been addressed in the task force itself.

Jean-Claude Trichet: Recovery, reform and renewal – Europe’s economic challenge Speech by Mr Jean-Claude Trichet, President of the European Central Bank, at the conference “The ECB and Its Watchers” XII, Frankfurt am Main, 9 July 2010. *  *  *  Ladies and Gentlemen, It is a pleasure to be with you in this 12th edition of the ECB Watchers’ Conference. Today, I would like to consider where we are in the financial crisis and the economic recovery; to describe the emerging contours of the post-crisis order both in Europe and the wider world; and to reflect on what has been achieved by the global policy response to the crisis and what remains to be done. 1. Where do we currently stand in the crisis? We are now almost three years into the crisis. The development of the crisis was marked by a progressive collapse of confidence: a seizing up of markets, dramatic financial events impacting the global financial system, a sharp decline in trade and a freefall in economic activity in the industrial world. We can all feel relief that the collective international efforts to avert catastrophe in the winter of 2008/09 have been successful. But events over the past few months have made clear that it is still too early to declare the crisis over. And, just as they have done throughout the crisis, governments and central banks in Europe and around the globe continue to respond to shifting economic and financial circumstances with swift, decisive and effective action.