samchain/econo-pairs-v1 huggingface dataset:
Given our interest as well in promoting a more level playing field, ensuring the effectiveness of market discipline, and seeking the efficient allocation of capital across borders, we support the objective towards convergence in accounting guidelines. During tomorrow’s discussions, Dr. Arnold Schilder, Executive Director of the Bank of the Netherlands and Chairman of the Committee’s Accounting Task Force, will share some of the Committee’s thinking and most recent work on emerging issues related to accounting, Basel II and supervision. After his remarks, we will have an opportunity to meet in smaller groups to discuss issues and the work ahead for supervisors to help promote sound practices with regard to loan accounting, regulatory capital, and fair value accounting, as well as to incorporate the role of external auditors and accountants effectively in the supervisory process. But these discussions mark only the beginning. Our focus on accounting from the supervisory perspective, and our dialogue with the accounting profession, must continue to grow in the years to come. 5. Conclusion  In my remarks today, I have tried to make clear that, in our new journey, challenging work remains ahead to ready our banks, to build our skills as supervisors, and to promote greater transparency in our markets. As we consider the preparations we must make, we might recall the words of the Spanish author, Miguel de Cervantes. In his world-renowned novel Don Quixote de la Mancha, he wrote nearly 400 years ago that, “To be prepared is half the victory.” The other half, I think, will be cooperation.

In recent years, supervisors have begun to move more generally toward a system of supervision that encourages prudent risk-taking through the offering of incentives rather than simply enforcing compliance with rigid rules. Internationally, the 1996 Market Risk Amendment to  2  BIS Review 52/2004  the existing Basel Accord represented the first time that banks received explicit capital benefits for developing more sophisticated measures of risk, in that case market risk. Basel II continues this trend by extending incentives to the treatment of credit risk and operational risk. 2.3  Basel II embraces both trends  By stepping back a bit from Basel II’s formulas, we can see that the new capital framework builds on two important trends to incorporate a new philosophy for banking supervision. It combines a riskfocused approach to supervision with incentives for prudent risk-taking into a coherent policy objective that seeks to promote adequate capitalisation. By incorporating in all three of its pillars clear incentives for banks to improve their management of risk, Basel II reinforces management’s focus on control structures. •  For example, in Basel II’s minimum capital requirements - or Pillar 1 - regulatory capital charges are aligned more closely to a bank’s own measures of risk. This creates immediate incentives for banks to improve those measures. •  Likewise, Pillar 2 - supervisory review - emphasises that responsibility for evaluating capital adequacy lies with a bank’s management.
This was largely offset by a negative currency translation effect of $ billion, mainly due to the strengthening of the Singapore Dollar against the US Dollar and Japanese Yen. For the financial year, MAS made a net profit of $ billion. This was after: deducting $ billion of expenses for domestic money market and other operations; and contributing $ billion to the Government’s Consolidated Fund, as payment in lieu of corporate income tax. MAS will return half of the profits, or $ billion to the Government and the remainder will be added to MAS’ reserves. MAS 50th ANNIVERSARY This year marks MAS’ 50th anniversary. We will be commemorating this milestone with a series of activities later this year, to reflect on the journey we have taken and to thank all our partners who have walked with us and 8/9  BIS central bankers' speeches  helped us on this journey. We will provide more details of the activities at a later date. Like the rest of Singapore, MAS has come a long way.

There are two cyber threats which the financial sector needs to pay keen attention to. The first is ransomware attacks where the modus operandi has become more threatening. In addition to corrupting a victim’s data using crypto-ransomware, attackers are now exfiltrating information from their victims. 6/9  BIS central bankers' speeches  MAS has asked financial institutions to review the adequacy of their internal IT controls, as well as incident response and business continuity plans to fend against the latest ransomware threats. Second, cyber criminals are targeting major third-party IT vendors to amplify the coverage of their attacks. The cyber attack on Solarwinds is a powerful illustration of the increased sophistication and persistence of cyber criminals. They are now attacking supply chains to infiltrate the networks and systems of multiple entities. MAS has exhorted financial institutions to exercise strong oversight of arrangements with third party service providers, to ensure system resilience and maintain data confidentiality. FINANCIAL SECTOR PERFORMANCE Let me now provide an update on the financial sector. In 2020, the financial services sector 9 grew by 5.1% even as the overall economy contracted. In the first half of this year, we estimate the sector grew by about 6%. Growth has been broad-based across the financial services sector. The banking industry has been supported by strong fee income growth. The insurance industry expanded strongly on the back of robust demand for single-premium life insurance products. The payments industry grew significantly as adoption of e-payments gained traction with businesses and individuals moving towards online transactions.
This has contributed to the financing of the economy and has helped to contain the impact of the crisis on economic activity and price developments. The spread between the three-month unsecured money market rate, Euribor, and the three-month overnight index swap rate (Eonia swap rate), a widely-used measure of interbank market tensions, declined by almost 130 basis points over the past seven months, from the highs of above 180 basis points recorded in October 2008 to just below 60 basis points in mid-May 2009. 6 Moreover, the levels of money market rates have declined even more from the peaks reached last October. For example, the three-month Euribor rate was 1.26% at the beginning of this week (26 May), more than 400 basis points lower that its peak value (5.39%) last October. Moreover, the increasing transaction volumes in the unsecured interbank market and the lower utilisation of the ECB’s deposit facility indicate that market liquidity has improved significantly. It is sometimes claimed that money market conditions in the euro area are considerably tighter than in other major money markets. The facts disprove such assertions. The current levels of interest rates in the euro money market compare very favourably with the levels of the corresponding interest rates in the dollar and pound sterling money markets, where interest rate spreads and levels have also declined sharply over the past few months.

And there is, of course – a limited liability company is basically a means of protecting its owners from the private consequences of the company becoming bankrupt. Being able to fund a business operation through borrowing is, of course, necessary and, in most cases, effective. In efficient markets, lenders’ risks are handled by means of interest rates and contract clauses. The limited liability company is thus a historically wealth-generating social institution. Nevertheless, the example illustrates that the higher cost of funding through equity is more a matter of private than social costs. Another factor that separates the costs for own and borrowed funds is the tax system. Companies may deduct interest on loans, but pay corporate tax for profits on equity. But this is just a private economic difference – from the social perspective, the only difference is the subsidisation of debt-financing in preference to equity. This specifically applies to banks that may be systemically important – it would be socially costly to allow them to file for bankruptcy. So the market often expects that the state will save a bank that is on the ropes, one way or another. These so-called implied guarantees create even greater differences between social and private costs, and risk leading the banks to take even greater risks. Banks are vulnerable, contagious and sometimes systemically important. There are great differences between private and social cost-benefit calculations. Economic theory and empirical experience gives us good reason to regulate banks.
Another culprit is high subsidies provided by many governments in the developing world to at least partially protect consumers from the cost of high food and energy prices. Fast-forwarding to the recent period, the observation that the central banks of developed countries still keep real interest rates negative in the face of financial risks may hamper a correction in commodity prices. On the other hand, many developing countries, mainly China, India, Malaysia, Indonesia, and Egypt have decided to gradually reduce subsidizing energy prices and pass the true cost to consumers. This is a favorable development that will eventually help to control demand pressures on commodities. Dear Guests, As you may all know, the commonly accepted practice in inflation targeting regime is that monetary policy should not react to supply-driven shocks that are temporary in nature and should allow temporary increases in inflation in the short-term, unless they create deterioration in inflation expectations. Otherwise, undesired fluctuations might arise in economic activity and relative prices. The increase in commodity prices would trigger a selfcorrecting mechanism. By changing the relative prices, it would provide valuable information on how the resources of the economy should be distributed. While high food and energy prices curb consumption on these products, they would also encourage investment and increase supply in the long-term. In short, the common view is that central banks have nothing to do but wait for the supply-driven shocks to work out their natural course.

In fact, the research conducted by the Central Bank staff indicates that economic agents increasingly focus on past inflation while forming their inflation expectations. After evaluating the said developments, the Central Bank concluded that the increases in food and energy prices in recent years reflect a structural change stemming from the global economic environment. In other words, these shocks are likely to prevail for a longer time period, contrary to previous forecasts. There is no clear evidence at this point that this trend will reverse in the short term. Moreover, our revised projections suggest that even with the maintenance of a cautious policy stance for the foreseeable future, reaching the 4 percent target is going to take an extended period of time. Dear Guests, Under these circumstances, the Central Bank of Turkey had two options. The first one was to stick to the inflation targets, as many central banks do today, but to avoid implementing a monetary policy that is consistent with these targets. In other words, the Central Bank would accept a priori that inflation would surpass the target in the foreseeable future. The absence of any policy response would be justified by the presence of supply side shocks. The central banks that adopt this approach are bound to lose their credibility gradually, as long as the inflation continues to remain above the targets. The second option involves revising inflation targets to an attainable level and implementing a monetary policy that is in line with the new targets without compromise.
Even in developed countries, there remains minorities that have limited access to basic financial services. For instance, a study conducted in the United Kingdom for the period 2002-2003 found that 2.8 million adults in households had no access to a bank account. In relation to this, regulators have to balance between the need for financial institutions to operate efficiently and the need to ensure access to basic financial services for both individuals and small businesses. In addition, rural communities have also tended to be underserved. The challenge confronting regulators is to ensure that all communities have access to financial services. This greater inclusion is vital to bring the lower income groups into the economic mainstream. An important aspect in the development of a consumer protection framework is to ensure that the framework remains relevant despite changes in economic and financial environment. Changes in the profile of consumers following changes in the demographic structure for example needs to be taken into account. In most communities, the ratio of retired population relative to working adults is expected to rise more steeply in the next decade. In countries with growing ageing populations, there is an increasing demand for financial planning, life insurance, wealth management and mutual fund investment services. Consumers' interests in these areas would need to be adequately safeguarded while financial literacy among the various target groups need to be actively promoted.

Of course, by its very nature clearing is an activity that generates major economies of scale, and thus encourages concentration. But greater competition is absolutely necessary to stimulate financial innovation. Fortunately, LCH SA will centralise repo transactions at the beginning of 2019. More generally, we would like to see the development in Paris of an enhanced and extended clearing services offering in the area of interest rate derivatives. More broadly, Brexit represents an opportunity for Europe to effectively transform its own savings, in order to enhance its ability to finance the real economy: what I call the Financing Union for Investment and Innovation. This involves better steering the euro area’s abundant savings to absorb shocks within the euro area more effectively and to meet investment and innovation needs in fields such as digital technology, energy transition and the equity financing of SMEs. In practice, the creation of a true Financing Union requires the acceleration of the Capital Markets Union and the completion of the Banking Union. The second pillar on the resolution of failing banks is more important still than a possible common deposit guarantee scheme. And it is essential to remove barriers for pan-European banks. This was the policy agenda of the FrancoGerman declaration in Meseberg in June 2018: but I insist on the urgent need to make it a reality today.
And when the whole edifice started to crumble, the shock waves travelled fast, a testimony to the efficiency of the transmission channels in a globalized economy. Thus, in no time at all, a crisis that had its roots in a narrow segment of the housing market in the United States moved across the Atlantic to Britain and then to the euro area. And as demand in the advanced economies and commodity prices began to tumble, emerging economies started to decelerate rapidly. So much for the decoupling theory! Unlike other recent crises, the current turmoil had its origin within the financial system itself. It followed a boom in asset prices, particularly house prices. Although some observers, including central banks, had warned about mispricing of risk, many investors purchased what are now known as “toxic” assets in a search for yield, increasing leverage to generate higher profits. The growing use of securitisation allowed banks to originate loans and distribute them, packaging risk and selling it to other investors. It was believed that this would spread risks more evenly, enhancing the stability of the system as a whole. But the financial engineering involved in this process was so complex that neither the regulators nor the credit rating agencies could calculate the risks. What the regulators also overlooked were the dangers that were developing as banks moved further away from their customers. On the financing side, banks were becoming increasingly dependent on wholesale investors for funding.

This improvement in the functioning of payment systems represents a huge step for liquidity circulation. Third, a broader range of participants: the payments market has expanded to include competition from big techs and major retailers, which are following a wide range of strategies in this respect. The flipside of this trend is that the increasingly global nature of the market is raising sovereignty issues, including those relating to the control of data when the providers are located outside the region or jurisdiction where they offer their services. Last, the crave for blockchain technology: all around the world, market participants and big techs have launched or are preparing to launch new projects for tokens designed to serve as means of payment or settlement using the blockchain technology. We all have in mind firstgeneration crypto-assets like Bitcoin and Ethereum, but there are now many others coming or foreseen, like the JP Morgan Coin, the UBS’ Utility Settlement Coin or The Facebook’ Libra. 2- The development of crypto-assets are part of the innovations fueled by these underlying trends affecting payment instruments and systems, combining the search for anonymity, management of non-intermediated peer-to-peer payments and the use of entirely web-based technologies. But they also have their specificities. Actually, they have unique financial, monetary and  technical features which set them apart from the currencies and payment instruments issued by financial institutions and central banks.
What I have in mind is next year’s prospect of a relatively large increase in fiscal policy’s contribution to household disposable income, accompanied by low interest rates. An expansionary economic policy normally tends to stimulate cyclical activity, which implies that 2002 should be a fairly good year for domestic demand. However, there are at least two factors that could limit or counter this effect. One factor has to do with the lower share prices and the tendencies for house prices to stop rising and in certain cases to fall. In recent years, purchases of cars and other consumer durables have been stimulated by the appreciation of assets that feature in household wealth. Conversely, falling asset prices during the past year have tended to subdue these purchases. The stimulus from economic  BIS Review 98/2001  3  policy may accordingly be dampened or delayed as long as asset prices continue to fall. Of course, the situation will be reversed if share prices and property prices instead stabilise, or even begin to rise once again. Another factor is connected with the risks in the labour market. The redundancy statistics suggest that employment will level out or even fall next year, which may involve an attendant increase in unemployment. Households are already expressing such fears in Statistics Sweden’s surveys. Besides the direct downward effect on household disposable income, a weaker labour market may make people in Sweden more cautious when making purchasing decisions.

This evening I have tried to present a general account of my preliminary view of some aspects of assessments of the future path of inflation. I look forward to the continued discussion of these matters with my Riksbank colleagues. Our decision about interest rate policy is due at the meeting next Tuesday, 4 December. The result of our discussions will be published the following day, 5 December, as will the fourth Inflation Report of 2001. 4  BIS Review 98/2001
There have recently been a number of discussions regarding whether the low policy rate we have had since last summer increases the risk of a Swedish housing market crash further ahead. My personal assessment is that extremely low interest rates lead to some increase in the risk that housing prices will be pushed up to unsustainable levels. But this increased risk must be weighed against the risk of higher interest rates hampering the recovery in the economy. However, without properly quantifying these risks the decision-makers have to rely on their gut feeling in their deliberations. There are many reasons why gut feeling may be a poor guide with regard to making this type of decision. In the field of cognitive research, for instance, one speaks of the neglect of probability bias, that is, a tendency to entirely disregard the probability of various scenarios actually occurring when people make decisions under conditions of uncertainty. It is common to entirely disregard the fact that the scenario may never occur or that one is completely over-estimating the probability of the scenario. This is far from the only cognitive bias that decision-makers might be affected by. But it is one that can be reduced by systematically trying to evaluate the probability of various scenarios occurring. It is also important to try to illustrate how the decision that is to be taken will increase or decrease the probability of these scenarios.

An excellent example of Ben’s interdisciplinary work is his book ‘The Moral Consequences of Economic Growth’, published in 2005. Economists have written countless papers on how to increase growth. But very few have addressed the question of why growth is desirable in the first place, in particular for societies that are already rich. Ben’s book fills this gap. It argues that economic growth improves the moral character of society. People tend to be more generous and tolerant towards each other when the economy grows. Economic stagnation, on the other hand, is associated with repression and bigotry. Ben’s latest book, ‘Religion and the Rise of Capitalism’, was published last year. It describes how religion has shaped economic thinking since the beginning of our discipline. The early economic thinkers of the European Enlightenment, such as Adam Smith, were not committed to religion. Ben argues, however, that their world view was profoundly influenced by developments in religious thinking. There is therefore a close connection between religion and the beginning of modern capitalism. With this I would like to conclude my remarks, since you are surely eager to learn more about this fascinating topic from Ben himself. Ladies and gentlemen, please join me in welcoming Benjamin Friedman with a big round of applause. Page 4/4
Similarly, the domestic postal systems can be connected to the global postal network and the Giro payment mechanism used for cross-border remittance transfers. 4. Framework for retail payment development  4.1 How do we seize the existing or emerging opportunities or create new ones? I hope many suggestions and initiatives may come up during the rest of the day. Let me mention a few of the major steps. The framework suggested here is by no means a well-designed blueprint for retail payment development in the region. It is only an effort made to put together a few thoughts. The key elements are not in any particular order either, but for convenience, I have categorised the key elements into policy and operational aspects. 4.2 In order to enable retail payments to play a critical role in financial inclusion, it is necessary to develop a comprehensive, medium-term framework that facilitates the reform process. Once a framework is prepared, all stakeholders need to operate within the framework designed to achieve common goals. Although the culture and patterns vary from country to country, it is clear that retail payment system reforms require the involvement of both the public and the private sector. In the public sector, the central bank’s or monetary authority’s involvement is essential, because they are responsible for monetary policy and for the preservation of public confidence in money. The private sector is equally important, as it has the most relevant information on the payment preferences of the people and is directly involved in providing payments services.

BIS central bankers’ speeches  5