samchain/econo-pairs-v1 huggingface dataset:
17 When interest rates are below the natural rate at which desired investment and savings equilibrate, banks will continue to expand credit. When economic agents are determined to take risks, they will find ways to circumvent measures that central banks and regulators have put in place. Non-monetary tools like macroprudential policy will therefore not adequately address the root problem caused by interest rates that are too low. 18 Under these circumstances, only monetary policy can “get in all of the cracks” to plug the vulnerabilities. An increase in short-term interest rates will trigger a more realistic evaluation of asset and collateral values, income flows, and thus risks. This will curtail the extent of leverage created by banks and capital markets and keep asset managers from crowding into risky assets. The effects of monetary policy are all-pervasive, and cannot be easily circumvented. 19 This approach, if formalised, amounts to augmenting the Taylor rule with an additional term to capture deviations in financial variables from their equilibrium levels.3 If financial market imbalances are growing, ceteris paribus, monetary policy should be tightened, even if it causes further deviations in output from potential in the short term. This approach does not preclude the need for robust financial regulation and supervision. But the key is to get the price of money right, to encourage a more realistic perception and tolerance of risks. 20 While no central bank currently implements monetary policy in this way, the concept behind the approach may not be as abstract as it seems.

Shortly after, HSBC and Bank of America did a proof-of-concept that showed how trade finance processes could be streamlined using blockchains and smart contracts. Building on these, MAS and the Hong Kong Monetary Authority will jointly develop the Global Trade Connectivity Network, a cross-border platform for trade finance using distributed ledger technology. GTCN will be an open architecture platform that enables the seamless transfer of digital documents and data across borders, starting with the Singapore-Hong Kong trade corridor. If all goes well, we expect the GTCN to go live in early 2019. Strengthening Supervision and Reducing Compliance Cost: SupTech It is not only the financial industry that needs FinTech, but regulators as well. MAS has embarked on its own FinTech journey to make our supervision more effective and the compliance burden we impose less painful. We call it Supervisory Technology, or SupTech for short. Let me give an example: detecting trade syndicates in the stock market. One of the most difficult things to detect in the market is collusive behaviour and price manipulation. MAS has put in place a data analytics and pattern recognition system, to study trading behaviour and detect accounts that may be 6/9  BIS central bankers' speeches  acting in concert to manipulate share prices, or engaging in circular trading to create a false impression of market interest.
The first, is the increasing significance of Asia in the global economy; second, the extensive international regulatory reforms that is being envisaged by the international community; and third, the rapid growth of Islamic finance and its integration into the international financial system. These trends are set to become significantly more pronounced in the aftermath of this global financial crisis. Asia and the global economy After one of the worst economic crises in modern history, the global economy is now on the path of recovery but with a pace that is set to be uneven. There is now a global shift taking place arising from an increasing growth divergence between the advanced and emerging economies resulting in a change in the configuration of the global economy. This is not only a consequence of the crisis related factors but also due to structural factors prevailing prior to the crisis. We have seen extraordinary and unprecedented measures been taken by the advanced economies to restore stability and the functioning of the financial systems, and to contain the effects of the financial crisis on the economy. While a catastrophe has been averted, the recovery in the advanced world continues to be reliant on policy support, with structural factors yet to be addressed. The IMF’s projection is for growth in the advanced economies for the period 2009 and 2014 to be 1.3% per annum, which is half of what was registered during the period 2000 to 2008.

With this now more developed Islamic financial services industry in Malaysia that includes the advanced development of Islamic financial institutions and markets, more aggressive liberalisation initiatives have been made in this sector to strengthen our interlinkages with financial markets in other parts of the world. This has also been reinforced by the further liberalisation of the capital account of the balance of payments and the implementation of tax neutrality measures. These initiatives are aimed at supporting the strengthening of trade and cross border investment activities through Islamic finance. Concluding remarks Let me conclude my remarks on these three major trends occurring in the world economy and the international financial system. Asia’s role in the global economy, the international  BIS Review 24/2010  5  regulatory reform agenda and the development and expansion of Islamic finance is likely to have a growing influence on the global economy and financial system going forward. As we participate in this rapidly evolving environment, these new trends need to be taken into account in creating a global economic and financial order that is profoundly better than the one we have today. Thank you.
This story was much more unique, as it involved the first banking crisis in Europe since the EU single market was formed in the early 1990s. Let me briefly discuss each of these in turn, in order to set the stage for the policy discussions. First, the macroeconomic boom-bust story. All the usual suspects were present: very strong capital inflows fuelling a credit and asset price boom that subsequently turned into a bubble at the same time as the economy overheated and an unsustainable external position developed, as could be seen in a double-digit current account deficit. And macroeconomic and prudential policies were not up to the task. At the deepest level, this part of the story was related to three factors: 1. The complications that tend to arise with macroeconomic management as very small, open economies become more and more financially integrated;  2. The specific conditions of ample and cheap credit at the global level;  3. And major policy mistakes in Iceland, both of the type that would be deemed to be such in any book (such as giving an already overheated economy a demand stimulus), and those more closely related to the orthodoxy prevailing at the time: freely floating exchange rates, interest rate policy focusing mainly on low inflation in terms of goods and services, and good micro-supervision; and let the markets do the rest. The first factor is perhaps of interest here.

There is no doubt that tremendous efforts have been made in the wake of the financial crisis to reach our objective of financial stability, providing the policymakers with additional tools to build-in robustness into the global financial system, increase the loss absorption capacity of financial institutions and infrastructures, and limit the scope for contagion while new approaches to prevent systemic risk have been developed, namely macroprudential policies. However, due to the magnitude of the task, its difficulty and its complexity, global regulators had to proceed with a sequential approach, starting by the banking system where their knowhow was the best, and expanding gradually a framework to the rest of the financial system in concentric circles. As a consequence, we are currently facing three challenges that I would like to focus on: keeping the momentum for reforms, allowing for the diversity and ensuring the robustness of the global financial system. 1. Keeping the momentum  After such a long and intense conference day, you might already feel a sentiment of regulatory fatigue! Consequently, you might appreciate the feeling of regulators and financial intermediaries after more than 8 years of intense regulatory developments and debates! And yet, the latter are not completed nor their implementation! Banking regulation, which is almost complete now, will only come into force in 2018–2019, even though it has already been largely factored in by markets and banking institutions. But regulation is still under development for the rest of the financial system.
Nevertheless, the impact is quite uneven across banks, owing to differences in factors such as the composition of loans to the private sector and of the sovereign loan portfolio, their international presence and the coverage of the ICO guarantee programme. In particular, in the portfolios of loans to NFCs and sole proprietors, the impact varies considerably according to firm size and economic sector.33 Loans to individuals are also important, as in business in Spain they account for more than half of the total loan portfolio.34  33  The larger differential impact on smaller firms reflects their lower capacity to absorb shocks, as their sources of revenue and financing are less diversified. The reasons for the cross-sector differences include the distinct impact the energy price increase has on each sector, and also the differences in the sectors’ sensitivity to the macroeconomic downturn and in their initial financial positions. 34  The expected loss rates in the mortgage portfolio remain limited, owing to the nature of the loans and their associated collateral, and the scenarios therefore envisage a smaller impact for this business.

The main driver of the improvement in ordinary profit was the reduction in impairment losses, which fell by 43.5% compared with 2020 to € billion, a somewhat lower level than in the two years prior to the pandemic. The recovery in profit in 2021 was widespread across the main countries where Spanish banks pursue significant international business. Profitability also improved at the European level, following the notable decline in the previous year, returning to close to prepandemic levels. As in Spain, the main driver of this improvement was the significant fall in impairment provisioning. The breakdown shows that gross income rose by close to 3% in 2021, driven by the timid recovery in net interest income9 and, above all, by a 10.4% increase in net fees and commissions, which more than offset the drop in gains on financial assets and liabilities. In any event, net interest income remained lower than in 2019.10 Fee and commission income has increased in recent years,11 mainly on account of payment services, although it is still low compared with Spanish banks’ main European peers. Profitability remained positive in 2022 Q1. Thus, ordinary profit at the six listed banks rose by more than 30%12 year-on-year, with increases of 9%-10% both in net interest income and fee and commission income. Meanwhile, impairment losses fell by 9% compared with March 2021. It must be noted, however, that the full economic impact of the war in Ukraine did not materialise in the first quarter of the year.
But that could not be a complete solution as it would leave the hosts of the group’s foreign subsidiaries with exposure to Topco being unwilling or unable to pay when it mattered. For that reason, the LAC of Topco needs to be passed down to the ‘systemic’ or otherwise key operating subsidiaries, forming LAC in the subsidiaries themselves. This should probably be in the form of subordinated debt issued to the Topco with write down triggers that would enable losses exceeding the subsidiary’s equity base to be pushed up to the Topco. By transmitting the losses to Topco, the operating company is recapitalised. If Topco itself is bankrupt as a result, it can be resolved in a top-down bailin by the group’s home resolution authority of its own debt. That is the model set out in the paper FDIC/Bank of England issued last December.13 For MPE resolutions, there needs to be sufficient LAC in each of the key subsidiaries that are manifestly relevant to global financial stability. Some of the gone-concern LAC should be issued externally, so that bailin can effect a transfer of ownership. Beyond that, the host authorities of other subsidiaries may want to require sufficient externally issued goneconcern LAC, in order to be confident of being able to execute a local resolution if the subsidiary they host is systemic locally, ie a domestic SIFI.

It is unlikely that in future decades the West will account for such a large share of the world’s unequivocally systemic firms. In both Asia and Latin America, a number of jurisdictions have made progress with putting the KA regime on to a statutory footing. But it is probably fair to say that not a few emerging-market countries are watching progress in the EU. Indeed, it is not an exaggeration to say that the EU’s Directive is the keystone to breaking the back of the TBTF problem. How? The toolkit for Resolution Authorities established by the KAs obviously includes the workhorse techniques for resolving standard commercial banks. Either: liquidation with prompt payout to insured depositors by the Deposit Guarantee Scheme (DGS), commonly known as Liquidation and Payout (L&P). Or: what the US call Purchase & Assumption (P&A) – selling to a third party the distressed bank’s deposit book together with some cash injected by the DGS and perhaps some other good assets. At its simplest, P&A involves splitting the distressed bank into ‘good’ and, let’s say, ‘not so good’ bits. The deposit book and cash might for a while be held in a Bridge Bank controlled by the Resolution Authority (RA), pending sale to a purchaser. But whether or not a Bridge Bank is employed as a holding position, the services to insured depositors are sustained. Meanwhile, the rump goes into administration, with the administrators selling what they can and winding down the rest.
I would like to conclude my speech by quoting Bill Gates: “We always overestimate the change that will occur in the next two years and underestimate the change that will occur in the next ten. Don’t let yourself be lulled into inaction”.3 The Banque de France tries to heed this warning. Although we do belong to the (very) “old world” – the Banque de France was created more than 200 years ago by Napoléon –, as any incumbent, we need to adjust and adapt to the “new world”. In order to do so:   we have adapted our organisation and governance with the creation of a Fintech hub within our supervisory function (which has supported more than 300 Fintechs), the appointments of a Chief Digital Officer and a Chief Data Officer, and the launch of a Lab to foster innovation within the Banque.   We experiment with new technologies: the Banque de France was the first central bank to implement a full-scale project based on DLT which is fully operational 4 and we successfully run eight artificial intelligence projects.   We also host discussions between regulators, academics and the industry: the latest working group on artificial intelligence will deliver its conclusion by end of this year. But this call for action is addressed to everyone, and especially to you, the next generation.

As the core 2  Sources: FSB, Global Monitoring Report on NBFI 2017  5/9  financial functions lift and shift to the cloud, the risk of a single point of failure will emerge, and yet, cloud providers are unregulated and to a large extent out of the reach of supervisors. Second, the question of conduct. Our regulation deems certain practices acceptable and others not. Technological developments are making it possible to use information that was previously out of reach of a financial intermediary. This could potentially allow a more accurate assessment of risk or a more “responsive” pricing of service. But what is possible may not be (socially) acceptable – to take one example, the current development of “social network informed credit scores” raises questions when privacy concerns or discriminatory bias are at stake. Third, the question of anti-money laundering and counter-terrorist financing. Consider, for instance, crypto-assets: the pseudo-anonymity of Bitcoin and altcoin has facilitated the laundering of money stemming from illegal activities such as drug transactions or tax evasion. Not surprisingly, the sharpest decline in Bitcoin prices thus far happened in 2013 when the infamous darknet marketplace, The Silk Road, was shut down by the FBI. (B) Let me now turn to new risks which are non-financial in nature but closely intertwined with the digitalisation of finance. Three in particular merit central banks’ scrutiny. First, the question of strategic independence of incumbent banks.
While the property and casualty insurers have been the hardest hit, life insurers are not necessarily spared as climate change has also taken its toll on human lives via natural disasters, epidemics and the like. While the global insurance industry has displayed remarkable resilience to withstand such record losses, the future remains fraught with uncertainties and the challenge is to ensure that risk management strategies remain adequate to counter the impact of unpredictable changes in global climate patterns. Allow me now to briefly share with you, some of the measures undertaken by Malaysia in responding to the evolving changes and challenges seen in the insurance marketplace. Firstly, in the area of structural reform, industry consolidation remains an area of priority for Bank Negara Malaysia in its efforts to foster a more competitive and resilient industry to harness economies of scale, expand distribution capacity, enhance business volume and exploit opportunities for cost rationalization. Secondly, the shift towards principle-based regulations and the implementation of a riskbased capital and supervisory framework in Malaysia provides a greater degree of flexibility for insurers to exploit business opportunities arising from the changing financial environment, whilst not losing sight of the inherent risks. Moving forward, Bank Negara Malaysia will adopt an increasingly differentiated regulatory approach where insurers that exhibit strong corporate governance and risk management practices will be given greater regulatory flexibility. Thirdly, the advent of bancassurance and bancatakaful has seen more players packaging life insurance and family takaful with innovative investment options that incorporate banking and investment product features.

We would have done this earlier, but first it was necessary to complete the process of registering the manor house and the land it stands on. It is worth noting under cost efficiencies that Eesti Pank has added technical support for the Fiscal Council to its list of responsibilities together with the macroprudential supervision and increased requirements for compiling financial statistics. Despite this, the number of people employed at the bank is roughly the same as a year ago, and Eesti Pank remains the smallest central bank by staff size in the European Union. Eesti Pank’s operating expenses fell last year to 17 million euros from the 17.4 million of a year before. Although the central bank’s duty is to keep inflation low and not to chase every possible source of higher revenues, it is good to be able to note that we ended last year comfortably in profit. 4  BIS central bankers’ speeches  Conclusion In conclusion I would like to emphasise again that it is important for stable development in Estonia and for improved public well-being that we remain ready to adapt to a changing economic climate, to react rationally to changes, and yet to maintain the conservative stance on monetary issues that has served us well so far. Thank you for your attention. BIS central bankers’ speeches  5
At end of ’99, the weight of the paid-in domestic government capital accounts for 41.7 percent, from 27 percent of the weight of the domestic government equity capital  2  While the credit outstanding in ALL is increased by ALL 17.5 billion or 128 percent, the one in foreign currency is increased by ALL 40.1 billion, or 71 percent. BIS Review 115/2006  3  Compared to end of 2004, the banking system appears with an increasing level of profit, to ALL 6.1 billion. Return on equity resulted to 22.24% at end of 2005 and 19.2 % at end of the nine-month period of 2006, while the credit quality denominated as a ratio of the net non-performing loans to total loan portfolio is at 2.3%, from 4.2% at end of 2004. However, it is still soon to judge about the credit quality, because credits are still new and their quality has to be monitored prudentially. •  Year 2005 recorded ALL 33 billion of the shareholders’ equity of the system, or about ALL 7 billion higher compared to 2004, and 19% of the capital adequacy indicator or about 3 percentage points lower than in the same previous year period, whereas for the nine-month period of 2006 these indicators are respectively: shareholders’ equity of the banking system reached ALL 39.8 billion, being increased by ALL 6.8 billion compared to year-end 2005, and the capital adequacy indicator was 18.3 % or 0.3 percentage point lower than in the same previous year period.

After the privatization process of the former Savings Bank was over and a 100% of its stock was transferred to the Raiffeisen International Bank Holding AG in August, the capital ownership structure during that period underwent significant changes, having the share of “domestic government capital” estimated at 6% from 32.1% at end of 2003, and the “domestic capital” at 12.75 from 35.15% it was in the same period of the previous year. 2  BIS Review 115/2006  Figure1: Banking system capital ownership structure in years 1  Recently, the improved climate for the development of business and the economy, the Savings Bank’s privatization from the Raiffeisen Bank, the macroeconomic stability, and the low inflation, have all led to rapid development of the banking system. Hence, we can highlight that: •  1  During 2005 and onwards, considerable developments have occurred. The system was more oriented towards the lending activity. The latter one constituted 26% of the portfolio, from 16% in the same previous year period. In 2005, the outstanding credit of the banking system increased by ALL 57.6 billion 2 or 82%, from ALL 19.3 billion or 38% in the previous year. In the meantime, the significant growth rate of the outstanding credit compared to end of 2004 has been reflected even in the changed credit structure by terms.