samchain/econo-pairs-v1 huggingface dataset:
Communications strategies are now seen as a crucial part of central bank activity, and no just as icing on the cake. The  BIS Review 71/2004  1  emphasis now is increasingly on forging links, building bridges and storing up political capital and public goodwill that will help us deal better with the next crisis. Similar observations might be made on the subject of the effectiveness of central banks - surely the result that we all strive for. Radical changes in our functions, progress in technology, and the process of accountability have all dictated cuts in staffing and resources, and various forms of streamlining and re-engineering. Much of this can be healthy and refreshing. But we should also be mindful of the need for flexibility, for some reserve capacity to deal with sudden and unexpected events. This is why the increasing focus on strategic planning and risk management, reflected in your discussions this week, is welcome. There is, of course, much still to be done on these subjects. I understand that the discussions over the past few days have been lively and, at times, quite passionate. There is, I think, one main reason for this - and it is the same reason why this meeting has attracted such an excellent attendance. Central bank governance is a field in which great change is taking place. A number of drivers are forcing this change.

The flow of liquidity has improved slightly, and interbank rates have fallen. In the US and Europe, these rates were more than 2 percentage points above the key rate in October last year, but now the gap has been halved. As a result, the low rates set by central banks are having a greater effect. In the US, mortgages and corporate loans have become cheaper after the Federal Reserve began to purchase bonds and commercial paper issued by mortgage banks and firms. In Germany, Sweden and Denmark, mortgage rates have decreased markedly. And in Norway, borrowing rates have fallen and credit to homebuyers is flowing again. Equity and commodity prices are still fluctuating widely, but the decline is no longer steep. BIS Review 16/2009  9  Lower key rates, higher public expenditure and reduced taxes will push up demand for goods and services, gradually stabilising output and employment and preventing inflation from becoming too low. There are also strong self-regulating mechanisms in market economies that can easily be underestimated when times are at their bleakest. Corporate profitability is being squeezed, but the rise in unemployment will result in lower wage growth, which will curb the impact on earnings. Investment is falling sharply, but there will in time be a need for new houses and commercial buildings and to replace obsolete machinery. Households all over the world are now increasing their saving and reducing debt. When debt eventually reaches a sustainable level, consumption will pick up.
This is an important step that would provide additional room for the country’s rapid convergence and for Bank of Albania’s rapid and irreversible development in line with the models of its European counterparties. 2  BIS central bankers’ speeches

As Islamic finance progresses, it will encounter many new challenges. Many of these challenges will be unprecedented and will vary from one country to another. It is from this perspective that as a collective, we need to collaborate even more closely to resolve some of the problems and bring Islamic finance to become an inherent part of society. Whatever we do today, will determine the shape and direction of the industry. For many of you who will become future thought leaders in Islamic finance, take the many opportunities that will come before you, to sharpen and deepen your skills and knowledge. Collaborate, respect and embrace each other’s views on various matters, no matter how far apart you are in your opinions. Celebrate diversity of views. Avoid polemics that trivialise issues. Debate and discuss the more important matters that concerns the ummah. Think, dig deeper and be innovative in approaching problems and solutions. Look at substance rather than form. Let’s not be argumentative. Let’s not get trapped into matters of no significance. Let’s practice and live the norms and the values that led to the glory days of many civilisations. You are a privileged group. As members of a highly diverse and global group of scholars, you are well positioned to make a difference to the world through Islamic finance. Since its inception in 2006, 86 recipients from 20 countries have been awarded the Shariah Scholarship Award. Right now, we have 40 recipients from 12 countries.
On this run of history, the global flow of funds could become an increasingly powerful generator of global financial instabilities. In that event, pressures could mount on policymakers to protect against the rising tide of capital flow-induced instability, including through capital restrictions and macro-prudential measures. Some of these measures, if not unthinkable, would have been frowned on as recently as a decade ago. When Malaysia imposed restrictions on capital movements in 1998, it was castigated by the international community. And when the Hong Kong authorities intervened in their stock market in the same year, many international policymakers blew a raspberry. What a difference a decade makes. What a difference a crisis in advanced economies makes. Ideological aversion to throwing grit in the wheels of international finance appears, if not to have disappeared, then to have moderated. Where once it was raspberries, today’s policymakers are blowing kisses. Capital restrictions and macro-prudential policies have entered the policy bloodstream, if not yet the mainstream. The debate today is how best to integrate such tools into established macroeconomic policy frameworks. The issues here are thorny ones. They include:   Should capital restrictions be used by emerging markets as a last resort once conventional macroeconomic policies have been exhausted? Or should they instead play a supporting role in all seasons, to avert excessive capital surges and accompanying fluctuations in financial activity? And what guidelines, if any, should apply to the policies of advanced countries as the source of such capital surges?

And considering that this $ trillion represents perhaps as little as one-fifth of the amount of ready liquidity in the U.S. financial system – that being held not just on deposit at the Fed Banks but also by nonfinancial corporations, private equity funds, other investors and households – there is a lot of inflationary tinder available should the Fed mismanage its exit from the hyper-accommodative policy we have pursued and augmented with QE3. Thus, only time will reveal the efficacy of the policy we have pursued and whether the risks that I and other observers (among them my mentor, Paul Volcker) fret over are as substantial, or whether we have made much ado about nothing. My former colleague, the wonderful ex-banker and much-admired Fed Governor Betsy Duke, was quoted on Oct. 28 in The Washington Post as saying this about QE3: “It’s still important to see what the ultimate costs are going to be. You can’t really judge those until it’s completely unwound.” 4 Betsy is spot on. Channeling Shakespeare In June of last year, I gave a speech in Toronto in which I likened the post-zero-bound monetary policy to a Shakespearean drama with five acts, suggesting we were then in the last scene of the third act of a play titled “The Grand Experiment in Modern Monetarism.” 5 I posited we will not know until the final act whether the play will end felicitously or otherwise. I thought I would update that analogy here today.
This entails assessing the solvency of the resulting institution, analysing the impact on overall financial stability and overseeing the execution of the merger to ensure that the potential synergies are indeed harnessed. Transnational European mergers would be particularly positive. They would deepen the Banking Union, reduce the sovereign-bank risk nexus, and provide greater potential for diversification. They would also help establish broader customer bases, so that the cost of investment in technology could be more widely distributed, although the immediate impact on cost-cutting would be more limited. In this respect, the ECB Guide on the supervisory approach to consolidation in the banking sector aims precisely to provide the market with greater predictability of supervisory actions, to help banks design merger plans that are sound from a prudential standpoint and ensure that the resulting institution has a business plan that, when executed correctly, will add value. However, banks should also seek to enhance their efficiency by improving the use they make of the information they hold. This requires significant investment in digitalisation and also the incorporation of new data processing technologies to allow them to change their business model while controlling their risk profile. And this is why it is so important that the “quick fix” has brought European prudential regulations on this kind of investment much closer in line with those already in place in the United States and Switzerland.

Mention should also be made of the new risks arising from the transition to a more sustainable economy. It is crucial that the sector should incorporate into its decisionmaking process climate change-associated risks, physical and transition-related alike. And we supervisors must ensure that banks correctly price the risks associated with climate change and incorporate them into their portfolio management. Many supervisors (including the Banco de España) are developing environmental stress tests to be introduced in the coming years. Their aim is to simulate the consequences for financial institutions of different hypothetical scenarios entailing changes in the structure of the economy. I would also like to reflect on what I consider to be one of the main challenges for the banking sector in the short, medium and long term, namely the low profitability of the banking business. It was already low in many European countries before the coronavirus crisis, but the present crisis will put it under further pressure. To address this challenge, it is essential for banks to continue to make efficiency gains, by cutting costs and making more use of new technologies. Consolidation in the sector could be an appropriate way to achieve this aim. Specifically, there appears to be room for consolidation both in Spain and in other European jurisdictions where the indicators point to some surplus capacity. Naturally, such processes are the responsibility of banks’ owners, while our role, as banking supervisors, is to analyse any merger plans submitted to us from the standpoint of business viability.
In this respect the two main challenges are: (i) to find a solution to measure risks in a sensitive, simple and comparable way; and (ii) to provide calibration of the capital floors and leverage ratio. A key driver for success in this calibration exercise will be having access to accurate data. 4  BIS central bankers’ speeches  I have outlined the main strategic aspects of the new TLAC standard, designed to provide a first line of defence in a gone concern situations. Meeting TLAC and Basel III requirements will pose a challenge for banks. One of these challenges has to do with the potential systemic impact of misconduct risks, which can undermine confidence. Having in place adequate compensation structures and sound corporate governance frameworks is the best way to tackle this. The Financial Stability Board is leading the work to determine if and when more measures might be needed to ensure a strong culture in the finance industry, so that confidence is preserved and financial markets can continue to serve the real economy. Thank you for your attention. I wish you a fruitful and interesting discussion in the rest of the Conference. BIS central bankers’ speeches  5

Hence, regulation and supervision in order to minimize systemic risk should concentrate on the leading global investment banks to make sure that adequate counterparty and liquidity risk management systems and processes are implemented. Against the backdrop of scarce resources, we should refrain from opening new regulatory fields which are not relevant for systemic risks. 1/1
Jaime Caruana: Risk management trends and the supervisory structure Remarks by Mr Jaime Caruana, Governor of the Bank of Spain and Chairman of the Basel Committee on Banking Supervision, at the 31st General Assembly of the Geneva Association, Madrid, 27-29 May 2004. * I. *  *  Introduction & overview  I would like to thank Mr de Castries, Mr Liedtke, and the members of the Geneva Association for inviting me to participate in your 31st General Assembly. As the chairman of the Basel Committee on Banking Supervision, I am honoured to address another organisation that names itself after a distinguished city in Switzerland. It is a special privilege for me to do so here in Madrid, not far from the Bank of Spain. Our organisations may hail from different Swiss cities and different sectors of the financial services industry, yet both organisations monitor trends in risk management and work to encourage advances in that discipline. This is a difficult but enormously important duty for all of us. Financial organisations whether they are insurance companies, securities firms, or banks - compete on their knowledge of their customers. They seek to tailor products and services to each customer’s ever changing needs. To succeed in an environment where products and services must evolve quickly, financial service providers must understand thoroughly the benefits, costs and risks of their current activities, while watching the horizon carefully for future changes that might alter the balance between risks and rewards.

Supervisors, for our part, must ensure that the regulatory system encourages banks, securities firms, and insurance companies to be capable of managing their risks today and ready to respond to new challenges tomorrow. Risk management and the supervisory system cannot and should not evolve independently of each other. On the contrary, supervisory agencies and financial services providers are currently working in tandem to develop a “virtuous circle” in risk management and supervision. Together, we want to ensure that supervision reflects the best practices being developed by the industry, while at the same encouraging institutions to improve those practices constantly. This morning, I would like to share a financial supervisor’s perspective with you on the “virtuous circle” that is emerging to encompass risk management and supervision. I’ll begin my remarks with the results of a study that outlines the great advances achieved by leading financial institutions around the world in developing more rigorous and comprehensive risk management approaches. At the same time that commercial organisations made improvements to their internal processes, supervisors have sought to incorporate those improvements into the supervisory structure, which is my second topic. We are moving toward a more flexible and forward-looking approach to financial supervision that seeks to motivate prudent management - and thereby complete the “virtuous circle” by encouraging further advances in risk management. The reforms underway are especially evident in the banking world under the Basel Committee’s “Basel II” framework.
I have been informed that this Gateway will also include in its content, the Shariah resolutions database of the International Shariah Research Academy (ISRA) following the signing of the memorandum of understanding between Thomson Reuters and ISRA that is scheduled today. ISRA was established in 2008 to provide a platform for greater engagement amongst practitioners, scholars, regulators, academicians in the area of Shariah and to promote applied research contemporary issues in Islamic finance. Their efforts have contributed to the harmonisation of Shariah interpretations and thus the standardisation of Shariah applications and practices is Islamic finance. ISRA has now become an important repository of knowledge for Shariah views or fatwas. The Reuters Islamic Finance Gateway thus has the potential to become an important vehicle for worldwide dissemination of high quality information on Islamic finance. In performing the function as an aggregator of information on Islamic finance, the Gateway will showcase the dynamic pulse of the global Islamic financial services industry. This increased information flow across borders in real time will also reinforce the trend of the internationalisation of Islamic finance. There is already an increasing level of foreign participation in the Islamic financial markets resulting in the increase of cross border flows in the international Islamic financial system. The increased information flow would allow for the raising of funds in different jurisdictions and for the investor base to be broadened further. Liberalisation has also brought greater foreign institutional presence in national jurisdictions resulting in diversity of players in the Islamic financial systems.

But as the master of detective novels, Agatha Christie said: "The truth, however ugly, is always curious and beautiful to seekers after it". We will continue to investigate and learn. But this should not obscure the elephant in the room. One of the most important potential source of vulnerabilities nowadays remains non-bank financial intermediaries, which are not regulated appropriately. This is where the liquidity mismatch is the highest and this is why I strongly concur with Klaas' determined commitment to deliver on the FSB agenda there. I thank you for your attention. 1 Pablo Hernández de Cos, Banking starts with banks: initial reflections on recent  market stress episodes, Speech, 12 April 2023. 3/3  BIS - Central bankers' speeches
But the latter would surely have made it even worse had it be in place for longer. Looking forwards, we do need strong judgemental supervision, and we do need the powers to separate trading activities into separate legal entities as the ICB has proposed. As Paul Volcker recently pointed out, customer banking involves a fiduciary duty, whereas trading with counterparties does not. My only caveat here, and it is a very important one, is that the fiduciary duty of customer banking was sadly lost in the wave of mis-selling. Judgemental supervision has already been applied to correct the excesses of pre-crisis activities. Investment banks have been forced to lower leverage and raise capital, and we are seeing the consequences. The monoline mortgage bank model – in the commercial not mutual-sector has been restructured heavily already. No demutualised building society survives as an independent entity today. The high return on equity with low cost of equity business model is dead. Of course, there is more to be done, and I have set out the framework within which I think about the capital needs of the banking system. Above all, simplicity is about clear focus and a firm resolve. Thank you  4  BIS central bankers’ speeches

The Executive Board’s perceptions regarding the economy and thus monetary policy are then woven in with the other information in the Monetary Policy Reports, including alternative scenarios and updates that provide background material for the monetary policy meetings. The forecasts and the monetary policy decisions The Executive Board’s priorities and perceptions The members of the Executive Board may have different perceptions regarding many different factors, which affect the monetary policy they consider to be the most well-balanced. We can have different opinions regarding the economic situation, about the impact of our interest rate policy on the economy, and about how much importance should be attached to stabilising the real economy if this involves a greater deviation from the inflation target. We may also have differing opinions on how risks not directly captured in the forecasts should be included in our deliberations. However, there is no scope for presenting six different repo rate decisions and six different repo rate paths which exactly represent the six Executive Board members’ opinions. In this case the decision-making situation would be very difficult. It would probably also entail the chairman’s repo rate path most often being the one voted through. The chairman decides on how the different proposals should be set against one another in turn and thus has the opportunity to eliminate the alternatives in an order that increases the likelihood of his own repo rate path being in the final battle. Moreover, he has the casting vote.
Indeed, henceforth instruments will be available that make the recurrence of a crisis such as the present one highly unlikely, and undoubtedly this work is very useful and very important going forward. Had these instruments been available to us from the outset of the Monetary Union, the current crisis in the euro area would surely not have broken, since the levels of cross-country divergence in terms of competitiveness, excessive debt or budget deficits that we are trying to redress would not have been reached. But all this progress has a very limited impact on our most immediate problem, which is to manage the crisis in which we are immersed. And what I wish to stress here is that this task requires very different tools from those needed to prevent this type of divergence recurring in the future. 18 months on from the outbreak of the sovereign debt crisis, we have robust mechanisms to prevent and sanction future imbalances, mechanisms that may be reinforced further if the improvements proposed by the ECB or some of the suggestions by the German government are finally heeded. But we have still not managed to activate the right mechanisms to halt the current market dynamic. Another example of reasonable approaches in respect of financial regulation – but which may prove insufficient to emerge from the current crisis – is the handling of moral hazard, the perverse incentive which induces agents to pursue inappropriate and risky behaviour because they assume they are not going to pay for the consequences.

That said, irrespective of the instruments that may soon be adopted, both the objective and the main criteria that have been followed in recent years should, in my opinion, be maintained. The objective is clear and leaves little room for discussion: to have solid institutions that are able to contribute effectively to the financing of households and businesses. And it would also be useful to preserve the main criteria used hitherto in the financial restructuring. Specifically, I am referring to the anticipation of problems, minimisation of the use of public funds, reducing capacity, the conditionality of assistance, the emphasis on downsizing balance sheets and the promotion of transparency. First it is very important to anticipate problems. The primary obligation of a banking supervisor is to ensure at all times that the credit institutions operating are solvent and viable. However, good supervisors should not limit themselves to analysing the present, but should also anticipate possible scenarios of non-viability that might arise in the future and attempt to reduce problems to a minimum before they emerge. When the crisis broke, the 45 Spanish savings banks then existing were all solvent and viable. However, taking into account the new economic and financial environment stemming from the crisis, it was possible to foresee that while some of them were very well-managed and unquestionably sound, many others, within a matter of years or months, might eventually be non-viable.