samchain/econo-pairs-v1 huggingface dataset:
This will also act as a deterrent as it signals the commitment and extent to which the relevant authorities and the industry will go to stamp out crime. Hence, we are looking forward to expand this partnership for different types of crimes. Organisations such as the Compliance Officers Networking Group of Malaysia (CONG) and the industry associations can also play a role in enhancing the professionalism and capacity building of compliance officers in Malaysia. The development of human capital is essential in our efforts to combat financial crime. It is our biggest asset, more than any technology. For Bank Negara Malaysia, we will also play our role by ensuring that the regulatory and supervisory framework will provide the necessary environment to prevent, detect and prosecute financial crimes. For us, fighting financial crime is not just about increasing the compliance cost of banks through greater reporting requirements. Instead, we are committed to ensure that the financial sector is well-equipped to support our law enforcement agencies in order to avert these threats. Since the beginning of this year, we have published Red Flag and Typologies reports on several type of crimes including terrorism and proliferation financing, corruption and fraud. These reports aims to provide insights and create awareness, amongst the reporting institutions, of the trends, methods, and techniques used in these crimes. Enhanced understanding of such risks would assist reporting institutions in identification and early detection in order to assist law enforcement agencies to combat such crimes.

At a time when we are witnessing an increase in corporate nonperforming loans, I reiterate my call for the banks to expand their provisions commensurately with this heightened credit risk. At the same time, dividend policies must be mindful of the need for higher levels of retained earnings in order to further strengthen capital buffers, also in view of the more onerous requirements of Basel III. Finally, I would encourage risk officers to go beyond simple compliance with regulations and proactively espouse prudent risk management practices and good judgement. BIS central bankers’ speeches  3  Before I hand over the floor to Professor Bannister, I would like, on this my last official meeting with the financial community, to express my sincere appreciation to you all for the cooperation and understanding I have benefited from over the past twelve years. Thank you. 4  BIS central bankers’ speeches
These approaches acknowledge the practical limitations of risk mitigation when there is little clarity on risk triggers or their impact. In the aftermath of the Global Financial Crisis, financial regulators vowed to end the risks that institutions deemed too-big-to-fail posed to the financial system. This led to strategies that were developed for the resolution of distressed or failed financial institutions without causing disruptions to the financial system or heavy costs to public finances. The implementation of recovery and resolution plans has been by far among the most significant post-crisis reforms undertaken – with far reaching financial, legal and operational implications that also extend across borders. While not all businesses pose the same kind of externalities as financial institutions, the push to move beyond a cursory treatment of business recovery and resolution plans is worth heeding. The idea of innovative risk management would ring hollow if everything came to a screeching halt because an organisation had failed to correctly anticipate a risk incident, and business continuity plans failed to support the organisation’s rapid and effective recovery from the incident. In a more uncertain world, the likelihood of this occurring is far from trivial. Despite a heightened appreciation of risk and new methods to managing risk, business recovery and resolution plans have generated little attention in most organisations beyond the operations of recovery centres.

Such a process is undeniably messier, less predictable and possibly harder to explain in a consistent way. But it is also precisely these very characteristics that make it much more relevant in the world that we live in today. 3/5  BIS central bankers' speeches  At the Bank, our work on proportionate regulation and risk culture aims to support this evolution. For example, the innovation sandbox allows financial institutions greater regulatory room to test innovations within a controlled environment and learn from emerging experience. We are also examining options to better tailor the regulatory framework to the size and complexity of financial institutions. And we are directing greater supervisory focus on an institution’s prevailing risk culture to determine the degree of supervisory intensity that we apply to individual institutions. We expect these developments to pave the way for more constructive dialogue with institutions to achieve regulatory frameworks that will deliver a sensible balance and greater synergies between risk and innovation. Building resilience The third important shift that I want to mention concerns a stronger focus of innovative risk management approaches on building resilience, in addition to simply averting or reducing risks. In the area of network security, organisations are increasingly adopting an “assume breach” paradigm where they operate on the assumption that a risk event has already occurred. In the financial world, reverse stress testing is being incorporated into risk management approaches to identify the scenarios that would break an institution.
The benchmark figure used for the weighting is based on the top panel of Figure 1B in Mayer and Pence (2008): “Subprime Mortgages: What, Where and to Whom?” Finance and Economics Discussion Series Paper No. 2008-29, Board of Governors of the Federal Reserve System – available on the Board of Governors website at http://www.federalreserve.gov/PUBS/FEDS/2008/200829/200829pap.pdf. BIS central bankers’ speeches  3  suggests that inflation is not likely to be a problem, then we can more comfortably align policy to continue supporting the recovery. Some observers and analysts have voiced great concern that the nascent economic recovery, combined with the actions of the Federal Reserve that have expanded its balance sheet, will lead to significant inflation. However, Figure 11 provides a variety of different measures of core inflation; core CPI, core PCE, trimmed core CPI and trimmed core PCE. It is striking how much all four series have declined. In fact many of these series are at their historical lows. Figure 12 shows the different measures of core inflation in the top panel, and the Federal Reserve’s balance sheet in the bottom panel. In the fall of 2008, the Federal Reserve’s balance sheet expanded significantly – but that period also corresponds to the emergence of disinflation (a reduction in the inflation rate) in the U.S. While monetary policy works with lags, why has the unprecedented increase in the Federal Reserve’s balance sheet corresponded with continued significant disinflation?

However, one of its significant features is that the uncertainty surrounding the “true” value of complex financial instruments has undermined the confidence of global markets, increased uncertainty about counterparty risk and led to contagion across asset classes, financial markets and economic regions. The crisis has highlighted the fact that the valuation of financial instruments is not only a question of accounting. It raises issues about risk measurement and management by financial institutions, prudential issues via the definition of capital requirements and, more widely, financial stability issues. However, valuation is also without any doubt an accounting issue. It is therefore hardly surprising that the debate about the application of accounting standards to financial instruments is a highly topical one. I think it interesting to note that the crisis has occurred in a financial system that has seen two far-reaching developments. I am referring first of all to the rapid growth in securitisation and products whose valuation is complex. I will not dwell on this aspect as it is not the subject of today’s meeting. The aspect I would like to focus on is the transition to the “fair value” accounting of financial instruments. The rationale behind this accounting development is understandable and can be summarised as follows. The aim is to enable investors and financial system participants, which include supervisors, to have a better understanding of the risk profile of financial institutions in order to better assess their position.
In general, the current macroeconomic developments and the expected future outlook indicate a moderate recovery of domestic economy (considering expected developments for the economies of the most important trading partners and domestic drivers of growth), inflation rate in line with the expectations, a balance of payments position that ensures a comfortable level of foreign reserves and still slow credit flows. These assessments created an environment for monetary relaxation, as a contribution to higher credit growth and thus, support to the domestic economy. On that basis, in January, we reduced the key interest rate on CB bills from 3.75% to 3.5%, which is the historically lowest level. Since January 2013, the changes in the reserve requirement instrument came into force, through reduction of the base of banks’ reserve requirements by the amount of newly approved loans, but only for credits to sectors whose growth reduces the external vulnerability of the economy (net exporters and energy sector). This non-standard measure will be in effect until the end of 2014, when the need for further application will be examined. These changes in reserve requirements have already started to contribute to higher lending to previously mentioned sectors in the economy. Just last week, we have done yet another change in the reserve requirement by reducing the reserve requirement ratio on Denar deposits from 10% to 8% and simultaneous increase of the reserve requirement ratio on foreign currency deposits from 13% to 15%, as well as introducing 0% reserve requirement ratio on banks’ long term liabilities to nonresidents.

The financial support through the banks’ credit market during the crisis years has been moderate, but permanent, therefore supporting the economic recovery of the economy. Anyway, in May 2013, the annual credit growth was 3.7%, pointing to a gradually slowing pace during 2012 and first half of 2013. Possible reasons for such trends in the credit market are: effects of financial deleverage process of foreign parent banks, banks’ deteriorating risk perceptions against the backdrop of still anemic economic activity and uncertainty regarding the global environment, and the present (though moderate) increase of credit risk in the system, as well as the potential. The NPL ratio reached 11.4% in the first quarter of 2013 being one the main challenges for the banking system that is closely monitored by the NBRM. Still, it is among the lowest in the group of the EU candidate countries. Regarding the future prospects for credit flows it can be noted that stable funding sources (loan-deposit coverage ratio of around 90%), strong liquidity position, and capital adequacy ratio continuously being twice as high than the minimum required, point to room for further increase of lending in the domestic economy. The improvement of the banking sector regulation in view of further implementation of the Basle and EU standards will remain being a high priority on the agenda in this field.
Needless to say, we must accept the reality that different national resolution regimes will continue to coexist. Let me be very clear on this: A full-fledged global resolution regime is a noble but seemingly unrealistic goal. We should not conclude from that, however, that the framework for cooperation across countries cannot be improved. One possibility is to work towards mutual recognition arrangements of compatible national resolution regimes. Recognising other resolution regimes helps each nation to adapt its own structures and processes in order to reduce frictions in crisis episodes. We should require that firms more clearly delineate different functions within their internal structures and simplify those structures. This will help facilitate an orderly wind down in the event of a severe crisis. It will probably also enhance effective management and risk management in these firms. This is an important point. As the crisis has demonstrated, in a  BIS Review 145/2009  5  number of cases it can be argued that firms were not only too big, but also too complex to be managed effectively. Furthermore, we need a financial market infrastructure which – to the extent that this is possible – minimises the destabilising effects of a failure on the rest of the financial sector. A key element that cannot be emphasised enough is the ongoing effort to centralise the clearing and settlement processes in the derivative market. This enhances transparency and reduces counterparty risk.

The baht has been depreciating since late April, reducing the year-to-date appreciation against the dollar to about 3 percent. The correction is also evidence that under flexible exchange rate regime, unwarranted overshooting inevitably will be corrected by market forces. The fact is that although the exchange rate is not the BOT’s main policy tool, or an intermediate policy target, it is an integral part of our macroeconomic analysis and policy deliberation. Beyond aggregate statistics, it is also recognized that sharp exchange rate volatility can have significant impact on small businesses with less capacity to adjust. Thus, while exchange rate is allowed to play an active automatic stabilizing role under current framework, the MPC constantly monitors the impact of baht movements on the overall economy. To supplement this baseline analysis, the BOT staff also conducts projections under different degrees of baht appreciation. In a recent joint forecast exercise with the Ministry of Finance and the Office of the National Economic and Social Development Board (NESDB), the BOT’s estimate of growth impact of baht appreciation in fact proved to be the largest among the three, testifying to our conservatism. In broad terms, however, the three agencies’ analyses agree that baht appreciation alone should not derail the underlying momentum of the economy. 2  BIS central bankers’ speeches  The MPC continues to be prudent, and vigilant about the potential adverse impact of extreme exchange rate volatility.
Chart 5: Surveys suggest underlying investment  Chart 6: Investment growth unusually weak  trend still negative  relative to employment growth  Sources: BoE, BCC, CBI, ONS and Bank calculations. Sources: ONS and Bank calculations. However, even then it was quite a bit weaker than in other countries, weaker still than in previous economic expansions in the UK (Chart 4). And it then started to decline. Business investment fell in every quarter of 2018 – outside recessions that’s the longest period of continual declines on record – and, although preliminary estimates suggest it recovered slightly in the first quarter of this year2 the standard business surveys suggest the underlying trend is still negative (Chart 5). This is remarkable at a time when the economy has been growing. What’s particularly striking is that firms have been cutting back on investment while adding jobs. Even as investment was shrinking, employment grew in every quarter of 2018, and quite strongly over the year as a whole (Chart 6). 2  It’s possible that this was driven, somewhat perversely, by the same no-deal worries that pushed up firms’ inventory holdings (certainly there will have been similar incentives to expand warehousing and logistical capacity). 3  All speeches are available online at www.bankofengland.co.uk/publications/Pages/speeches/default.aspx  3  As I say, the impact of Brexit uncertainty on investment has been talked about quite a bit already and I’m not looking to give an exhaustive account of it today.

As is usual in these situations, it’s the downside risk that gives the option of waiting its value. But there’s also a cost to waiting because the firm is forgoing profits in the meantime. This cost increases with the expected duration of the uncertainty: the longer a firm thinks it’s going to have to wait for things to be resolved the greater the profits foregone and the more likely it is that the firm will simply decide to get on with things and make the investment anyway. Conversely, delaying becomes more reasonable if the uncertainty is expected to last only a short time. A firm that has that expectation may as well wait to see how things turn out. One implication of this is that you’d expect the impact of uncertainty on investment to intensify as we get closer to the date of resolution. Broadly speaking I think that’s what we’ve seen in the data. Another is that investment suffers more than it needs to if firms repeatedly expect things to be resolved sooner than they actually are. A repeated series of cliff-edges, each of which is expected to be decisive but in reality just gives way to the next cliff, is more damaging for investment than if it had been clear at the outset that the process will take time. This doesn’t mean that resolving things soon, by any means necessary, is the better course.
This meant that if the interest rate changed during a maintenance period, the change would not have been fully reflected in the interest payments to depository institutions until the beginning of a new maintenance period. This methodology likely would have resulted in slow adjustment of market rates to changes in the IOER rate. The revised calculation bases interest payments to depository institutions on the IOER rate in effect each day and the level of balances held each day. 20  See Clouse, Ihrig, Klee, and Chen, “The Federal Reserve’s Tools for Policy Normalization in a Preferred Habitat Model of Financial Markets,” October 2014; Martin, McAndrews, Palida, and Skeie, “Federal Reserve Tools for Managing Rates and Reserves,” September 2013; and Armenter and Lester, “Excess Reserves and Monetary Policy Normalization,” September 2015. 21  Testing focused on two types of term operations. Term RRPs are similar to ON RRP in most respects; for example, both operations use the same expanded set of counterparties. The key differences are that term RRPs are conducted for longer than overnight, they each have their own, separate, aggregate capacity limit, and the term RRP does not incorporate a per-counterparty cap. Term RRPs can be used in a variety of ways. In the current framework, they have been used to offer increased RRP capacity, using an interest-rate-oriented approach, around periods when larger-than-usual demand is expected, but they could also be used in a quantityoriented way to drain reserves.

In this section, I will explain why the Federal Reserve was able to lift rates off zero without requiring large-scale “reserve draining.”3 Next, what do the new data on money market trading say about how this new framework is affecting market conditions? As part of this discussion, I’ll walk through the enhanced data that, starting in March, the New York Fed will use to calculate the effective federal funds rate.4 Finally, what questions remain, and what can be done to learn more about the issues they raise? These include the level of capacity required in the Federal Reserve’s reverse repo operations and the consequences of changes in the regulatory rules for banks and money funds. BIS central bankers’ speeches  1  As always, these views are mine alone and do not necessarily reflect those of the New York Fed or the Federal Reserve System. A new approach for policy implementation Why are we following a new approach to implementing monetary policy? Before the financial crisis, the Federal Reserve followed a well-worn playbook for monetary policy implementation that was based on scarcity of reserves. Reserves left at the Federal Reserve earned zero percent interest.
To follow, I will discuss the role of policy in and ensuring that growth is sustainable and not prone to relapses, especially ways to mitigate potential economic and financial imbalances. And finally, I will explain how the Bank of Thailand intends to find the right balance for policy to foster businesses and investment during the rise of Asia. Ladies and Gentlemen, Since the ancient Greek and Indian times, a golden age refers to a period of peace and unity, stability, and rising wealth, with an abundance of hope and opportunities. Evidence has pointed out that Asia has increasingly embraced these characteristics. In terms of peace and unity, we have witnessed increasing international cooperation to boost economic welfare and safeguard against risks in the region. For ASEAN, this has been reflected by the increase in free trade and investment agreements both bilaterally and under the ASEAN Economic Community. In a broader group, the ASEAN+3 countries have been working closely to set up and improve a committed mechanism for regional crisis prevention and management. As for economic stability, I think that the robust recovery, low level of public debt, together with sufficient foreign reserves have demonstrated that Asian regional economies have the satisfactory capacity to cope with future shocks. In terms of increasing wealth, it is clear that the share of emerging Asia in world GDP has been increasing markedly with a status as a global production hub of manufactured goods. This is projected to rise even further.

This is because it helps investors, businesses, and household to effectively make plans and manage their risks, as well as lower businesses’ cost of funds. To end my remarks today, I would like to stress that while there remain risks and uncertainties surrounding the overall outlook for global growth, prospects for Asia remain relatively bright. However, countries in Asia, and Thailand especially, need to put real efforts to foster capacity, innovation, and productivity. We must also prevent excessive risk taking and lax policy-making from becoming the norm. This requires preempting excessive risktaking and conducting policy with prudence. I can assure you that the Bank of Thailand is committed to ensuring a stable macroeconomic environment which would help investors, businesses, and households in planning their economic activities and to operate effectively. However, policies can mitigate only parts of the spectrum of risks. The business sector must also be mindful and well-prepared to deal with new risks and challenges, going forward. Thank you. BIS central bankers’ speeches  3