samchain/econo-pairs-v1 huggingface dataset:
In the case of LTCM, stress testing could have given banks at least some warning of the types of exposures they could have faced last fall. The critical importance of stress testing is noted very explicitly in our new supervisory guidance. Sound Practice Guidance The sound practices document accompanying the Basle report presents an important set of standards that will guide both banks and their supervisors. It appears that banks generally have tightened the credit risk management standards for their HLI exposures since the collapse of LTCM. However, it is important that supervisors try to ensure that progress continues. Memories tend to be short, and we want to make sure that as markets calm down, as they have in the past months, banks do not return to the old ways of doing business. The adoption and rigorous enforcement of enhanced risk management practices should contribute substantially to limiting excessive risk-taking and leverage at HLIs. This is the case because HLIs cannot trade without access to financing and liquidity from banks and securities  3  BIS Review 27/1999  firms. If each counterparty manages its risks appropriately, the chance of contagion to other institutions and the financial markets more broadly would be reduced substantially. It is this risk of contagion and financial market instability that is the principal concern of central banks and supervisors. Along with other federal banking supervisors, the Federal Reserve has moved quickly to implement the recommendations of the Basle Committee’ s report.

Basle Report Findings As you know, I chair the Basle Committee on Banking Supervision, comprised of bank supervisors from the G-10 countries who coordinate supervisory policy for internationally active banks. While the Committee does not have formal legal enforcement powers, its conclusions and recommendations are widely implemented, both in G-10 countries and many others. In late January, the Committee issued a report dealing with the relationship between 1  BIS Review 27/1999  banks and highly-leveraged institutions, or “HLIs”. The Committee’ s report provides a framework for addressing the broader issues raised by the LTCM episode, the policy responses of supervisors, and some key risk management challenges for the banking industry going forward. In the United States, the Federal Reserve System, the New York State Banking Department, and the Office of the Comptroller of the Currency have conducted target reviews of a number of large-bank dealings with hedge funds. These reviews contributed to the Committee’ s work, to the Federal Reserve System’ s issuance on February 1 of new guidance to financial examiners and banks, and to similar guidance from the Comptroller of the Currency issued in January. These new standards emphasize the need for improvements in the credit risk management process at banks. The new standards will likely be complemented by a study of the implications of the LTCM episode by the President’ s Working Group on Financial Markets.
We are also encouraged by the leadership shown by the Lord Mayor Alderman Alan Yarrow who is also President of TheCityUK’s Advisory Committee during his visit to Malaysia in May 2015 to discuss ways to further strengthen the collaboration between our countries with Islamic finance as the intermediary, in particular in the areas of trade and investment. Malaysia-UK relationship The UK-Malaysia’s relationship stretched back many centuries. Our strong and close linkages in social, economic and finance span over a period of 200 years that have delivered great economic benefits and opportunities to both countries. In Islamic finance, our collaborative partnership formally began with the MoU between Bank Negara Malaysia and the UK Trade and Investment (UKTI) in 2009. The collaboration paves the way for both countries to strengthen international linkages in talent and expertise, cross border business and infrastructure support. Islamic finance: prospects & opportunities Islamic finance has increased its significant in the international financial landscape. As at third quarter of 2014, global banking asset has reached almost USD2 trillion whilst Islamic fund assets and takaful contributions amounted to USD76 billion and USD21 billion, respectively 1. As at end June 2015, total sukuk or Islamic bond outstanding stood at USD313 billion with Malaysia making up 55% or USD172 billion of total market share 2. 1  Source: IFSB 3Q2014. 2  Source: Bloomberg, Zawya. BIS central bankers’ speeches  1  The increased participation of non-Muslim jurisdictions also reflects the positive acceptance of Islamic finance among the global community.

Beyond the theoretical considerations, it is important that financial regulation, in all its forms, should contribute to maintaining financial system diversity. Thus, attempting to measure all assets and liabilities at fair value has some drawbacks – and even entails risks – that need to be taken into account if lessons are to be drawn from the financial crisis for accounting rules. To conclude, I would like to stress an important point regarding the new financial regulatory framework. It would be unrealistic to believe that financial regulation is the answer, and, above all, that it is capable of protecting us from the risk of financial instability. Indeed, the crisis can largely be attributed to financial institutions’ inadequate risk management, which stems from an irrational trust in quantitative tools. Financial regulation should be an incentive for financial system participants to develop a sound and efficient management framework. It is no substitute. 2  BIS Review 161/2008
Given that markets are forward-looking, they would try to anticipate any difficulty faced by a sovereign by short-selling their positions, thus triggering the crisis. This would discourage investment in the euro area because of its potential volatility and perverse market dynamics. Finally, such a measure would delay any return to the market by a sovereign, because no market participant would be willing to start reinvesting in the country for a long period if they know that this kind of investment might at some stage be penalised. This would thus discourage private sector involvement and oblige the official sector to increase its financial contribution. A clear example is the fear that private sector involvement would be sought automatically under the European Stability Mechanism. Faced with such circumstances, investors would be sceptical about buying government bonds maturing after 2013. And the statement which is often made in this country that “there will be no restructuring before 2013” does little to reassure investors, as it implies that there might be one afterwards. The proof of what I have just mentioned can be found in the data. Just looking at the yield spreads between the government bonds of the three stressed countries and those of Germany, it can be seen that they were gradually coming down last autumn until the day of the Deauville agreement and then spiked up after the October European Council, in which it was mentioned that preparatory work on the ESM would include “the role of the private sector”.

Under bankruptcy laws or out-of-court settlement guidelines, such as the London Rules, the Jakarta Initiatives or the Hong Kong Guidelines, when a corporate is facing financing difficulties, the responsibility is passed to the debtor and creditors to arrange debt settlements among themselves. Indebted companies can reorganise and restructure their operations to return to profitability. In turn, creditors agree to reschedule loans or accept the conversion of debt into equity. While the basic principles of private creditor participation in resolving the debtor’s dilemma are uncontroversial, the application of these principles to sovereign debt is much more complex. Debt workouts in the corporate and public sectors are quite different. First, assessing the solvency of a country is different from that of a company. The former requires not only an analysis of the cash flow, the balance sheet and the assets and liabilities but also an evaluation of the political will to implement the measures needed to ensure that the country remains solvent. The capacity to service debt requires both a willingness and an ability to implement policies that will generate the necessary resources. To quote the example of Greece: it has a gross debt of around € billion and marketable assets worth up to € billion, so the country is solvent to the extent that it is willing to sell off some of these assets.
It is also interesting to note that credit derivatives and hedge funds, which many people claimed would cause the next crisis, have not reinforced the problems in the market, but rather to them being handled. Nevertheless, the market turbulence has shown that the deficiencies in the design and functioning of the credit markets need closer investigation. Some innovations appear to have been a little too fast for the market. At the same time, as I said in my introduction, it is still too early to draw any definite conclusions from what we have seen. When loans pass through several channels and are repackaged along the way, there is often a long distance between the final investor and the party that originally issued the loan. This means that the incentive to make a thorough credit assessment declines. It appears as though the original credit grantor took too little responsibility in the repackaging process. The way that information on credit quality is passed on to investors is also open to debate. One of the credit rating agencies’ tasks is to fill in the information gap between the issuer and the end investor. 3 With hindsight one can note that this has not always been successful. But even if there are deficiencies in the way that the credit rating agencies have worked with regard to structured credit products, there are also signs that many investors misunderstood how a credit rating should be used.

If there is a more rapid downswing than expected, the problems in the mortgage market may be more profound and spread to other sectors of the credit market. And of course the unrest in the financial markets can in turn contribute to a broader slowdown in the US economy. The situation remains uncertain and there is considerable sensitivity to new negative information and to other shocks. And there will probably be more bad news from the United States and Europe. We were all taken by surprise This autumn has seen a number of unpleasant surprises and, as I have said, there is reason to believe that the unrest will continue. The Riksbank, like most other central banks, had previously warned that there were difficulties in the credit market, particularly the low risk premiums. The situation we have seen was therefore not entirely unexpected. However, something that was underestimated was how quickly and by how much the price of risk rose, as well as how quickly problems in a distant part of the US credit market could spread throughout the world and have such a strong impact on the interbank market, which is the actual core of the international financial system. BIS Review 136/2007  5  To those wishing to learn more about the market turbulence, I can warmly recommend the Riksbank's Financial Stability Report, which will be published soon.
It raises the purchase price of commercial property, so those, as you say, with a lot of financial firepower, global institutional investors and so on, will find it easier to deal with that. And as you say, there are knock-on effects in the rental market, absolutely. We have a strategy review this year, where I think we have always been alive to these concerns. Revisiting how we think about housing in how we do monetary policy is part of that review. For monetary policy, if it has these consequences, we need what we call macroprudential policy to go hand-in-hand. So here in Ireland, as you know, the Central Bank of Ireland has mortgage rules, and it is a very difficult situation. If someone says that in order to allow the individual to compete with the global investors, maybe they should be able to borrow more money: I don’t really think that’s part of the answer. We tried that before here, and we need to keep a limit on the amount of debt that households take on. Because the cost of excessive debt is so high, as we know in this country. Going back, how we deal with improving affordable housing, all of these are frontline political issues, that is true across Europe in different ways. For a fast-growing economy like Ireland, where the workforce is growing, where there is so much pressure on housing, it’s obviously quite intense. But we don’t think tighter monetary policy from us is part of the answer.

Ladies and Gentlemen, In these competitive and challenging times, excellence in marketing capabilities, innovative and efficient distribution network, product development capabilities and customer relationship and care require the ability to harness these different competencies, formulate a coherent enterprise-wide strategy, that is then executed effectively. For that to happen, banks have to look within their organisations for the answers. Before resources are allocated, before a marketing direction and strategy is established, before the organisation is restructured, the bank needs to decide what its strategic business will be within the context of its markets - exactly what type of financial service provider it will be. As part of the efforts to enhance efficiency and thus alleviate the level of competitiveness, significant strategies were initiated during the year. This included the consolidation, the rationalisation of common functions and operations across institutions in the group, outsourcing of non-core activity and leveraging on cross- selling of the products and services within the group. Following the consolidation of the 54 domestic banking institutions into ten banking groups, there was significant rationalisation of the wide range of common functions and operations across institutions in the group. Six banking groups have also now leveraged on cross-selling of their products and services across institutions in the group. A further impetus towards achieving this would be the merging of the commercial banking and finance company businesses in the banking group into one single entity.
A good candidate could for instance be our policy to support fair access to payment instruments: Banque de France is committed to ensure the availability in our jurisdiction of a range of payment instruments suited the needs of all users. The development of electronic payments based on innovative technologies lays the foundation for a smoother and safer payment experience. But this should not exclude part of the population. Up to now, a large part of financial inclusion has also  been about making access to cash easier for those who don’t have a credit or debit card, and ensuring the acceptance and availability of banknotes has therefore been an important dimension of our retail payment policy. But changes in payment solutions supply and changes in payment habits in favour of electronic payments may make this policy more difficult and costly to maintain going forward. One possibility often mentioned would be for the issuance of a central bank digital currency accessible to the general public. At this stage, in many developed economies and certainly in Europe, the business case for this kind of innovation does not appear to me such that it should be a short-term priority. The priority should rather be to facilitate cross-border payments. The case is for me more compelling for a central bank digital currency at the wholesale level, for use between financial intermediaries, given the potential for a quick and widespread tokenization of financial assets.

For some quarters now, we have indicated that in order to ensure appropriate monetary conditions, we would consider selling foreign currency in addition to policy rate increases. In the fourth quarter of 2022, we sold foreign currency worth around CHF 27 billion. Foreign currency sales, together with the increase in the SNB policy rate, contribute to the tightening of monetary policy. They help to dampen imported inflation. We will also sell foreign currency in the future if this is appropriate from the monetary policy perspective. However, the development of inflation and thus the outlook for monetary policy are currently highly uncertain; therefore, we conversely also remain willing to buy foreign currency if necessary, i.e. if there were to be excessive appreciation pressure on the Swiss franc. Ladies and gentlemen, I now hand over to Martin Schlegel. Liquidity assistance loans  Ladies and gentlemen, allow me to explain how the SNB is providing liquidity to Credit Suisse and UBS. The liquidity is being granted on three levels. First, both banks have unrestricted access to the SNB’s already long-established facilities. The banks can obtain liquidity against high-quality securities under the liquidity-shortage financing facility (LSFF). This serves to bridge unexpected liquidity bottlenecks in the short term. Furthermore, the SNB provides emergency liquidity assistance (ELA). ELA loans are covered by collateral in the form of Swiss mortgages transferred to the SNB or pledged securities. Second, Credit Suisse and UBS have access to additional liquidity assistance (ELA+).
Tarisa Watanagase: Thai financial sector and the challenges ahead Speech by Dr Tarisa Watanagase, Deputy Governor of the Bank of Thailand, at the conference on Asian Finance & Capital Markets 2004, Bangkok, 8 July 2004. *  *  *  Good morning, Let me first begin by thanking Euro Events for inviting me to address this distinguished audience. I am delighted to be here to share with you some of my thoughts on the Thai financial sector and where it is heading, especially since a lot is happening at this juncture, with the Financial Sector Master Plan being implemented. I trust therefore that we will have much to learn from each other, given the diverse background of participants in this conference, ranging from banking and government officials to investment managers and business leaders. Since you will engage in absorbing debates on practical issues on finance and capital markets, my presentation will deal with the broader issue of prospects and challenges for the financial market in the Thai perspective. While the discussion will be based on the experience of Thailand, some of the challenges will be commonly faced by other emerging economies. Thus, it is my sincere hope that the implication drawn from this presentation will also be applicable and useful for participants from other countries. I will first touch on the structure of the Thai financial sector and the assessment of where the banking sector currently stands.

To increase confidence in the long term, however, we  2  This figure may vary somewhat depending on how it is calculated. 3  See also the article “The EMU and the debt crisis in Europe” in the Monetary Policy Report of February 2012. 2  BIS central bankers’ speeches  need real changes and the credible implementation of requirements for sustainable public finances. Nevertheless, the situation looks much better now than it did in the autumn. If we look outside Europe, we can see the beginnings of a turnaround in the US economy and China, for example, is still experiencing good growth. Despite this, however, we should probably expect the impetus to the Swedish economy from abroad to be limited over the next few years, mainly due to weak development in Europe. Inflation and growth prospects justify keeping the repo rate low Developments abroad, and above all in Europe, are thus highly important to the Swedish economy. But the development of domestic demand, for example household consumption, was also weak in the second half of 2011. Since then, however, we have received a number of somewhat more positive signals. Share prices have risen since the end of last year and confidence indicators are clearly pointing in the right direction, although from relatively low levels. There is thus potential for an eventual increase in household demand. Growth may gradually increase. The main objective of monetary policy is to keep inflation close to the target.
However, in the event of abrupt or excessive movements of financial market variables or capital flows, the Bank of Thailand stands ready to utilize the necessary policy tools in order to support economic recovery and ensure the well functioning of the domestic financial markets. Looking forward, amid the prolonged low rate environment both at home and abroad, we will continue to closely monitor the buildup of imbalances and underpricing of risks in the financial system, while preparing to take necessary actions in order to prevent them from becoming systemic risks. All in all, monetary policy in the periods ahead will continue to be a delicate balancing act between risks of inflation, growth and financial stability, and the Monetary Policy Committee will make sure that its actions do not add vulnerability to the financial environment. Regarding our financial sector development policy, the Bank of Thailand believes that efficient and inclusive financial and payment systems can help empower our growth engine. By efficiently allocating resources to match the diverse needs of different sectors in our economy, we should be able to release their untapped potential and therefore enhance Thailand’s competitiveness. Indeed, our three master plans – namely the Financial Sector Master Plan, the Payment System Roadmap and the Capital Account Liberalization Master Plan – have been designed with such goals in mind.

The passage of this Act is a win-win for small businesses as well as banks. The Bank of Thailand regulations on loan classification, provisioning requirement, and valuation guidelines have been issued to help banks adopt this new collateral regime. 4/5  BIS Central Banker's Speeches  Ultimately however, we would like to see Thailand moving from collateral-based lending towards cash-flow-based lending especially for small businesses with few or no eligible collaterals but otherwise viable prospects. In order to do so, we need to have sufficient data for credit risk enhancement and monitoring. In light of this objective, we are developing an industry-wide SME database from pooled bank data for banks to use for their planning and risk management. In addition, we are working with relevant parties to amend the Credit Bureau Act to expand its membership to players like Peer-to-Peer (P2P) lenders. These efforts would get along well with the government policy to expand the roles and coverage of Thai Credit Guarantee Corporation (TCG) to provide credit access for SMEs lacking collateral security. Ladies and Gentlemen. If we look beyond our domestic market, increasing regional integration brings numerous exciting business opportunities. Thailand’s strategic location at the heart of Mainland ASEAN along with close economic relations with our neighbors make us a natural candidate to become a regional connector of trade and financial services. We have offered many fronts to enhance such connectivity.