samchain/econo-pairs-v1 huggingface dataset:
We can thus expect a decrease in ROE, but this only reflects the decreased risk premium associated with the decreased risk-taking. Similarly, the cost of debt decreases and this drop in the cost of funds perfectly offsets the effect of the greater use of the more expensive source of capital in the firm’s financing structure. The essence of the Modigliani-Miller theorem is that the cost of capital and thus the firm’s value are unaffected. Of course we do not live in a perfect world, and the Modigliani-Miller equivalence does not hold. Financing matters. The relevant literature typically puts forward a number of factors to justify the higher cost of equity financing: the fiscal advantage of debt, the cost associated with bankruptcy and the differential liquidity and issuing cost between debt and equity. These arguments apply to pure equity financing, not in the case of Cocos. As debt instruments, Cocos offer the fiscal advantage of other debt instruments. As hybrid instruments, they substitute for other hybrids that are already part of the financing structure of banks and that have proved relatively inexpensive for banks to issue. Finally, it is not clear that bankruptcy costs are relevant in the context of the TBTF problem where precisely those costs are never really incurred. For all these reasons, we may hypothesise that the total cost of bank financing will not materially increase as a result of higher capital requirements, in particular if the latter can take the form of Cocos.

4  BIS central bankers’ speeches    The total deposit base of the banking system increased by 23 percent to Le1.7 trillion as of November 2010.   Total private sector credit increased by 30.4 percent in 2010, lower than the 46.2 percent recorded for 2009, with non-performing loans declining, albeit slightly, to about 16 percent of total loans by November 2010.   Domestic interest rates remained generally stable, with the exception of interest rates on government securities, which rose due to increased borrowing by Government. This development, which is currently being addressed by the Bank of Sierra Leone and the Ministry of Finance and Economic Development could have a rippling effect on commercial banks’ lending rates. Your Excellency, distinguished ladies and gentlemen, in the early part of 2010, I summoned a series of meetings with board members and managing directors of all commercial banks to review various aspects of their operations, including profitability and corporate governance. The aims of these meetings were to ensure that all commercial banks were brought on board the central bank’s plan to reinvigorate the financial sector by creating stronger, more profitable and efficient institutions and to ensure that individual bank practices do not pose risks to the entire banking system as has been the case in other parts of the globe.
This proposal is an important step to encourage a strong corporate and market focus on how Islamic financial institutions are generating value, not just for shareholders, but for the communities which they are a part of. On-going collaboration and active engagement with the industry are currently being undertaken under this initiative to ensure proactive behaviours and sustained momentum towards the creation of a sustainable development. Another precondition for long term sustainable value creations is the availability of top-notch talent to drive and execute innovative business strategies that will realise the full potential of Islamic finance. Based on market assessments, a greater pool of quality professionals are required to sustain the growth of global Islamic finance that is estimated to surpass $ trillion total assets size by 2020. The challenge in meeting this demand however goes beyond the numbers. The next phase of growth and development of Islamic finance calls for a deep talent pool that not only has a strong foundation in the application of Islamic finance principles, but also the much broader set of competencies required to use those applications effectively to provide and implement solutions to real world problems. And such talent must be developed not only within Islamic financial institutions, but also the professional ancillary service providers that are part of the Islamic finance ecosystem. In Malaysia, there are close to 40 professional ancillary services entities under the MIFC Community which play an important role in the development of Islamic finance.

In the early 1980s, Governor Abdul Aziz Taha has laid down the foundations for the establishment of the first Islamic bank and the issuance of the first government sukuk. The dual financial system that we see in Malaysia today is the realisation of the vision framed by Governor Jaffar Hussein way back in 1990. From there on, we continued to advance on many fronts, including the establishment of the Shariah Advisory Council under the leadership of Governor Ahmad Don. Significant milestones were achieved with Governor Zeti at the helm of the Central Bank. During this period, Islamic finance morphed from a niche segment into the financial mainstream, and from a largely domestic-centric focus to one of  BIS central bankers’ speeches  1  global relevance. In particular, her immense contributions have enabled us to achieve much more to expand the frontiers of Islamic finance as a global community. I wanted to take the opportunity today to acknowledge their tremendous contributions. Moving forward, the Bank will continue to build upon these foundations in making advancement that will further strengthen Islamic finance’s growth trajectory. In the same way that past efforts have delivered solid growth in the industry and significantly enhanced Islamic finance potential for future growth, our present actions will largely determine the future prospects of Islamic finance. As was the case in the past, we will continue to require innovative solutions and collaborative strategies to take Islamic finance to the next level of development.
Now it is true that slightly over half of trade within non-Japan Asia is processing trade geared towards meeting import demand outside of the region, in particular in the developed economies. But this reliance on demand from the developed economies has been decreasing, and is likely to continue to decrease. Trade integration within the region is therefore likely to grow. Financial integration in the region shows a more mixed picture, and can be said to be high or low depending on what exactly is meant by financial integration, which is not at all clear. In terms of foreign direct investment, the degree of regional integration seems high if we look at the available figures on the sources and destinations of FDI within the region. The most striking examples are the various economies in the region as a source of FDI for China, and as destinations for FDI from Japan. But in terms of financial intermediation within the region - meaning the flow of savings into investments, other than FDI, through the banking, debt and equity channels - the degree of financial integration is not high at all. The very substantial, and growing, volume of domestic savings invested overseas goes mainly, on a gross basis, to the developed rather than the regional markets.

But, for the region as a whole, this kind of integration is less striking than the presence of banks from the developed markets. For example, the number of US and European banks in Hong Kong roughly equals that of banks from the region. Similar observations may be made about the equity markets. In declining order, we now come to monetary integration. There have, in fact, been some recent efforts at monetary co-operation. These began in 1995 with the collection of EMEAP bilateral swap facilities that provide US dollar liquidity secured against US Treasury securities. In 1997 the idea of an Asian Monetary Fund was aired, but it came to nothing. Then, in 1999, came the collection of ASEAN+3 bilateral swap arrangements under the Chiang Mai Initiative. These cannot be said to amount to efforts towards monetary integration. And, in fact, while ideas may have been thrown around from time to time, there has not really been any formal discussion among Asian authorities that I am aware of towards monetary union. Why is this the case? I think it is mainly because the obstacles to union appear to be so daunting, and that the special considerations that apply to the Asian case throw up so many difficult questions. These "special considerations" are big matters, and they can be conveniently divided into three broad categories: economic, technical and political. Let me give a brief outline. The economic issues concern the viability of an Asian monetary union.
In the UK, the real-time gross settlement system which came into operation in the spring of last year is being developed so that it will operate in euro. If the UK joins, the UK sterling system will effectively become a euro system. And, in case the UK is “out”, a parallel euro system is under construction to sit alongside the sterling system: it will enable the members of CHAPS to process euro payments as a foreign currency within the UK and across borders within the EU, through its link to the pan-European RTGS system -- TARGET -- which is being developed. The idea behind TARGET is to link together in euro the national RTGS systems of EU Member States so that large-value payments can be made or received between Member States throughout the EU area, with finality in real time, in exactly the same way as they can at present be made and received within Member States with national RTGS systems denominated in their own national currencies. One of the main purposes of TARGET is to support closer European economic and financial integration by reducing the risks in pan-European payments -- just as national RTGS systems reduce the risk in national payment systems. The other main purpose of TARGET is to integrate the euro money market so as to ensure that the same short term euro interest rate -- determined by the single monetary policy of the ECB -- prevails throughout the euro area. TARGET is a project which we strongly support.

Even in one market in one country, the introduction of major changes in securities settlement systems can lead to teething problems, both in the central IT infrastructure and for individual institutions as they learn how to apply the changes. Yet in the case of EMU, a number of Member States will switch to the euro more or less simultaneously at the start. That carries considerable risks of confusion and error, unless there is an extensive programme across Europe to explain the changes required in detail first. This is not of course, a particular problem for the UK. (ii) Market framework for the use of the euro BIS Review 106/1997  -5The second important aspect of preparation is the development of a comprehensive market framework for the use of the euro in London. The euro regulations help to provide the legal part of the framework as I understand you discussed yesterday. To make sure that the euro market in London, as elsewhere in Europe, is as deep and liquid as possible, we also need to harmonise market conventions on new issues of securities in the euro money and bond markets, and conventions in the foreign exchange markets. Market associations now agree on the basis on which conventions in these markets should be harmonised, and the Bank has encouraged their initiative. The problem has been to see how EU-wide decisions will be taken. Harmonised practices may develop spontaneously in the markets, but there is no guarantee of this.
the net borrowings, lie almost entirely with the US, the surpluses or the net lenders are identified with Japan, China, East Asia, the oil exporting economies, and other emerging markets including Latin America. And the third is the financing of the deficits, as well as the reinvestment of official reserves, which are now a major component of global capital lows. The key issues therefore are whether this process can go on? Is it a permanent or a temporary phenomenon? And what would be the implications for the global economy and financial markets. Today, I want to comment on these issues. Specifically, I will discuss the major forces underlying external surplus and reserves accumulation from an Asian perspective. Next, I will comment on policies that are needed globally to address this problem. To begin, reserves accumulation is essentially the mirror image of the evolution of the US external deficits. Two popular views explaining this phenomenon have been put forward. The first is the export-led development model, i.e. the new Bretton Woods, which sees reserves accumulation as a consequence of an attempt to maintain export-led development, especially in Asia. The second explanation is the global-saving glut hypothesis, of which the glut is driven by the transformation of emerging markets from net borrowers to net lenders in the international capital market. Both interpretations I think have merits, and reserves accumulation is probably a reflection of both.

But the point that really should be emphasized is that external surplus and reserves accumulation, for the most part, are a reflection of the dynamic of the adjustment in global investment and saving that has taken place since the Asian financial crisis. This dynamic has been instigated by the configuration of policies pursued by the major economies and by emerging markets, as well as by the development of financial institutions and markets around the world that has sped up and influenced the direction of global capital flows. But why the Asian financial crisis as a starting point? To me, the Asian financial crisis marks a number of important watersheds in the global financial relationship. BIS Review 134/2007  1  First, the crisis reaffirms the dominant roles of market and globalized capital. Second, the severity of the crisis led many emerging economies to rethink their policies of relying on external help for crisis prevention and resolution. And this has led to consideration to selfinsure against risk of crisis, with reserves accumulation becoming an important aspect of this consideration. And third, sharp adjustments in relative prices, especially real exchange rate and real interest rates after the crisis, brought into play the major forces that led to the adjustment in global investment and savings, as well as reserves accumulation. Today, I want to identify three factors as the major forces contributing to external surplus and reserves accumulation. The first is the process of global investment-savings adjustment that I have noted.
However, uninterrupted exchange of data among different users must be enabled, without jeopardizing the confidentiality principle. A good example in this respect is the EU Regulation on European Statistics as of March, 2009, where statistical confidentiality is treated in the following manner: “Transmission of confidential data between an ESS authority that collected the data and an ESCB member may take place provided that this transmission is necessary for the efficient development, production and dissemination of European statistics or for increasing the quality of European statistics, within the respective spheres of competence of the ESS and the ESCB, and that this necessity has been justified.” Of course this stresses even more the importance of procedures for safeguarding the data confidentiality. The need for higher scrutiny, higher quality, additional dimensions do not refer only to statistics which I have touched upon above. The global crisis stressed the need to “reshape” economic data as well, as it came under higher public scrutiny as well. It means they are watched and used actively by policy-makers, financial markets and general public. The example of the excessive deficit procedure mechanism and the European Commission Macro Imbalance procedure, used to detect and correct macroeconomic imbalances on the basis of a scoreboard of indicators “are adding pressure on statisticians to deliver high quality data” (Gonzales-Paramo, 2012). This highlights the need and the importance of having excellent cooperation between central banks and national statistical offices.

It is not possible to see the road ahead clearly and nor is it possible to know exactly what will happen if one puts one’s foot down on the accelerator pedal – only that the effect will come after a fairly long period of time. Why haven’t we cut the interest rate? Let me now return to the present situation and the question of whether it is reasonable to lower the interest rate in order to rapidly bring the present low inflation rate back in line with the target. The Executive Board’s reasoning at its most recent monetary policy meetings has been roughly as follows. Firstly, as I mentioned at the beginning, the Swedish economy has developed at an increasingly strong rate in recent years, and our analyses during the winter and spring have come to an assessment that this will continue. We have thus seen a rise in inflationary pressure at the end of the forecast horizon. If our assessment during this period had been that demand was declining, I believe the situation would have been different. Secondly, the present low inflation rate can be largely explained by what is known as positive supply shocks, such as increased competition, lower import prices and surprisingly rapid productivity growth. These factors benefit economic developments. To attempt to push up prices for domestic goods and services to counteract a decline in prices for imported goods is not necessarily a wise choice. Thirdly, monetary policy’s impact comes through influencing demand, primarily corporate investment and household consumption.
The world of work is being reshaped in many advanced economies by the secular fall in the degree of unionisation and collective bargaining, by changes in employment contracts and working patterns and by rises in the degree of concentration and automation in the company sector. By reducing workers’ “pay power”, they too have depressed wage growth, actually and prospectively. I will start by discussing recent pay developments and the factors responsible for driving them, cyclical and structural. I will then discuss the implications of these cyclical and structural factors for domestic cost growth, inflationary pressures and hence for monetary policy in the period ahead. Jobs and Pay  I do not need to tell this audience that the past decade has been a strikingly weak one for pay growth. Ten years ago, the mean weekly wage in the UK was around £ per week. A decade on, it has risen to £  2  All speeches are available online at www.bankofengland.co.uk/speeches  2  per week, an average annual rise of less than 2% in money terms. This makes it the weakest decade for growth in money wages for British workers since the 1930s. That is not the end of the story, of course. Over the same period, consumer prices in the UK have risen by, on average, 2.2% per year. That means inflation-adjusted, or real, pay has fallen by around 3.7% cumulatively over the past decade.

However, the estimated scale seems to be much exaggerated. One problematic issue is related to the  BIS Review 6/2007  1  fact that before the eurozone, we did not have examples of currency unions between developed countries. So the Rose study was based on data on currency unions involving poor and/ or small countries. As noted by Micco, Stein and Ordonez (2003), “one does not need to be a eurosceptic to wonder whether such findings are directly applicable to Europe’s single currency”. Follow-up studies (e.g. Rose and Wincoop (2001), Kenen (2002), Persson (2001)) attempted to correct the Rose estimates but arrived, rather inconclusively, at anything between a 50% and 150% growth of bilateral trade. Recently, the first studies based on euro area data emerged. These show that the trade creation effect of the euro was substantial, although (until now) by an order of magnitude smaller that the original Rose estimate (e.g. Micco, Stein and Ordonez (2003)). Our knowledge about trade creation effects of the euro is still far from complete and we will probably have to wait another 10+ years to have enough data to draw firm conclusions about its magnitude in the eurozone. Now let me move to the cost side. As already noted in contrast to the benefits, some costs have a contingent character. They are tail-events – rather unlikely but with a possibly high impact if they happen. Let me concentrate on two issues: -  asymmetric shocks,  -  arising micro- and macroeconomic imbalances.
Thanks to the low exposure of Polish financial institutions to the main infected markets and good economic conditions in Poland, the Polish financial system remained practically unaffected by the turbulences which unwound on the global financial markets. Nevertheless, some negative effects of those turbulences may yet materialize. In addition, two areas in Poland require a special watch of supervisory institutions: the property market and the equity market in view of the risk of an asset bubble developing on those markets. The development of asset bubbles on asset markets constitutes a potentially very dangerous phenomenon. As shown by experience of many countries, shrinking credit supply (credit crunch) materialized at commercial banks in the wake of a bubble burst was a strong shock for the whole economy. 1 In some cases it may lead to a long-term economic recession, like the one which Japan experienced in the 90s. Bearing in mind the severe macro- and microeconomic consequences of bubble burst, we should determine the appropriate reaction of public authorities, including the institutions responsible for the economic policies of a country and the supervisory authorities. However, the key questions are whether there should be a reaction, who should react and when. A number of arguments may be quoted for and against undertaking action by central banks during a boom phase of a bubble 2 . I enumerated them in my book on globalization 3 .

The closer a country’s trade relations were with Ukraine and Russia, the stronger are the direct adverse effects now on growth, of course. However, owing to global interconnectedness, the war is also throwing sand in the gears of countries with few trade links in the region. All of this slows the economy, also here in Switzerland. For the current year, we anticipate that Swiss GDP will grow by 2.5%. This is half a percentage point lower than we expected before the war broke out. Inflationary pressure has risen in Switzerland, too, albeit comparatively moderately thus far. Annual average inflation for 2021 was still at 0.6%; in March 2022 it stood at 2.4%. We define price stability as a situation in which inflation lies between 0% and 2% over the medium term. At our most recent monetary policy assessment in March, we decided to leave our policy rate unchanged at −0.75%, and to maintain our willingness to intervene in the foreign exchange market as necessary. However, we had already stressed in December that we would allow the Swiss franc to appreciate to a certain extent. So how do we put our current monetary policy in context? We intervene in the foreign exchange market when strong upward pressure on the Swiss franc would lead to persistently negative inflation and weigh heavily on the economy. However, we do not react mechanically to every instance of upward pressure.