samchain/econo-pairs-v1 huggingface dataset:
With these Guidelines in-force, the Board of Directors of respective FAs are now required to establish the necessary processes to ensure proper monitoring of the quality of the advisory process conducted by FA representatives, and we expect FAs to deal firmly and expediently in the event of non-compliance which results in mis-selling or the provision of inappropriate advice. I am greatly encouraged to see the continuing growth of the FA industry and today’s event marks a significant milestone for the industry as a whole. The theme of this Conference, “Charting New Frontiers – Financial Advisers the Future” is well-timed and reflective of the  BIS central bankers’ speeches  3  changes we are now experiencing as our nation progresses towards a high-income economy. Once again, I would like to congratulate AFA on its official launch and look forward to meaningful contributions from the Association in driving the financial advisory sector forward. On this note, I wish you all a successful and productive Conference. 4  BIS central bankers’ speeches

John C Williams: A tale of many economies Remarks by Mr John C Williams, President and Chief Executive Officer of the Federal Reserve Bank of New York, at University at Albany-SUNY, Albany, New York, 11 July 2019. * * * As prepared for delivery Thank you for that kind introduction and for having me to speak today. I’m an economist, so I naturally have a fascination with data, statistics, and what we can learn from them. But the reason I find economics so interesting isn’t the numbers or the charts—it’s how they shape the everyday lives of people. And that’s the reason running a Federal Reserve Bank is such a privilege. The work we do—our public mission—plays a big role in helping people get jobs, take out mortgages, or grow their businesses. Today I’m going to talk a bit about that work and the health of the economy—both at the national level and for this region, the Federal Reserve’s Second District. Before I go any further I need to give the standard Fed disclaimer that the views I express today are mine alone and do not necessarily reflect those of the Federal Open Market Committee or others in the Federal Reserve System. I’ve just referred to the Federal Open Market Committee and the Federal Reserve System, but I know it’s not always entirely clear to people what they are, or what they do.
Last year I pointed out that sterling’s exchange rate was at a 15 year low against the dollar, but close to its peak against the euro. In overall terms sterling’s effective Exchange Rate Index against currencies generally had been relatively stable - at around 105 plus or minus 5% - for most of the past 2-3 years. That pattern of  BIS Review 40/2002  1  exchange rates made life particularly difficult for the euro-exposed sectors or our economy, and, given that the eurozone represents over 50% of our external trade, contributed significantly to the imbalance within our economy. Happily, from our point of view, and indeed in the context of the global external imbalance, we have recently seen a significant strengthening of the euro against the dollar, and to a lesser extent against sterling, which will help to ease some of the earlier tensions. Sterling’s exchange rate has recently moved to two year high against the dollar and nearly a three year low against the euro. Sterling has consequently also weakened in overall, effective, terms, from some 107 some months ago to currently around 103 - which is still within the earlier range. It is frankly anyone’s guess whether the recent pattern of exchange rate movements will be extended, but what has happened so far, taken together with the improved prospect for global demand, suggests that the adverse external factors weighing down the UK economy over the past two years or so should now diminish.

It is not a threat - if anything it is a promise. It’s what our mandate from the Chancellor requires us to do for the very good reason that low, stable, inflation is both a necessary condition for and a reflection of overall macro-economic stability over the medium and longer term, which is clearly what we all want to see. Given the qualifications, it is not a promise on which we will necessarily deliver immediately. We start from a position in which inflation is somewhat below our symmetrical target, and there is little evidence at this point of significant inflationary pressure; wage pressures, in particular, remain relatively benign despite the robust labour market - and it is crucial that that should continue. That gives us a certain amount of time to assess the unfolding evidence on the evolution of both the external situation and the strength of overall domestic demand, though one can legitimately debate just how much risk we can afford to take by waiting. But if and when we do decide to act, you should see that as a sign of the strength of the economy rather than as evidence of weakness. Indeed my message to you this evening is that, after a difficult passage over the past twelve months, we can reasonably now look forward to more favourable offshore winds in the period ahead, opening the way to somewhat stronger and better balanced overall output growth, but with inflation remaining close to target.
Rather, I am interested this evening in those instruments, structures, firms or markets which, alone or in combination, and to a greater or lesser extent, replicate the core features of commercial banks: liquidity services, maturity mismatch and leverage. In that spirit, I will say something about money market mutual funds; finance companies; Structured Investment Vehicles and Asset Backed Commercial Paper; and securities dealers. I will also say something about some markets. In particular, the securities lending market; but also how the RMBS/ABS market can combine with repo funding to create investment structures whose leverage and liquidity risk creates some of the brittleness of banking systems. It is not intended to be an exhaustive, systematic survey. And beyond those interested in the details of how markets work, it is the general message that matters. Because some common threads are clear. Notably, maturity and credit transformation. Each of the vehicles, instruments or markets I will discuss has been used to transform longer-maturity, less liquid assets (loans) into shorter maturity, more liquid liabilities. In each case we need to decide whether or not we want to set constraints around the operation of those forms of shadow banking. And we need some principles to guide us when, inevitably, we confront new variants of shadow banking in the future. I do not have all the answers to these questions, so my goal this evening is to push them up the agenda. As the Governor of the Bank has underlined, it is vital we debate the structure of the financial system.

So we need policies and principles that stand in the way of its weakening the resilience of the system, while allowing enterprise and our capital markets to flourish. 15  See the Bank’s recently published paper: “The role of macroprudential policy: A discussion paper” and Tucker P M W (2009e), “The debate on financial system resilience: Macroprudential instruments” at the Barclays Annual Lecture in London. 8  BIS Review 6/2010
However good the policies may be, if the capacities of the institutions implementing these policies are not matching the rigour of the policies, the policies will not be able to deliver what expected of them. If I am to repeat myself once more, in the light of the structural transformation in the Turkish economy during the last five years, I can easily say that Turkey is a clear example of the view that governments need to assume a leading role in changing and reforming the existing institutions and in setting up 10 brand new ones . In this respect, newly established independent authorities charged with regulating markets from competition to public procurement and to energy matters might be cited as good examples. However it goes without saying that the most prominent institutional change that took place is the amendment of the Law of the Central Bank of Turkey, which made it independent. The manifestations of the independence of the Central Bank in the form of greater transparency and accountability together with the inflation-targeting regime contributed to the implementation of a rulebased monetary policy. After the thirty-year period of high inflation, we have experienced single-digit inflation rates. An independent central bank has constituted and will continue to constitute a corner stone for the structural transformation towards good governance and good institutions in Turkey.

Such recovery plans should: •  Identify actionable options that the firm can take in response to financial weakness that will restore the confidence of the firm’s counterparties in the firm without the need for extraordinary official sector support;  •  Incorporate processes that analyze the root causes of their problems and identify longer-term strategies that will need to be employed as other recovery options to restore capital and liquidity are being executed; and,  •  Be regularly tested and updated to ensure they remain reasonable. For some types of firms – like financial market utilities, recovery planning is actually an even more important issue. Because FMUs provide critical services to the industry, experiencing a major disruption that could lead to resolution – or dissolution – is unacceptable. It is important, then, that a CCP be structured in a way, and develop and have tools available, to enable it to recover from losses and continue operations under extreme scenarios. Simply put, the debate on ‘less complex’ for financial market utilities is much more about recovery than it is about resolution. Steadfast resiliency may include casting a more critical eye on the resources needed for a single CCP to withstand a plausible, severe shock. Conclusion While there is still work that needs to be done to make financial institutions more resilient, better managed and less complex, we have also made a great deal of progress.
So, as regards net investment, in other words the contribution to capital formation, this was more than halved as a percentage of GDP in the mid 1970s. This meant two things. First, capital growth per employee, or per hour worked, fell. For a number of years, investment dropped so much that capital per employee in the business sector actually declined. In other words, each employee worked with less capital. In order to illustrate what capital per employee means, we can take an extreme example, namely what a lone worker can accomplish when digging with a spade and iron bar compared with a hydraulic excavator. The latter represents considerably more capital per employee than just digging with a spade, as well as substantially less physical effort for the worker. Therefore, we should expect productivity growth to fall when capital per employee declines. But there is also another indirect effect. With new capital, new technology is introduced into the production process. Investment is the means for putting new technology and research into practical production. Through investment, new methods and new technology are ushered into production processes. For this reason, we should expect less technological progress in production when capital formation falls. An excavator is so much more than a large number of spades; it represents entirely new technology that affects the whole production process. Figure 1 shows that capital formation, net investment as a percentage of GDP, fell in the mid 1970s from around 15 per cent of GDP to about 5 per cent.

The higher the  BIS Review 56/2003  1  long-term sustainable rate of growth, the easier it is for us to balance aggregate demand in the economy so that it coincides with what is available for household consumption, business investment and the needs of the public sector. So monetary policy cannot raise the potential growth rate but, in a worst case scenario, as we witnessed during the 1970s and 1980s, it can worsen our chances of attaining a high potential growth rate by affecting demand in the economy in the wrong way. Consequently, on an abstract level, the “formula” for economic growth is very simple. It is the weighted sum of labour force growth and capital growth as well as technological progress. However, when we compare growth between different countries, it is not that interesting to note that a country has high growth because its labour force is growing fast. It is the standard of living that is of interest and this does not have to improve just because the population and labour force are growing. The important issue instead is how quickly a country’s production grows per capita and this leads us into concepts such as productivity in a broad sense. For productivity is just that - production per capita. It can be measured per inhabitant, per employee or per hour worked. The concepts are closely related. One interesting observation is that the United States’ rapid growth in recent years has been attributable mainly to high labour force growth.
Added to this, public finances are in good shape as far as debt is concerned, which reduces the political pressure on the SNB. The value of bank deposits in Switzerland is stable because the value of its central bank money is stable, because the banks are operating prudently, and because the regulation of the banking system is centred on stability. The strong capital base and high liquidity of the banks in Switzerland increase the resilience of the system in times of crisis and promote confidence among depositors. Both of these factors contribute to bank deposits retaining their value. Current monetary policy and the role of central bank balance sheets Our findings are therefore rather reassuring. In Switzerland, central bank money and bank deposits are essentially sound money. However, there is no guarantee that this will always be the case. Or, to put it in somewhat more pointed terms: will the expansionary monetary policy that the SNB has been following for some years jeopardise the solidity of the Swiss franc in the future? Issuing too much central bank money can indeed undermine the foundations of sound money, especially if the money is created to solve political or structural problems. However, the unprecedented expansion in the monetary base in recent years does not pose a particular threat to the stability of the Swiss franc’s value.

This meant that, for example, the differences in the risk premia applied to the various issuers of government debt disappeared. It was thought – and this was a widely held viewpoint – that membership of the Monetary Union would reduce the risk linked to current account deficits, because they could be financed within the Union in light of the free movement of capital. This approach, which would be proven to be mistaken with the crisis, led, among other things, to the risk associated with our economy’s growing external debt not being properly estimated. As regards demographic growth, the population rose by around 5,000,000 between 2000 and 2007, an unprecedented increase in such a short period since population series have existed in Spain, i.e. since the mid-18th century. Almost 90% of this population increase was attributable to net immigrant inflows, most of whom adults, which fuelled the growth of the real estate sector by means of both a permanent increase in the demand for housing and, on the supply side, by providing the labour that helped the construction sector expand.
1.5  Exchange rate targeting and adoption of another currency  In some respects, the structure of the Icelandic economy calls for a flexible exchange rate. Offsetting this are excess exchange rate volatility and studies indicating that the Icelandic króna has tended to be a source of shocks more than a shock absorber. Furthermore, there are various benefits of euro area membership through EU accession, such as increased international trade and access to a deeper financial market without exchange rate risk. But if EU membership proves not to be an option – for instance, if an acceptable solution to the euro area crisis cannot be found and/or if a majority of the electorate is opposed to it – and Icelanders are either unable or unwilling to address the pre-crisis flaws in monetary and economic policy without sacrificing exchange rate flexibility, other options should be examined, such as some type of exchange rate targeting or unilateral or bilateral adoption of another currency. These options are discussed in Chapters 18 and 19, while Chapter 20 focuses on the issues that must be considered in selecting a currency to adopt or use as an anchor. Exchange rate targeting entails defining limits on exchange rate movements and applying monetary policy so as to keep the exchange rate within that band. Such bands can vary in width, the commitment to the exchange rate target can vary in strength, and the commitment can be backed by other declarations and policy actions that further support the target.

The króna is now worth only 0.05% of its value prior to the 1922 devaluation; in other words, it has depreciated by 99.95%. In terms of consumer prices, the króna has eroded in value even more, or about 99.99%. In other words, its purchasing power in terms of goods and services is currently only 0.013% of what it was in June 1944, when the Republic of Iceland was founded. Nevertheless, over this period, Iceland developed from being one of the poorest countries in Europe to one of the richest in per capita terms, despite the economic costs of persistent inflation. Currency depreciation and subsequent inflation episodes have sometimes expedited the necessary adjustment following economic shocks, however, thereby returning the economy more quickly to a path of economic growth. Chapters 3 and 12 focus on certain aspects of Iceland’s experience with an independent currency. In Chapters 9 and 13, two key questions are asked. First, how effective is monetary policy in achieving the goals with which it is tasked? Second, has the flexibility of the exchange rate facilitated economic adjustment and stability, or has it instead been a source of shocks? Summarising these findings reveals that Iceland’s experience of independent monetary policy and a flexible exchange rate has been poorer than that in many other countries, in that monetary policy has not been successful in achieving its goals and the flexible exchange rate has tended to be a source of shocks rather than a shock absorber.
In the late 70s, many countries including advanced economies experienced rapid monetary expansion and as a result very high inflation rates, in many instances in double digits. 1981 was the turning point of central banking. The Federal Reserve, under the leadership of its chairman Paul Volcker, engaged in a very tight and painful monetary tightening, despite the harsh criticism from the US administration and the real sector. As inflation rate in the US gradually declined to low single digits, the Federal Reserve earned the reputation of an uncompromised inflation fighter, which gradually extended to other central banks in advanced economies as well. This was also the period in which many central banks gained operational independence. Over time it became a conventional wisdom among policy makers that the most important and long lasting contribution of central banks to long term growth and financial stability is to establish and sustain price stability. As the issue of financial stability has gained critical importance during the recent global crisis, central banks are asked to address directly not only price stability but also financial stability as well. As I explained before, to maintain smooth functioning of the financial system has been a concern of many central banks since their foundation. In fact, that is the reason we are called as “the bank of banks” or “the lender of last resort” for financial institutions.

To its credit, the insurance industry has taken important strides in rising to the challenges faced. Generally, Bank Negara has been encouraged by the positive response of the industry to new regulations that further strengthen corporate governance and risk management standards and promote the fair treatment of consumers. Of course, some companies have been more progressive than others in absorbing the regulatory principles within their companies. But overall, our supervisory interactions with the industry have shown that the industry as a whole has made good progress in lifting standards of financial and business practices. This is encouraging as ultimately, both the industry and Bank Negara have a common interest in promoting an efficient and stable insurance market in Malaysia. At Bank Negara, we are continuing to strengthen our regulatory and supervisory capabilities as well as sharpen our focus. As those from Malaysia would be familiar, we are now into the fourth month of the Bank’s new regulatory and supervisory structure. The new organisational structure for the regulatory and supervisory functions within the Bank were realigned back in November last year to move from the previous sectoral approach to regulation, to one that will integrate the Bank’s regulation of the different financial sectors under its purview along functional lines. As a result, the functions previously under the former Insurance Regulation Department have now been assumed by the newly established Financial Sector Development Department, the Prudential Policy Department, the Consumer and Market Conduct Department and the Financial Surveillance Department.