samchain/econo-pairs-v1 huggingface dataset:
5 Yet more sources of potential funding pressure have emerged from greater activity in capital markets, such as the pipeline risk that arises from being unable to offload leveraged loans and warehouses of loans awaiting securitisation when unfavourable market conditions prevail. And banks are also subject to the risk of exposures previously passed on to third parties flowing back to them, for example when sub-prime residential mortgage-backed securities are “put back” to the originator should they be found to breach certain credit criteria. Finally, banks are also exposed to the risks of a decline in asset market liquidity and falls in market prices through the potential for higher collateral or margin requirements. These may substantially raise the level of funding a bank requires on a day-today basis. 5  Institute for International Finance: “Principles of Liquidity Risk Management” March 2007. BIS Review 50/2008  5  As emphasised in a recent report by the Senior Supervisors Group, 6 banks need to develop a comprehensive approach to the management of liquidity risk to ensure that it is in line with the bank’s overall risk appetite. One strong recommendation in the report is that financial organisations develop and apply a systematic policy of internal charging for liquidity risk. In particular, banks need to ensure that risk decisions made by front office traders price appropriately the liquidity risk generated by new products and business lines, rather than treating it as a “free good” or overhead to be managed centrally by the treasury function.

Our experience is that changes in the Norwegian interest rate level only have a predictable effect on the krone exchange rate when the change in interest rates also contributes to stabilising inflation. However, the relationship between interest rates and price and cost developments is uncertain. The setting of interest rates thus requires the use of professional judgement and discretion. The basis for exercising discretion is subject to limitations, however. Should any doubt arise as to whether the interest rate is oriented towards nominal stability, this would trigger substantial capital movements. House prices and real interest rate after tax Index 160  140  Per cent  8 Real house price (left-hand scale)  4  120  0  100  -4  Real interest rate (right-hand scale)  80  -8 1980  1984  1988  1992  1996  2000  An inappropriate setting of interest rates could easily jeopardise financial stability in the domestic economy. The experience of Norway and other countries shows that credit and property markets can be very unstable. If interest rates are kept at too low a level for too long, credit demand will rise  BIS Review 14/2001  3  sharply, as we witnessed in the 1980s. At that time, rising property prices generated expectations of further price increases, which in turn led to rising credit demand. When the bubble burst, recession ensued with falling asset values, a debt crisis and a growing number of bankruptcies.
Depending on the precise timing of the steps that will occur in the exit sequence, there will likely be opportunities to do so. For example, there is a good chance that the Desk will still be selling MBS at the time when the SOMA portfolio gets back to its normal size. 11 In such circumstances, the Federal Reserve would have to then engage in sizable Treasury purchases to offset the ongoing sales of MBS and to expand the SOMA portfolio as needed to meet currency demand and other factors. This period of Treasury purchases would allow the FOMC to rebuild its Treasury portfolio with the maturity structure that it sees as optimal. 9  This view was expressed by Chairman Bernanke in the press conference following the April 2011 FOMC meeting. 10  Of course, the minutes also noted that the path of sales could also be adjusted up or down in response to material changes in the economic outlook or financial conditions. 11  In this scenario, the Treasury portfolio, through redemptions of maturing assets, would have fallen below the levels that will be required once the SOMA portfolio has been fully normalized. This outcome would be intended to get the overall size of the balance sheet down more quickly, with a view that Treasury redemptions are an effective tool for doing so relative to more rapid sales of MBS.

6  BIS central bankers’ speeches
5  See Finn E. Kydland and Edward C. Prescott (1977): “Rules Rather than Discretion: The Inconsistency of Optimal Plans”, Journal of Political Economy, 85, no. 3, pp. 473–491. 6  See Arne Kloster and Kristin Solberg-Johansen (2006): “Forecasting in Norges Bank”, Economic Bulletin, 3/2006, Jarle Bergo “Interest rate projections in theory and practice” (speech at the Foreign Exchange Seminar of Norwegian Economists on 26 January 2007) and Svein Gjedrem “Inflation targeting – some theory with main focus on practice” (speech at the Centre of Monetary Economics/Norwegian School of Management on 8 June 2004. 7  In Alan Greenspan’s opening remarks to the Jackson Hole symposium in 2003, available at: http://www.bis.org/review/r030905a.pdf. 8  See for example William F. Sharpe (1964): “Capital Asset Prices: A Theory of Market Equilibrium under Conditions of Risk”, Journal of Finance, vol. XIX, no. 3 and Harry M. Markowitz (1952): “Portfolio selection”, Journal of Finance, vol. XII, no. 1. 2  BIS Review 147/2010  “One of our major banks, now mainly in public ownership, reputedly had 4000 risk managers. But the difficulty was seeing the risk to the system as a whole rather than to any specific financial instrument or loan (...) They frequently lost sight of the bigger picture.” 9 In setting the key policy rate, too, we often face more fundamental uncertainty, where it is very difficult to calculate probabilities for possible scenarios. 10 In decision situations like these, it may be appropriate to establish routines that can guard against especially severe consequences.

History has shown that the countries that devalued in 1931 weathered the depression better than those which did not. 12 Following the British lead was a decision that produced a good outcome. In 1949 there was a new sterling devaluation, this time 30 per cent against the US dollar. As in 1931, the Norwegian government announced that the value of the krone would be lowered correspondingly 13 . But unlike at that time, the level of activity in Norway was now high, and  9  The letter from the British Academy to the Queen is available at: http://media.ft.com/cms/3e3b6ca8-7a08-11de-b86f-00144feabdc0.pdf. 10  See Frank H. Knight (1921): Risk, uncertainty, and profit, Hart, Schaffner & Marx; Houghton Mifflin Co, Boston. 11  See the article “Fotspor med historie” [Footsteps with history], Aftenposten, 8 July 1989 and Rod Pyle (2007): Destination Moon: The Apollo Missions in the Astronauts’ Own Words, Harper Paperbacks. For further discussion and additional examples, see Thomas Gilovich, Dale Griffin and Daniel Kahneman (2002): Heuristics and biases. The psychology of intuitive judgment, Cambridge University Press. 12  See the discussion in Tore Jørgen Hanisch, Espen Søilen and Gunhild Ecklund (1999): Norsk økonomisk politikk i det 20. århundre. Verdivalg i en åpen økonomi, [Norwegian economic history in the 20th century. Ethical choices in an open economy] Høyskoleforlaget, Kristiansand. 13  The government had discussed how Norway should respond to a British devaluation. However, they had not reached a final conclusion and the government was split.
Businesses continue to have problems mobilising capital linked to the remaining risk in the business sector, the question of discipline of borrowers, and the need for prospective borrowers to adapt to the more sophisticated credit requirements of commercial banks. These factors restricted the expansion of commercial bank credits. On a positive note, the ability to maintain macroeconomic stability resulting from low inflation, has enabled monetary policy to remain accommodative and helped reduce the financial burden on businesses up to a certain level. Although in the year 2000 the economy grew less than forecasted, we have, however, managed to make considerable progress in tackling a number of important problems arising from the 1997 crisis, and some of these are bearing fruit. On financial institutions, overall financial position of the Thai banking industry has improved markedly. A number of banks are now showing profits while interest spread has improved to 1.57 by the third quarter. Commercial bank external debt has also declined substantially. More than 78 % of bank’s existing foreign liabilities have been new borrowings incurred after July 1997. This shows that Thai banks have no difficulties in raising funds abroad. All banks are expected to meet full 100 % loss provision requirement by end of the year as required by the Bank of Thailand. In the last three years some B890 billion has been raised as new bank capital, raising the BIS capital-adequacy ratio to 11.95 % for the industry.

The Bank of Thailand also plans to improve convenience of the general public by standardising the width of all bank notes, and to introduce chemically treated paper to promote hygiene and lengthen the life span of the notes in circulation. BIS Review 6/2001  3  Ladies and gentlemen, The most important factor for preventing the recurrence of the financial crisis is to put in place a framework of financial institution supervision in which the business sectors and the public place confidence. From the first of January next year, the Bank of Thailand will introduce a new financial institution supervision framework which is risk-based supervision, focusing on the risk management system of the financial institutions. Under this new system, the responsibility of the supervisor in charge of each institution will be clearly set out in order to ensure direct accountability. Their work will be supplemented by on-site inspection, where the supervisor will work with internal supervisor (off-site) of the Bank of Thailand and external auditors of the financial institutions. In order to promote transparency and to ensure that the financial institutions being examined understand the purpose of the visit, a formal audit program will be sent out to inform the financial institutions prior to the visits. The annual bank supervisor’s on-site visit plan requires that each institution be visited at least once a year. The process of bank examination will be timelier.
Law enforcement agencies have also stepped up capacity and efforts to curb laundering of illegal proceeds. Three main law enforcement agencies for the AMLATFA investigations, i.e., the Royal Malaysian Police, the Malaysian Anti-Corruption Commission and the Royal Customs Malaysia have established dedicated AML/CFT units to give focus to ML/TF investigations and expedite overall enforcement actions. Other related enforcement agencies have also geared up to achieve the same progress. For Bank Negara Malaysia, we will remain vigilant on the level of compliance of the financial institutions with the AML/CFT rules and measures. Thematic examination will continue to be carried out on AML/CFT compliance of the financial institutions, and other reporting institutions, when the need arises. Non-compliance incidences will be dealt with based on the seriousness of the issue. We will not compromise on serious matters, such as tipping-off, as those are the foundation of the AML/CFT framework. Apart from that, we are fully aware of the concern of not to cause the “overshooting” of AML/CFT implementation so as to affect the financial inclusion agenda. For this, Malaysia will be involved, under the umbrella of the APG and jointly with the FATF on initiative related to financial inclusion, in particular to look at best practices to ensure that implementation of the AML/CFT measures is not a barrier to financial inclusion. In Malaysia, the subject of financial inclusion is actually embedded in the National agenda and implemented with the full participation of the financial sector.

Striving to enhance the level of governance in this area will not only result in lowering the overall threat of ML/TF in Malaysia, but would also enable the financial institutions to derive greater value for themselves, and in the process, reduces the cost associated with the ML/TF prevention activities. I will briefly share my thoughts today on this issue by covering three key items; firstly (a) the current emerging trends of ML/TF; secondly (b) policy and strategic response by the authorities in Malaysia on these emerging trends; and finally (c) our expectations on the financial institutions in response to these trends. BIS Review 99/2010  1  Emerging ML/TF trends ML/TF is notable for the diversity of its forms, players, location and settings. While it is normally described in the sequential elements of placement, layering and integration, the real activities are very fluid. Recent global ML/TF trends indicate that the criminals, especially the professional launderers, will exploit every possible gap in the formal and informal financial system to launder the illegal proceeds. They are known to misuse the payment and fund transfer system, including wire transfer and remittance services, internet payments, mobile payment and stored value card, to channel the illegal proceeds within and across borders. The traditional laundering methods of cash smuggling, via casino, investment and insurance policies are increasingly being used together with other methods such as through the banking facilities to avoid detection.
We have witnessed significant progress amidst the orderly development of the takaful industry, which growth is underpinned by the holistic and pragmatic approach taken in developing the Islamic financial industry. The market has become more diverse, as there has been tremendous increase in the number of takaful operators operating in Malaysia, where from having a single takaful operator in 1984, we now have 9 takaful operators, 4 retakaful operators and one international takaful operator. In Labuan International Business and Financial Centre, there is also strong presence of the takaful industry, where its takaful market comprises 14 retakaful operators. The market segment for takaful has also widened over the years to meet the financial needs of the economy as its appeals and value propositions have transcended beyond religious reasons. Product offerings by takaful operators have further broadened to cater to the differentiated needs of customers, with family takaful products now dominating the market with a share of 78 percent of net contribution, as compared to general takaful products that dominated a share of 63 percent back in 1984. The takaful industry exhibits high potential, as demonstrated by its robust expansion with annual growth rate of total assets and contributions averaging between 20 percent and 26 percent over the period of 2004 to 2009. Globally, Malaysia also signifies its presence in the takaful market, being the second largest takaful market in the world as its total assets of $ billion dominated 26 percent of total global takaful assets in 2009.

Strong international cooperation and collective support from member Central Banks and regulatory authorities of the IFSB and global institutions, as well as the strong connectivity with other international standard setting bodies and relevant organisations would ensure continuous close engagements that would allow the attainment of balanced views. The IFSB has had a key role in shaping the global Islamic financial industry, with a decade of achievements that have provided a solid foundation for the progressive growth of Islamic finance that is underpinned with stability. Significant contributions have been made by the IFSB in realising the recommendations in the eight building blocks identified in the Islamic Finance and Global Financial Stability Report 2010, particularly in the areas of prudential standards and liquidity management. It is encouraging that the cross-sectoral prudential standards issued by the IFSB since 2005 have now been implemented in nine countries and more are expected to follow as we progress forward. These standards have taken into account the distinct characteristics and specificities of Islamic finance. The effective implementation of these standards contribute to promoting the soundness and stability of Islamic financial institutions. There has also been strong support by the IFSB for its members  BIS central bankers’ speeches  1  to effectively implement the standards through technical assistance that aims to enhance juridictional preparedness in adopting the standards.
The quarterly assessment in mid-March 2008 will provide the opportunity to assess the inflation and economic outlook on the basis of new data. BIS Review 13/2008  1

Edward Scicluna: Central banks on the way out of the Covid-19 crisis but facing new global challenges Speech by Mr Edward Scicluna, Governor of the Central Bank of Malta, at the 2022 Conference of Mediterranean Central Banks "Building resilience in uncertain times: safeguarding financial stability, encouraging investments", jointly organised by the Central Bank of the Republic of Turkey, the Organisation for Economic Co-operation and Development (OECD), the European Institute of the Mediterranean (IEMed) and the Bank of Spain, Session "Central banks on the way out of the Covid-19 crisis but facing new global challenges", Istanbul, 31 October 2022. *** Fellow governors, ladies and gentlemen I would like to thank our host, Governor Kavcolu and his team, the OECD, IEMed, and the Bank of Spain for their invitation and for their warm welcome. I have come to share my views at this Seventh Annual Conference of Mediterranean Central Banks on the challenges we monetary policymakers are facing in the current macroeconomic and geopolitical environment, because as Mediterranean countries we have an obligation to explain our respective position and its relevance to our region. Because financial instability in any one country does not help the attractiveness of the whole region in the eyes of the investor. Let me start with what is relevant to any Central Banker wherever he or she comes from. I think that what is sharply standing out today is the sharp trade-offs confronting us central bankers. The biggest being that between containing inflation and avoiding a recession.
Analysis of data for price developments in various US cities over the past suggests not only that significant inflation differences occur within a monetary union, but also that they are at least as great as those currently prevailing between euro area countries. Thus, recent divergences in the euro area are by no means unusual. A further feature of the US data is that the observed divergences in inflation rates among these cities, although persistent, are not permanent. There is a tendency for price levels in individual cities to converge back towards their initial levels relative to the national average. It can be assumed that similar adjustment processes would also operate in the euro area. The role of other economic policies Differences in economic developments between countries within the euro area do not, therefore, always warrant an economic policy response. Action may, however, be necessary. For instance, when developments diverging from those in other countries threaten to trigger painful adjustment processes in the form of increasing unemployment. This can be avoided. If action is required it must be taken through other, national economic policies, in particular wage developments and fiscal policy. As said before, “Frankfurt” has no role to play in this area. As regards labour and product market developments, it is important, also for this reason, to reduce as far as possible existing rigidities, so as to allow wages and prices to adjust.

I am delighted that the Governing Council’s decision has been very well received; not only by representatives of the City of Frankfurt, but also by the local and international media. Let me conclude by stressing that the Governing Council was very pleased indeed with the way the competition ran, with the quality of the designs and with the outcome of the competition. Of course, more challenges and many further decisions lie ahead. The successful completion of the competition is, however, an important milestone on the way towards building a new home for our institution. I am convinced that the winning design chosen by the Governing Council will become not only a Frankfurt landmark, but also a symbol of a united Europe and its single currency, the euro. I would now like to invite Prof. Prix to present his design proposal. BIS Review 5/2005  3
Thus, the gap between producer and consumer inflation has recently increased well above the long-term average in many advanced and emerging economies. For instance, PPI is four times the rate of CPI in the euro area. In the price developments during the pandemic, we have seen that a limited group may have a significant contribution to inflation. For example, the durable goods group, which had decelerated on average in the US for the last 25 years, has been one of the items that had the largest contribution to the recent rise in inflation, due also to supply constraints. In the reopening and economic normalization period, energy and services prices registered significant increases across the world. Global central banks think that energy and pandemic-driven high rates of price increases in some sectors will prove to be temporary with the normalization in demand composition, easing of supply constraints, and waning base effects. These factors will also have a downward effect on Turkey’s inflation in the upcoming period. Having touched on the current state of global inflation and how it has been affected by pandemic-driven conditions, I would now like to share with you our evaluations of inflation developments in Turkey. In August, annual inflation rose by 0.30 points to 19.25%.

Control design and execution take place in a world in which there is uncertainty about whether 3/5  BIS central bankers' speeches  there is a problem, what the problem is, what to do about it, when to do something, and what the effects of what we do will be. We can make better decisions when we understand and manage that uncertainty. There is also uncertainty about threats. We will never be able to envision the characteristics of all future causes of disruption. Even when we plan effectively, we will be surprised again. And, like any other system, the control system will exhibit performance variability. For these reasons, we can’t rely solely on prevention. Resilience requires the ability to withstand and recover when threats make it through preventive barriers, so a strong control system must incorporate preventive, detective, and corrective controls. Perhaps because we are overoptimistic about prevention, detective and corrective controls sometimes get second-class billing. For many threats, time is not on our side; the impact grows as the detection time increases. That’s the case with “dwell time” for cyber breaches, which is the amount of time attackers are on your network before you detect them.9 It’s important to decide how long you are willing to wait to find out that you have a problem, and then use that as a requirement to design detective controls. Underinvesting in corrective controls is problematic too.