samchain/econo-pairs-v1 huggingface dataset:
(a) UK Banks are: Barclays, HSBC, LBG, Nationwide, RBS and Santander UK. Table 2 Drivers of UK banks’ lower ROE Total reduction in post-tax return on equity, 2006-H1 2015(a)  -11  Due to reduction in leverage  -4  Due to fall in return on assets  -7  of which:  Net interest income  -4  Trading income and fees  -6  Misconduct costs  -3  Other income and expenses  -4  Impairments  3  Operating expenses  7  Increases due to  Sources: Published accounts, bank data submissions and Bank calculations. (a) UK banks are Barclays, Cooperative Bank, HSBC, Lloyds Banking Group, Nationwide, RBS and Santander UK. More fundamentally, banks are out of favour because of a new-found exasperation with their returns rather than due to old concerns about their resilience. UK banks, for example, have seen a sharp decline in profitability since the crisis, with average group-level post-tax returns on equity falling from 17% in 2006 to 6% in the first half of 2015 (Chart 6). Of course, with hindsight, a substantial proportion of the pre-crisis return  6  BIS central bankers’ speeches  was ephemeral, reliant on short-term funding, capital-light balance sheets and massive synthetic leverage.

This sets out baseline standards for financial institutions, and addresses key fundamentals of technology resilience including governance, cybersecurity risk management as well as capacity-building. Conclusion These are exciting times, where rapid technological innovations, evolving business models and shifting customer preferences, present new opportunities and challenges to the status quo. Such opportunities can bring about a positive and transformational impact to our society and economy. We should be bold to capitalize on these emerging trends, while remaining steadfast in managing the associated risks. Times are changing, and change is good. It takes us out of our comfort zones, and helps us reach new heights. Before I close, I would like to congratulate all the winners of today’s ceremony and I wish you all a pleasant evening ahead. 4/4  BIS central bankers' speeches
And businesses are unlikely to want to expand while capacity is lying idle and there is still much uncertainty about the outlook for demand. But the substantial depreciation of sterling – down nearly 25% since the start of the crisis – should, over time, help to boost the contribution of net exports to UK growth. We have seen some of the fruits of that in the robust performance of manufacturing over the past year. As I already noted, the economy began to grow again more than a year ago, in the fourth quarter of 2009. And over the first year of the recovery, growth was around the UK’s historical average rate. In part, that was on the back of the boost to growth from a slowing in the rate of inventory de-stocking. Given the prospective fiscal consolidation, the maintenance of such growth rates requires a pickup in the contribution of private domestic final demand and in net exports. In our November Inflation Report, our central view 3 , predicated on market interest rates, was for the recovery to be maintained, with the boost from a stimulatory monetary stance and from the past depreciation of sterling offsetting the continuing headwinds from de-leveraging and fiscal consolidation. Since the November Report, we have, of course, had the first estimates from the ONS of growth in the final quarter of last year. They suggest that the economy contracted by 0.6%. In part, that was down to the disruption caused by the snow.

With hindsight, of course, we know that it was the first of those risks that materialised, as the demise of Lehman Brothers led to a near-seizure of financial markets and a collapse in global activity, while oil prices plummeted to around $ a barrel. But it was by no means obvious during the first part of the 2008 that would be how things panned out. I recall this period because it bears some similarity to the current conjuncture. Inflation has been running well above our 2% target, in part reflecting external forces, raising the possibility that elevated inflation may persist into the medium term. But the recovery, while underway for more than a year, still faces significant headwinds and has recently shown signs of fragility. Should the recovery prove weak, and significant spare capacity persist, we may yet be faced with inflation running below the target in the medium term. Monetary policy needs to balance those two risks. My talk today will focus on the sources of the currently elevated inflation, whether it is likely to persist and what policy should seek to do about it. But before turning to those topics, let me say a few words about the headwinds that still confront us on the demand side of the economy. To begin with, this was not a typical downturn and we should not anticipate a typical recovery. After normal cyclical downturns, economies typically return to the previous trend growth path within a few years.
The increased international integration of both capital and goods markets has brought a huge increase in the scale of cross-border financial activity. The largest global financial institutions now play significant roles in a large number of financial systems outside of their home market. These changes are likely to affect the manner in which financial shocks in one region are propagated to other regions. Finally, we have witnessed an increase in the degree of concentration in some markets, a development that has the potential to make the system more vulnerable to the deterioration in conditions at one of the major bank or nonbank financial intermediaries. The degree of systemic risk presented by these changes depends importantly on two things. It depends on the robustness of the infrastructure that supports these markets. And it depends on the level of reserves, capital, margin and collateral that the major financial institutions hold against risk, which is in part a function of the strength of risk management systems. In both of these areas, market practice has made significant progress over the past decade, and further improvements are underway. A few quick points about two areas in which we believe further progress offers the highest possible return in terms of improving the overall resilience of the financial system. In the broad area of market infrastructure, we think the greatest near-term imperative is to strengthen the post-trade processing systems that underpin the rapidly growing over-the-counter derivatives market.

Muhammad bin Ibrahim: Sukuk as a viable fund-raising and investment instrument Opening remarks by Mr Muhammad bin Ibrahim, Deputy Governor of the Central Bank of Malaysia, at the HKMA-BNM Joint Conference on Islamic Finance, Hong Kong, 14 April 2014. *  *  *  Much has been talked about the global financial crisis that had brought about unparalleled financial miseries, economic calamities and social grievances. While the focus has been on financial reforms and economic remedies, the thought on the minds of governments and regulators is how to create a more sustainable global financial landscape. Emphasis on ethics is key to this approach. Greater involvement in ethical-related business has made its strides in contributing towards the overall strength of the global financial system. Ethical investment itself has gained international recognition in recent years. Estimated to be worth more than USD13 trillion, the ethical investment market now represents over a fifth of total assets managed globally. Pension funds, sovereign wealth funds and institutional investors are leading the way. Europe, the United States of America and Canada make up 96% of the share of this market. In Asia, the market is still relatively small – at less than USD100 billion. As ethical investment catches on in Asia, so too has investment in sukuk. Sharing a close affinity, they optimise financial returns while maintaining social good and upholding strong governance. It is my pleasure to be here today at this Joint Conference on Islamic Finance, organised by the Hong Kong Monetary Authority and Bank Negara Malaysia.
Earlier this year, I used the central paths from the February Inflation Report to generate some interest rate trajectories, assuming monetary policy was set to minimise current and future deviations of inflation from target and output from trend (Haldane (2015b)). It is useful to update these interest rate paths for the MPC’s latest GDP and inflation forecasts. These are shown in Chart 14. The interest rate profiles are relatively similar to those in February. As then, they suggest the optimal path for interest rates involves an immediate cut in rates for about a year, which pushes inflation back to target and closes the output gap. Thereafter, interest rates rise gradually in line with the market curve. As with any model-based simulation, these interest rate paths are no more than illustrative. Nonetheless, I find they serve as a useful benchmark: what is it about the economy, not captured by the model, which would cause me to deviate from this path? Earlier in the year, these types of simulations played a role in my judging that a neutral stance on the future direction of interest rates was a prudent course. One important drawback of these model-based simulations is that they tend to underplay the effects of risk, focussing instead on central paths for growth and inflation. So how might risks, including dread and recession risk, affect the path of demand and the optimal interest rate trajectory in the period ahead? In principle, dread risk affects demand in two ways.

It is not surprising that the Central Bank of Turkey, one of the most important institutions of the Turkish economy, which hopes to become integrated with the western economies, is affected by these trends in modern central banking as it maps out its medium and long-term strategies. Accordingly, the main goal of the Central Bank of Turkey, like that of other central banks, should be to maintain the stability of prices in the economy. At this stage I would like to clear up two points with respect to the price stability target. First, the Central Bank’s price stability target and its responsibility for price stability are two different issues. The price stability target assumes a stability which exists under conditions of low inflation. Therefore, the economy has to undergo a “ disinflationary process” before the Central Bank assumes responsibility for price stability. It is well known that in Turkey, which has been experiencing high inflation for years, reducing inflation to the levels of the western economies will require a comprehensive effort and is not a process which can be accomplished by the Central Bank alone. The Central Bank can track the price stability target as a part of the larger disinflationary programme. I believe that once low inflation rates have been achieved by means of such a programme, it will be a rational decision to make the Central Bank responsible for maintaining price stability. The second point I want to stress concerning the price stability target concerns microeconomic functions of central banks.
It serves as a networking effort while creating opportunities to exchange views, explore mutually beneficial opportunities, and most importantly, implement positive changes in the financial systems. It is not too far-fetched to envisage the generation of breakthrough thinking for future collaboration that is solution-driven; practical; and innovative. Collective effort is also key to success and the industry should aim to work closely with other key stakeholders. These include government agencies, civil societies and the public to increase awareness and encourage more active participation in supporting further development and offerings of sustainable financial solutions in the market. Strong technical know-how in dealing with the changing dynamics of the financial landscape and the arising risks is also essential for industry players to navigate itself in this journey. To end, I wish to reiterate that “sustainability is indeed a journey, and one that is best navigated collectively”. Sustainable development can be best served by re-connecting finance and element of value creation that is reinforced by bringing benefit to society, environment and prosperity. On that note, I wish all of you a beneficial and productive session today. 1 Around 30 least developed and other vulnerable countries are exposed to debt distress – limiting their ability to  invest in the sustainable development goals (SDGs). 2 Countries home to most people in the world and global growth in real wages is only 1.8% – the lowest since  2008 (Source: United Nation (2019).

The increasing competition in Sri Lanka’s banking industry has widened the scope of the IT infrastructure development to meet diversified demands made by numerous users. Today, customers of some banks enjoy services through Internet banking, Telebanking, Mobile telephone banking and Visa/Master Credit and Debit card facilities. The growing competition and expectations have also increased awareness amongst banks of the role and importance of technology in banking. 3. Worldwide Outsourcing and Service Improvements  3.1 An even more recent area in which the advancement of ICT facilities has had a significant impact is in the outsourcing of financial services. By 2010, it is projected that more than 20 per cent of the global financial services industry might shift offshore. In 2005, 70 per cent of world financial institutions used outsourcing compared to 26 per cent in 2003. For developed countries, outsourcing financial services offer cost reductions, while IT companies in many developing countries, such as India, Sri Lanka, China, South Africa, the Philippines, Singapore and Malaysia got opportunities to use their IT skills and profit from it. Similarly, the outsourcing of business processes, such as call centres, general processing for human resources, finance and accounting, back office services has also taken place. This trend has influenced some banks in Sri Lanka also to form their own subsidiaries to handle IT operations within the group. 4.
Insofar as they are used efficiently, these programmes represent an opportunity to shore up economic recovery and employment in the short term, to speed up the structural transformation towards a higherproductivity economy, and to address the socioeconomic consequences of the crisis and limit their duration. 12 13  An alternative would be to link the legal retirement age to life expectancy developments, as in Italy and Portugal. See the Banco de España’s 2018 Annual Report. 34  However, I must stress the need to ensure that these programmes are used appropriately. In particular, the receipt of these European funds in the coming years should not blind us to the need to undertake fiscal consolidation. Given the temporary nature of these funds, even if used efficiently they cannot be a substitute for the necessary adjustments, although they may ease the cost of these adjustments across several dimensions. First, assigning the funds to projects that will increase our economic growth potential will help expand tax bases. Second, the available evidence shows that the more favourable the cyclical position when fiscal consolidation is undertaken, the lower the costs of that consolidation; the projects developed using the European funds should help us achieve a more favourable cyclical position. As I have explained earlier, economic policy measures must continuously adapt to changing circumstances. In addition, they must also help the economy adjust to the new postpandemic setting.

The key difference from SIVs was that the underlying assets were largely purchased from third-parties and not necessarily in securities form. 6  BIS central bankers’ speeches  We now want to turn to an example of a structure that did at least partially survive the crisis: UK RMBS master trusts. These are versatile structures that allow an issuer to transform a portfolio of assets into a very different investment product. In principle, the master trust purchases mortgages from the bank and issues tailored bullet-maturity securities. The assets and the liabilities can be very different, e.g. the demand for the securities may be stronger in US dollars than in sterling, so an FX swap converts the cash-flows into dollars. Or most of the mortgages may be floating rate, whereas investor demand is stronger for fixed-rate product, and an interest rate swap(s) converts the cash flows accordingly. Mortgages typically pay down somewhat randomly and relatively quickly, whereas investors prefer straight-bullet maturities. The master trust can accommodate this by allowing on-going reinvestments of the pay downs and conversely allowing the trust to put assets back to the bank if the cash-flows are not sufficient to make a particular principal repayment. The downside is clearly that the on-going linkages between the issuer and the trust remain very strong, and it is thus hard to identify where economic risks ultimately reside. RMBS master trust securitisations are designed to be called on their bullet maturity date and that is how they were priced and traded.
For example, the Central Bank is a respondent in all court cases recently filed in connection with unauthorized and failed investment schemes as the petitioners are of the view that the Central Bank is responsible for the loss of investors’ money. Let me therefore elaborate on Central Bank functions. First, the issue of currency Central banking is a concept originated from the issue of currency. In the evolution of money, private banks started issuing their own bank notes, initially based on their gold holding and later as their own liabilities. The bank in which the public placed the highest trust started operating as a central bank in the market. Later in the history, legislation was brought to empower the Central Bank to print bank notes or currency which function as the intermediary between all economic transactions. Currency in issue at present in Sri Lanka is about  2  BIS central bankers’ speeches  Rs. 422 billion and is a liability of the Central Bank, even as it is an asset to the rest of us. The Central Bank is prepared to pay against any currency note in any other value of legal tender preferred by the public. The Central Bank maintains a cash counter for this. In order to protect the public trust in currency, the Central Bank primarily undertakes two actions. First, it attempts to issue currency notes with intrinsic material security making it difficult for counterfeiting and designs are chosen to facilitate easy recognition of different currency notes by people including the blind.

The combination has served to amplify the implications of reduced risk warehousing capacity of the intermediary sector relative to the provision of liquidity from market makers during times of market stress relative to the past. That said, I would hesitate in drawing too much of a comparison between the market liquidity of today and that of pre-crisis. You don’t need a long memory to recall the impact of underpricing liquidity risk on the highly leveraged market makers. Returning to such a situation would be a misplaced aspiration. The second theme I want to draw out is the evolution of market micro-structure. Electronic platforms are now increasingly used across the various FICC markets. In some cases regulation has been the cause but in others, such as foreign exchange markets, firms have over a number of years increasingly embraced electronic forms of trading. This includes using “request-for-quote” platforms to automate processes previously carried out by phone. Electronic platforms are effective in pooling liquidity in “normal” times but may have the potential, at least as currently calibrated and given today’s level of competition, to contribute to discontinuous pricing in periods of stress if circuit-breakers result in platforms shutting down. There has been much commentary about the temporary unavailability of a number of electronic trading platforms in the immediate aftermath of the removal of the Swiss franc peg. A contrarian view, which I do not ascribe to, would be that no explanation is required.
I believe there are three things that finance must aspire to, if it is to be a force for good: it must be trusted; it must be inclusive; and it must be sustainable. This Symposium will cover these issues in greater depth. I want to focus my opening remarks on the issue of trust. Global surveys show that the financial sector suffers from a trust deficit. The Edelman Trust Barometer asked over 33,000 respondents globally to rate how much they trust businesses in each of 15 industries to “do what is right”. Financial services was the least trusted industry. There is also a broader sense that finance has not served the economy or society well. Why this mistrust? The reckless risk-taking and blatant disregard for ethical conduct that we saw in the lead-up to the global financial crisis are a big part of the explanation. And it has not helped that the financial industry continues to be dogged by disappointing revelations of financial misconduct and malfeasance. 1/5  BIS central bankers' speeches  Europe saw its largest ever money laundering scandal last year, with hundreds of billions of Euros in tainted money flowing through European banks and their branches across the world. In the US, regulators and prosecutors imposed on financial institutions a total of $ billion in penalties last year for failing to comply with anti-money laundering requirements. In the UK, more than 13 million complaints have been made against retail banks for the aggressive mis-selling of so-called Payment Protection Insurance.

As a result, the new tools allow exposures to that sector to be deterred. The application of a global buffer, on the other hand, does not alter the relative incentives across the different lending segments, which may have unintended consequences. Also, other tools are made available to the regulator that do not impact lending institutions’ capital requirements, but rather the characteristics of borrowers and even of loans. Unlike  13/15  capital tools, which are designed to increase institutions’ capacity to absorb shocks, these new tools seek to reduce the vulnerability of borrowers or to limit the appearance of bubbles. Finally, to be able to cover the financial system as a whole, the legislation gives other sectoral supervisors similar tools. In the design of macroprudential instruments that go beyond banks, Spain has taken the lead in European regulation, although clearly the coordinated application of these tools will be one of the tests that the new macroprudential authority has to pass. Of course, these tools can never be applied automatically. Their use must be measured and fine-tuned responsibly by the supervisor. In any event, activation of these measures in cyclical upswings is likely to meet with criticism from public opinion, consumers and the institutions themselves. We must not forget that the aim is to restrict credit, with the focus on a particular sector. When applied to the property sector, the measures will curb credit and make it more expensive, hampering access to owner-occupied housing, even if only temporarily.