samchain/econo-pairs-v1 huggingface dataset:
ISRA focuses on applied research in Shariah and Islamic finance, and provides the avenue for greater engagement between industry players and scholars. In addition, the tax neutrality treatment, has paved the way for the introduction of innovative products such as Ijarah Munthahiah Bithamleek (leasing ending with ownership) and Musharakah Mutanaqisah (diminishing partnership) in home financing, and currency option using the concept of Hamish Jiddiyah (security deposit) and Tawarruq (monetisation). Secondly , foreign Islamic subsidiaries have an important role in enhancing the international linkages of the Islamic finance industry regionally and internationally. Reinforced by a well developed legal, regulatory and Shariah framework and with three decades of experience, our Islamic financial system offers a unique platform as a meeting place between those that require funds and those with surplus funds. Malaysia has the full complement of the financial infrastructure, products and institutions. This is reinforced by the adoption of international regulatory best practices and liberal foreign exchange administration rules. This environment has encouraged the issuance of ringgit denominated sukuk by multilateral institutions and foreign multinational corporations in our market. It has also increased participation of investors in our Islamic financial markets. In a number of the sukuk issuances, the foreign subscribers (other than from Asian region) represent more than two thirds of total  2  BIS Review 146/2008  subscribers. Given the investment opportunities in the East Asian region, there are significant potential business activities, especially in the Asia-Pacific region.

To optimize the business potential, Islamic financial institutions need to develop their niche strengths and leverage on Malaysia's resources to extend the operations to both the regional and global market. As a foreign Islamic banking subsidiary, the potential to provide greater market access in the domestic economy and improve the overall financial inclusion is also important. This includes the offering of new financial products to the different domestic economic segments. Concluding remarks On this occasion of the official launch of HSBC Amanah Malaysia Berhad, let me take this opportunity to congratulate HSBC Bank Malaysia Berhad on the initiative to establish its own of the Islamic banking subsidiary and for its commitment to contribute to the success of Islamic finance. By allocating dedicated resources in the Islamic subsidiary in Malaysia, HSBC Bank will enhance its potential to contribute to the advancement of Islamic banking business going forward. I wish HSBC Amanah Malaysia Berhad every success in its endeavours. BIS Review 146/2008  3
If petroleum revenues were to be used as they accrue, this would lead to wide fluctuations in demand in the Norwegian economy and thereby amplify cyclical fluctuations. Third, the use of petroleum revenues will have an impact on competitiveness in Norwegian business and industry. A high level and wide fluctuations in the use of petroleum revenues will have a negative impact on the operating parameters for internationally exposed industries. The challenges associated with the emergence of the petroleum sector have contributed to the development of the four main pillars of Norway’s economic policy, which were established in the 1990s and in 2001. The pillars are: the oil fund mechanism, the fiscal rule, a floating exchange rate and inflation targeting. The Government Petroleum Fund was established in 1990 with a view to safeguarding long-term considerations in the use of petroleum revenues. The first allocation to the Fund was made in 1996, and the market value of the Government Pension Fund – Global, as the Fund is now called, had reached over NOK 1500 billion at the end of June this year. Under the oil fund mechanism, increased government petroleum revenues are invested abroad. This curbs the impact of oil price fluctuations on domestic demand and output - and on inflation and the krone exchange rate. A floating krone exchange rate also has a stabilising effect, and the exchange rate normally appreciates in favourable periods and depreciates during adverse periods. A flexible exchange rate can reduce fluctuations in employment and output.

The latest Banque de France survey shows that the capacity utilisation rate has reached a record high. This state of affairs makes the recommendation issued by the Council over the past four years more appropriate than ever: “Now is the time to invest”. •  lastly, actively seek improvements in productivity, which lie at the very heart of economic growth by embracing technical progress, the digital revolution, the new information and communication technologies, biotechnology and material sciences and by promoting a high level of research and development in the productive sector in France as well as Europe. This openness to technical progress and rapid productivity enhancement is one of the keys to maintaining low inflation and a long-lasting growth, which is vibrant, sustainable and creates jobs. *  *  *  This, Ladies and Gentlemen, is what I wished to say about monetary policy and the French and European economies as we stand on the verge of the year 2001. May I draw your attention to the press kit that will be handed out to you. It contains documents that should prove very useful to a sound understanding of the economic and monetary situation, in particular the charts on production bottlenecks and recruitment difficulties. I would also like to point out the one hundred questions-andanswers on the changeover to the euro. These should provide individuals, professionals and the specialised press with clear and accurate information on any questions that may arise regarding the challenging events that await us in the years 2001 and 2002.
At EU level, the forthcoming ESCB-CESR recommendations for central counterparties have already been revised to include specific guidance on their application to CCPs for OTC derivatives. It is now also crucial to achieve such a common understanding at the global level as well. In this respect, we look forward to the recently initiated joint efforts of the CPSS and IOSCO to review the CPSS-IOSCO recommendations for central counterparties issued in 2004. Finally, I wish to reiterate that the introduction of CCPs will not be a panacea for addressing all concerns regarding the resilience and efficiency of OTC derivatives markets. For instance, we will need complementary action to ensure better risk management and transparency as well for those products that are not yet sufficiently standardised to be eligible for central clearing. Furthermore, sound post-trading needs to be complemented by enhanced trading, pre-clearing and lifecycle management of OTC derivatives, e.g. via the greater use of automated trading and confirmation, portfolio compression, the registration of all trades in central data depositories, as well as enhanced risk management and disclosure requirements for the financial institutions involved in OTC derivatives trading. Towards more efficient and resilient retail infrastructures for the euro area Let me finally come to the third issue we need to focus on beyond the current turmoil: the vital role of retail infrastructures in terms of financial stability. The retail business facilitates the bulk of payments related to the day-to-day lives and financial activities of both individuals and companies.

It's hard now to imagine that we had no formal banking supervision at all in this country until about twenty years ago. But for the most part such regulation today does not tell us what we can and cannot do, rather it sets the criteria that we must meet, and the behavioural standards we are expected to observe, in doing whatever it is that we choose to do. It leaves much more room for both consumer and producer choice, including producers from overseas, and much more room, and more incentive, therefore for competition and innovation. And, in that less prescriptive, more permissive, environment, the new technologies have brought about massive changes in traded instruments, in the way in which markets operate and are organised and in payments, settlements and delivery arrangements and so on, which, while not without occasional problems, have overwhelmingly on balance brought massive benefits in terms of market efficiency. In reflecting on this whole process in the UK, there are a number of characteristics of the general approach that I think have been important. The first relates to the extent to which it was market-driven. No attempt was made as far as I am aware - certainly not by the Bank - to tell market players what they should do individually or in organising themselves collectively.
For each (approximate) decade for which the data on 80 sub-components of the retail prices index are available, the chart shows the relationship between the standard deviation of those relative prices and the inflation rate in each month. At low inflation rates, say up to 4% a year, it appears that it is the absolute value of changes in relative prices that is linked to the inflation rate. This would be the case, as in Britain recently, where changes in relative prices, whether up or down, were largely responsible for short-term fluctuations in the inflation rate around a relatively stable long run level. Variability in relative prices might lead inflation to be either above or below the inflation target, but not systematically in one direction or the other. Increases in house prices move the inflation rate up and falls in oil prices move it down. In both cases, an increase in the variability of relative prices leads to movements of inflation away from the target, but not in a systematic direction. But at higher rates of inflation (or deflation) the deviation of inflation from zero is positively correlated with the variability of relative prices. Hence, outside a range close to price stability, the higher the inflation rate, the greater is the variability of relative prices.

Table 2 Short and long interest rates in the UK Short rate  Long rate  Mean  St. dev  Mean  St. dev  1950-1959  2.87  1.67  4.40  0.88  1960-1969  5.51  1.31  6.58  1.07  1970-1979  8.92  2.81  11.94  2.41  1980-1992  11.28  2.23  10.83  1.88  1993-2002  5.58  0.88  6.38  1.59  1950-2002  7.09  3.59  8.19  3.32  Note: Short rates are three-month treasury bill yields. Long rates are 20-year gilt yields. Data are monthly, and use the rate at the close of the last business day of the month. Data up to September 2002. Source: Global Financial Data, Inc.; Bank of England calculations. BIS Review 68/2002  3  Chart 2 Total inflation premium expected in ten years time, UK 1997  Note: The total inflation premium is measured as the difference between implied forward nominal rates on conventional gilts ten years hence and implied real rates on index-linked gilts ten years hence. Source: Bank of England. So price stability appears to have led to a more stable macro economic environment, with fewer surprises to inflation, less inflation uncertainty, and a lower level of real interest rates. Has this improved nominal performance led to greater stability of the real economy? Table 3 shows that since 1992, output has grown at a little above its forty year average, and has been much more stable than before.
The respective shares of debt and equity on a firm’s balance sheet don’t matter for anything. What economists have done since is to understand how certain market imperfections – particular departures from MM (as it’s often called) – affect this choice. Some focus on the difficulty in monitoring managers who might have different incentives from the owners of a company. Managers might be tempted to do all sorts of things (spending more on nice offices, building empires) that aren’t in owners’ best interests. Higher debt levels can provide something of a discipline in this respect. They limit managers’ room for manoeuvre. Debt instruments often come with explicit restrictions – so-called “covenants” – on what can be done with the money. They can also deliver control rights to creditors – a say in the decisions of the firm – in the event that something goes wrong. On the other hand, too much debt might itself distort managers’ incentives. For example, excessive leverage can encourage managers to pursue high-risk projects that benefit everybody when they go well but whose costs are borne disproportionately by the debt holders if they go wrong. As I say, there is a huge area in economics and I’m not really going to go into it here. The one point I want to make is that, while these theories have been reasonably successful in explaining the cross-sectional variation in leverage – which types of firms issue debt and which use more equity – they have a harder time accounting for changes over time.

With this in mind, the Basel Committee has established a Working Group to review the Committee’s existing guidance on corporate governance for banks. This guidance was issued in 1999, and while the principles contained in it remain relevant, the Committee believes that this is an opportune time to review them. First, the OECD last year issued revised principles on corporate governance. Since the Committee’s 1999 guidance drew upon the original OECD principles, we felt that it would be appropriate to consider their revised principles as well from our prudential perspective. Second, in light of the recent high-profile corporate governance breakdowns that I highlighted at the beginning of my remarks, we felt that it was important to consider whether there were any lessons to be learned that would apply specifically to our guidance for banks. Finally, the Committee has asked the Working Group to consider whether it would be appropriate to develop guidance on what I call “know your structure” elements. While it is too soon to report on the Working Group’s findings, they are expected to make recommendations to the Basel Committee this summer. We hope to issue a draft of revised guidance on corporate governance for public consultation in late summer or early fall. The IFSB has already expressed an interest in this work, and I certainly encourage everyone here to review the draft guidance when it is released and to send us your comments.
I will say more on the causes of deflationary forces a bit later, but this analysis partly explains why the Bank of England has also been engaged on special operations to support the liquidity, funding and capital positions of the banks through,  8  See for example, FR Glahe, (1977) “Macroeconomics Theory and Policy”, 2nd edition, publ: Harcourt Brace Jovanovich. 9  The definition of M4 can be found here: http://www.bankofengland.co.uk/statistics/Pages/iadb/notesiadb/ m4.aspx  4  BIS central bankers’ speeches  respectively, the Special Liquidity Scheme, the Funding for Lending Scheme and the capital recommendations by the FPC. What of our ability to influence credit markets directly? I want to argue that it largely reflects how we go about changing the supply of money. On the one hand, to increase the quantity of money in scale, quickly and safely, it is quite clear that gilts are the best instrument to buy: there is a large market and there is no resultant private sector credit risk taken by the public sector. Many financial instruments tend to be priced by reference to the interest rates on sovereign debt and so changing gilt yields will have effects across sterling markets. In addition to buying gilts to inject money, we can consider two other ways to affect credit markets. First we can buy financial instruments outright. If particular markets have become dysfunctional so that general monetary expansion doesn’t help, relatively small amounts of direct purchases may unblock the relevant markets.

Our monetary policy objective is set in the annual Inflation Target Remit given to us in a letter from the Chancellor.6 The Remit requires the Monetary Policy Committee to target a 2% inflation rate in the Consumer Price Index, but it is also made clear that we should avoid “undesirable volatility in output” which might arise from “external events or temporary difficulties” beyond the control of the monetary framework. In order to steer inflation towards the 2% target, in effect we can control either the price or the supply of narrow money. Prior to 2009, we would set Bank Rate and then adjust the supply of commercial bank reserves to guide overnight interest rates towards it. To do this the Bank would conduct Open Market Operations (OMOs) in which we lend to, or borrow from, the commercial banks so as to increase or decrease the level of reserve balances in aggregate, in line with the banks’ stated targets. We would adjust those operations precisely to ensure that short-term market rates are driven towards the rate we pay on those reserve balances – which is Bank Rate. Since we also charge Bank Rate in our routine OMOs, Bank Rate is essentially the anchoring price of short term money.
Speedy and efficient liquidation of insolvent companies is crucial for the economy’s overall ability to restructure, innovate and grow. This is closely related to creditor protection. Creditors enjoy high standing in Norwegian legislation. High creditor protection makes it relatively easy for creditors to demand liquidation when the conditions are met. As long as the legal system and administrators in bankruptcy function as intended, the creditors may realise their claims on the estate and resources are freed up for society. It is essential that resources – labour, skills and capital – that are tied up in an unprofitable business are freed up for new activities. This also provides adequate, if painful, adjustment in a crisis. The downturn is shortened, and the economy gets back on its feet faster. Household debt is harder to restructure. Norwegian households can settle debt by liquidating their assets, but this usually only takes place after the borrower dies.4 Before that, the rule is that debt follows you to your grave. Norway has a Debt Settlement Act. Very few would voluntarily petition to enter into a debt settlement arrangement. While some of the debt may be forgiven, such an arrangement involves garnishment of wages, down to the minimum for necessities. Many of those who enter into such an arrangement in Norway struggle with debts incurred while self-employed. Recent years have seen a sharp rise in consumer debt. Defaulting on this sort of debt is much more common than defaulting on a residential mortgage. Default does not mean that lenders forfeit their money.

Credit can be used to finance education, a car and a place to live while we are young and enables us to enjoy the benefits while earning money to pay for them. Over the past century, a modern financial system has evolved that provides ample access to credit. A welldeveloped credit market is an important part of a well-functioning economy. There is another side of the coin: Once we have incurred a debt, it remains with us. The debt must be repaid – with interest. We might say that while credit is an unvarnished good, debt is a necessary evil. Paying for bread already eaten can be tough. When we borrow money, we draw up a repayment plan with the bank. Implicit in this plan are a number of expectations – regarding our future earnings, net worth and interest rates. If these expectations pan out, the plan succeeds. We arrive at the desired outcome. And many times, the future turns out even better than expected. In recent decades, house prices have risen and with them our wealth. Income growth in Norway has been high and has benefited nearly everyone. At the same time, interest rates have fallen to historically low levels. This has made a high debt burden easier to bear. In forming our expectations, we often look in the rear-view mirror. As anyone knows who has driven a car, mirrors are important. But if you only look back in the mirror, you will land in the ditch.
There was thus no scope for stabilising monetary and fiscal policies. Since then the pendulum has swung back a little with the neo-Keynesianism, which has reintroduced some of the elements of the classical Keynesian analysis. Due to different reasons it can take time before the economy returns to its long run equilibrium after a shock. Monopolistic competition and sticky wages are a few examples. The participants’ expectations can play a major role according to these theories. Monetary and fiscal policy can therefore be used to stabilise the economy. Macroeconomic analysis is often carried out with the aid of general equilibrium models (DSGE models, Dynamic Stochastic General Equilibrium). 5 The Riksbank, like a number of other central banks, uses one of these models for forecasts and simulations. The Riksbank’s model is called Ramses (Riksbank’s aggregate macromodel for studies of the economy in Sweden). In Ramses, goods and labour markets are assumed to be in monopolistic competition and wages and prices are sticky. However, the Ramses model analysis is only part of the forecasting process, which is also based on other statistical analyses and of course assessments. In the short term, that is to say the current quarter and one quarter ahead – what is usually called “now-casting” – we use different statistical models and indicators to make an assessment of the current situation. This analysis strives for the best possible accuracy in the forecasts and is often only vaguely anchored in economic theory.

To begin with, companies adapt to the change in demand by adjusting production using their existing resources. For instance, they cut down on overtime and stand-ins rather than making staff redundant. At the same time, they invest less. Productivity falls and unit labour costs rise, as wages are sticky in the short term. In the end companies have to adjust their costs to the lower demand and after a few quarters employment begins to fall. Now consumption is also beginning to be affected; the leaner times are making people hold more firmly onto their money. When unemployment rises, wage demands are subdued, which slows down the increase in unit labour costs. This in turn leads to companies’ profit margins gradually increasing. When the effects of the negative shock that caused the downturn fade away, growth gradually returns to the normal trend level. Companies respond to the rising demand by increasing production and investment, which in turn leads to unemployment falling and to consumption accelerating again. However, I would like to repeat that an economic cycle does not always follow this average example. It is often the case that one of the components does not show its usual pattern and sometimes the economy “settles” for an unusually long time in one phase of the cycle. A few years ago, for instance, there was much talk of “jobless growth” when employment failed to accelerate despite a high growth rate. In addition, the length of an economic cycle varies considerably.