samchain/econo-pairs-v1 huggingface dataset:
Zeti Akhtar Aziz: Finance and the real economy – fostering sustainability Speech by Dr Zeti Akhtar Aziz, Governor of the Central Bank of Malaysia, at the Islamic Development Bank (IDB) Regional Lecture Series on Islamic economics, finance and banking: “Finance and the real economy – fostering sustainability”, Jakarta, 19 December 2012. *  *  *  I am most honoured to be invited to deliver this inaugural lecture of the Islamic Development Bank Regional Lecture Series. I am also most delighted to be back here in Jakarta. I would like to thank the Islamic Development Bank for the invitation, and Bank Indonesia for kindly hosting this event. For more than three decades now, the Islamic Development Bank has had an important role in promoting economic growth and development in so many parts of the world, and associated with this, has been its role in fostering the development of Islamic finance. It has supported the building of key international financial infrastructure that has been important for the orderly global development of Islamic finance and for safeguarding financial stability. The Islamic Development Bank has also supported research and education efforts in this area, while its strategic interests in financial institutions in different jurisdictions have been an important catalyst for their establishment and expansion.

Given this, it does not appear entirely unnatural for fiscal policy to support monetary policy in exceptional circumstances with regard to maintaining confidence in the inflation target – and thereby ensuring that the central bank's policy rate can continue to be an effective tool in the future. Conditioning of monetary policy a possible route? An area that we as central bank have control over, and where we could possibly become more effective, is our communication of future monetary policy. Although we have been publishing a forecast for the repo rate for many years now,  10 For a more detailed discussion of the Riksbank’s monetary policy toolbox, see Ingves (2020). 11 Moreover, ideas have recently been put forward with regard to fiscal policy being a more effective stabilisation  policy tool than monetary policy in some situations, in that fiscal policy measures can more directly target individual sectors of the economy where the problems are greatest, see Woodford (2020). 12 See, for example, Sims (2016). This idea has also been put forward earlier in the Swedish debate, see Borg (2003). 7 [15]  we have to acknowledge that our forecasts during the past decade have systematically overestimated how quickly the interest rate can be raised. We have not been alone in this overestimation – the market forecasts have looked fairly similar (Figure 6). They were better than the Riksbank's during the period 2011-2013, but the pattern is essentially the same – substantial overestimates and inaccurate forecasts.
As a result, the ECB recently lowered policy rates to the ZLB, has started undertaking additional unconventional monetary policies, and is now encouraging fiscal expansion among eurozone countries that are able to do so. These lessons from monetary history strongly suggest that there are great risks to premature liftoff from the zero lower bound or near-ZLB conditions. Unless economic conditions are fundamentally strong and the previous impediments to growth have receded sufficiently, the odds remain high that monetary authorities will need to retreat right back into the ZLB. And the costs of being mired in the zero lower bound are simply very large. I have already talked about how the ZLB prevents using our very best policy tools to address negative shocks. The constraint also means that interest rates cannot fall low enough to equate the supply of saving with the demand for investment. This, of course, significantly impedes capital formation, future economic growth, and further employment expansion. Furthermore, the ZLB often comes hand in hand with undesirably low inflation or even a falling price level, carrying with it the associated costs of debt deflation on the real economy. The risk of too-high inflation What about the other risk to our policy goals that I mentioned – the risk that the U.S. economy could face pricing pressures that accelerate rapidly and ultimately leave inflation far above our 2 percent target for an unacceptably long period?

At some point when the economy has clearly overcome the remaining impediments from the largest economic and financial downturn since the Great Depression, the odds of inflation rising noticeably above target could become palpable. But such a breakout is just not at all very likely today. Indeed, many Fed critics have been voicing this concern since 2009, and it hasn’t even come close to happening. What if inflation just ran moderately above target for some time? Well, I see the costs of this outcome as clearly being much smaller than the costs of falling back into the ZLB. First, I believe the U.S. economy could weather the modest increases in interest rates that would be needed to keep inflation in check. Such rate increases would be manageable for the real economy; this is particularly true if industry and labor markets have already made the most difficult reallocations of jobs and overcome other factors so that productive resources are more efficiently and fully employed. Second, as I’ve noted many times in the past, a symmetric inflation target means we should be averaging 2 percent inflation over time. We’ve averaged well under that 2 percent mark for the past six and a half years. With a symmetric inflation target, one could imagine moderately-above-target inflation for a limited period of time as simply the flip side of our recent inflation experience – and hardly an event that would impose great costs on the economy. The murky state of inflation expectations is another factor that enters my risk management considerations.
Low for long makes demand management of the economy more difficult in downturns, reducing the space for monetary policy easing with conventional tools. This is because, for a given inflation target and with the reduction in long-run real rates, policy rates are closer to their effective lower bound. Changes in the structure of the financial system as a result of low for long may also weaken the transmission mechanism. Monetary policy, to be clear, is not powerless at the effective lower bound. As post crisis experience has demonstrated, ‘unconventional’ monetary policy tools can and have provided stimulus when interest rates are at or near the effective lower bound. These are now very much a part of central bank toolkits.24  22 For example, the share of corporate debt owed by UK companies with a ratio of net debt to EBITDA  greater than four was 35% in 2018, compared to 28% in 2007. 23 See Bank of England (2019), Chart F.6. 24 See, for example, a recent BIS paper that conducts a cross-country analysis of unconventional monetary policy tools. Potter, Smets et al (2019).

The regulator as well as the external auditor starts their examinations and audits with the financial reporting aspects of companies. The external auditor is basically looking at the financial performance of the company and its compliance with the laws, observance of auditing and accounting standards and rules and regulations set out by the regulator. They also look into aspects such as health of the balance sheet, status of the profit & loss account and the ability of the company to operate as a going concern. The regulator, on the other hand, has to make sure that not only companies adhere to provisions in the governing laws and comply with rules and regulations but also ensure that finance and leasing companies have put in place necessary processes and procedures to mitigate risks, be it credit, liquidity, market or systemic. The regulator makes recommendations to initiate action, if such risk mitigation methods are not considered adequate. The regulator is conscious of not only the viability of the company to operate as a going concern, but also its ability to pay its liabilities to creditors and depositors. Sometimes, there is an over-lapping of the two roles of the regulator and external auditor, but with closer dialogue, coordination and cooperation, the duplication of work can be avoided. The regulator should have quarterly/monthly dialogue with the companies and external auditors which is a healthy practice than working on an isolated basis.
[2] Given the economic and social hardship associated with this year’s reduction, such a drop is hardly feasible by simply reducing economic activity. The pandemic is therefore a stark reminder that preventing climate change from inflicting permanent harm on the global economy requires a fundamental structural change to our economy, inducing systematic changes in the way energy is generated and consumed. With brutal clarity, the current crisis has exposed two major risks to the global economy: first, the farreaching damages imposed on our society by a lack of prevention and early action, fostered by disbelief in science, in the face of a global shock that threatens not only the economy but our lives. And, second, the repercussions of a failure to act collectively in a globalised world where inaction in one part of the globe can lead to highly disruptive and long-lasting spillover effects in other parts, hitting the poorest and most vulnerable in our societies most severely. In this sense, the pandemic has been a warning shot with regard to the much greater challenge arising from climate change. In his famous speech, Mark Carney, then Governor of the Bank of England, has argued that “the catastrophic impacts of climate change will be felt beyond the traditional horizons of most actors – imposing a cost on future generations that the current generation has no direct incentive to fix”.

There seems to be a negative relationship between the outstanding volume of green bonds and their spread over non-green peers (see figure 6). Figure 6 Green bond outstanding volume in % of size of direct curve peers (x-axis) vs. premium (y-axis)  Source: Commerzbank Research. Hence, green bonds tend to be priced at a premium over conventional bonds, in part reflecting poorer liquidity conditions. For example, the daily trading turnover of French conventional government bonds remains notably higher than that of their green counterparts (see figure 7). Figure 7 Average daily bond turnover for selected French bonds(5-day moving average)  Source: Commerzbank Research. The current crisis could give an unparalleled boost to the green financial market and thereby help reduce the costs of transitioning towards a low-carbon economy. We have already seen firms and governments employ more diverse and creative funding strategies in recent weeks. Many euro area governments have started, or are planning, to issue green bonds for the first time. This is undoubtedly good news. But current market forces will not be sufficient to mobilise the funds required to finance the transition towards a more sustainable economy. Further policy actions are urgently needed, primarily on two fronts. First, the costs of the crisis are mainly debt-financed. But growing empirical evidence suggests that stock markets are more effective than bond markets in financing the greening of our economy, given the high capital intensity, high risks and long-term horizon of most projects.
However, the micro effects of volatility, particularly of unwarranted or unexpected volatility, may actually impair the smooth functioning of financial markets, through different channels. For instance: the asset pricing process and the determination of equilibrium prices is being complicated; transaction costs and collateralisation costs increase; the fragility of financial intermediaries’ balance sheets increases; the unequal ability of market participants to tackle volatility movements can increase polarisation among participants, and develop risks of an uneven playing field. Ultimately, these effects may unduly raise the costs and bias the allocation of capital, a source of concern from a financial stability point of view. Such a higher volatility may have a globally negative impact on market efficiency. Indeed, higher volatility may lead to excessive risk aversion among investors and finally to a misallocation of capital, at both the global and sectorial levels. It may also lead to some lack of discrimination between different debtors which can be especially detrimental to growth in countries who need capital most. 1.2. Several factors are at play when financial asset prices experience more amplified and volatile moves. The first set of factors relate to the behaviour of market participants: Some market participants have become more inclined to engage in "short-termism", that is, they might be too much concerned with their short-term results, exhibiting market “myopia”. This trend might result, in particular, from growing pressure of investors to yield immediate financial results that are not necessarily sustainable, the so-called “tyranny of return on equity”.

But much of my talk will focus on the unique complications associated with negative nominal interest rates and the extent to which these complications constrain how low the rates can be set. After outlining these challenges, I’ll suggest that the zero lower bound on policy interest rates is much like the low tide mark on a beach: Standing at that border between the land and the ocean, you can continue to lower your elevation by walking into the water, but with each additional step, you will need to push against the increasing resistance of the water. There is a distinct qualitative difference between positive and negative nominal interest rates, just as there is a distinct qualitative difference between the beach and the ocean. The zero lower bound is marked by this same qualitative difference: zero is a rate below which a central bank encounters the distinctive and increasing costs of a negative nominal rate, relative to a nonnegative rate of interest. Purpose In September 2014, the ECB lowered its deposit rate to its current level of negative 0.2 percent. More recently, in late 2014 and early 2015, the SNB, DNB, and Riksbank reduced their policy rates to levels below zero, with the SNB and DNB setting their rates at negative 0.75 percent. 1 These central banks established their negative rates for various reasons. Both the SNB and DNB established negative policy rates primarily to deter capital inflows and reduce the appreciation pressure on their currencies.
Rest assured that the ECB Governing Council is fully committed to rein in inflation, and to ensure that it returns towards 2% by end 2024 or end 2025. II. Paris' momentum as financial centre Amidst this geopolitical and economic uncertainty, and despite the recent turmoil in the United States and in Switzerland, financial stability has been preserved in Europe. EU banks are robust, with substantial capital and liquidity buffers: they are in their overwhelming majority subject to stringent Basel requirements – which makes a big difference with the many mid-sized US banks. We have in the euro area no "Sorgenkind" or "problem child", such as Crédit Suisse; and since 2014 we have had a single and strong supervisor thanks to Banking Union. As President of the French prudential authority (the ACPR), I can in particular attest to how solid and diversified French banks are nowadays. Four of them are categorised as global systemically important banks (G-SIBS), and they act as catalysts for Paris as a financial centre. Indeed, Paris stands out as unique in the network of European financial centres: it is the only one to offer such a wide range of financial activities, from global asset management to insurance and banking, and it has further reinforced its position since Brexit.

Hamad Al-Sayari: A brief overview of the Saudi Arabian banking sector Speech by His Excellency Hamad Al-Sayari, Governor of the Saudi Arabian Monetary Agency, at the opening of a branch of the National Bank of Kuwait, Jeddah, 6 May 2006. *  *  *  Dear Audience, It gives me great pleasure to be here tonight to inaugurate the branch of the National Bank of Kuwait (NBK) in Jeddah, a city which has long been known for embracing the business sector due to its closeness to the sacred places and its unique location on the Red Sea. The commencement of NBK of its banking operations in the Kingdom of Saudi Arabia marks further consolidation of cordial relations between the two brotherly countries (Saudi Arabia and Kuwait). This is one of the fruits of mutual Gulf work which the leaderships of the two countries are keen to enhance. Dear Brothers, The inauguration of NBK branch comes at a time when the Kingdom is witnessing robust economic performance. In 2005, the Saudi economy grew in real terms by 6.5 percent; the private sector registered a real growth of 6.6 percent. What is reassuring is that the private sector has become the main impetus of the Saudi economy. Its average growth rate for the past years stood at 5.3 percent.
3/11  BIS - Central bankers' speeches  It eliminates settlement risk, duplicative reconciliation, and the need for large prefunding accounts. It has benefits not only for retail payments but also cross-currency and securities transactions. One of the most promising ways to achieve atomic settlement is through tokenised assets which can be exchanged simultaneously on a distributed ledger. This is what MAS has been experimenting with since 2016 through Project Ubin. Project Ubin demonstrated three things: banks paying one another without going through MAS; decentralised netting of payments while preserving transactional privacy; and final settlement and delivery-vs-payment by tokenising digital currencies and securities assets so that they could be simultaneously exchanged. The success of Project Ubin paved the way for further collaborations and progress. Partior – a joint venture among DBS Bank, JP Morgan, and Temasek – has used a blockchain based multi-currency clearing and settlement platform to reduce the settlement time for Singapore dollar and US dollar transactions from days to minutes. Project Dunbar – a partnership among the BIS Innovation Hub, Reserve Bank of Australia, Bank Negara Malaysia, South Africa Reserve Bank, and MAS – has built open-source distributed ledger platforms for international settlements using wholesale central bank digital currencies, or CBDCs. MAS will be launching Project Ubin+, a global initiative on the cross-border exchange and settlement of foreign currency transactions using wholesale CBDCs. It will focus on three areas: One, study business models and governance structures where settlement can be performed atomically, to improve efficiencies and reduce risks.

See Cassis, Y, tr. Collier, J (2006), ‘Capitals of Capital: A History of International Financial Centres 1780–2005’. See also Pogliani, P, von Goetz, P and Woolridge, P (2022), ‘The outsize role of cross-border financial centres’, BIS Quarterly Review, June 2002, pages 1–15. 13. See industry survey responses summarized in The Global Financial Centres Index 30, September 2021 14. IMF Country Report No. 22/105, April 2022 15. House of Commons Library, ‘Bank rescues of 2007-09: outcomes and cost’, October 2018 16. Institute for Fiscal Studies, ‘10 years on – have we recovered from the financial crisis?’, September 2018 17. Regulatory Initiatives Grid 18. Prudential and Resolution Policy Index
This means that consumption will not increase as much and that an expansionary fiscal policy will have little or no effect (see for example Barro and Redlick, 2011). 7  IMF, World Economic Outlook, October 2010. 8  BIS central bankers’ speeches  economy recovered relatively quickly following the crisis of the 1990s. However, Michael Bergman of Copenhagen University has shown that budget consolidation in Sweden between 1994 and 1997 actually had a negative impact on GDP and consumption and also led to an increase in unemployment.8 Given this it is reasonable to expect that cuts in the euro area and the United States will lead to reduced demand on export markets that are important to Sweden, and to lower resource utilisation. Risk of an impact on the exchange rate The fact that countries with weak public finances may be forced to implement fiscal tightening in what appears to be a weak economic climate has consequences for monetary policy. We can expect more central banks abroad to conduct an expansionary monetary policy in order to counteract the dampening effect of fiscal tightening on demand. However, as policy rates in many countries are already close to zero there is limited scope for further policy-rate cuts. Many central banks are instead expected to leave their policy rates unchanged for some time to come.

Research indicates that a fall on the stock market affects household confidence relatively quickly, that is already after two to four weeks.5 The indicator of Swedish consumer confidence in the economy published by the National Institute for Economic Research tends to fall when the Stockholm stock exchange falls (see Figure 6). There may therefore be good reasons for believing that the recent falls on the stock markets of the world are one of the reasons why the Swedish households have become more cautious and are expected to increasing their saving. Financial turbulence has also led the companies to lower their expectations regarding the period ahead and to begin to postpone investments. All in all this has a dampening effect on economic activity in Sweden. High sovereign debts abroad affect Sweden As we have noted, the level of debt is high in the euro area and the United States. Following many years of budget deficit, what were in many cases already weak public finances were further undermined in connection with the financial crisis of 2008–2009. In 2009, the average budget deficit in the euro area amounted to 6.4 per cent of GDP. This figure fell to 6 per cent  5  See for example Jansen and Nahuis, 2003; Kremer and Westerman, 2004; and Beckmann, Belke and Kuhl, 2011. BIS central bankers’ speeches  7  in 2010 and is expected to be 4.4 per cent in 2011.