samchain/econo-pairs-v1 huggingface dataset:
Ásgeir Jónsson: Address – 59th Annual Meeting of the Central Bank of Iceland Address by Mr Ásgeir Jónsson, Governor of the Central Bank of Iceland, at the 59th Annual Meeting of the Central Bank of Iceland, Reykjavík, 25 March 2020. * * * On 19 October 1918, Iceland finally reached a sovereignty agreement with the Danish authorities. But that day, 19 October, was momentous for another reason as well. It was the day the second wave of the Spanish flu arrived in Iceland with the passenger ship Botnia. No hygienic measures or mitigating actions were taken at first. In fact, the Surgeon General considered it pointless. The disease spread like wildfire and peaked a mere three weeks after it had been borne to Iceland. However, the authorities prevented the spread of the Spanish flu to North and East Iceland by closing off transportation. At that time, half of the nation lived in the countryside, and it was therefore easier to maintain distances between people than it is today. Iceland recorded its first death from the Spanish flu on 2 November 1918. An estimated 63% of Reykjavík residents were infected, and around 500 Icelanders died, making for a mortality rate of 2.6%. The Spanish flu hit young people the hardest. It is clear that, against this backdrop, the celebration of Iceland’s sovereignty, when the Danish-Icelandic Act of Union entered into effect on 1 December 1918, was a bittersweet affair. But misfortune had more in store for Iceland.

As the level of competition in the corporate bond market is much lower, a key priority in the design of these operations was to encourage strong participation from market makers. Accordingly we decided to adopt a uniform pricing method for these auctions, in which the Bank pays the same (highest) price for all the accepted offers to sell us a given bond. Our judgement, was that this approach would help incentivise participation and therefore competition, as participants do not need to make firm judgements about the overall market level, but can instead focus on their own valuations. This effect may be particularly important for increasing the likelihood of smaller or less informed market participants taking part. This increased participation should in turn increase the likelihood of the Bank achieving competitive pricing in its purchases. By contrast our gilt auctions allocate on a receive-your-offer (‘discriminatory pricing’) basis. This works well when broad participation is assured. Third, the relative value of offers is judged in a different manner in our corporate bond operations. For gilts, we allocate relative to representative market yields at the end of our auctions – this enables participants to accurately anticipate the competitiveness of their offers. If a similar approach had been applied to our corporate bond operations, where there is considerably less certainty around the prevailing executable market price , the Bank would have risked allocating against stale market prices, or prices that could easily be influenced by participants in the auction.
14 It offers a conducive physical space dedicated to the infrastructural needs of FinTech startups, here in the heart of Singapore’s financial district. It reduces costs for start-ups, gives them convenient access to data centre and other services, and even has a nursing room. 15 Let me cite two FinTechs starting up residence here in LATTICE80: Percipient, a local start-up, has successfully developed a customised digital solution for the State Bank of India. Percipient’s big data technology allows for efficient management of the bank’s database of over 500 million accounts, and translating into large potential cost savings. Sparks Systems builds new generation trading platforms for hedge funds, banks, financial institutions and other high volume institutional participants in the foreign exchange market. It aims is to develop an efficient market place for emerging market FX. 16 This innovation village also promotes collaboration and co-creation. Even in an age of Tweets and Snapchats, face-to-face interaction remains a source of new ideas, and a way to suss out potential partners. 2/3  BIS central bankers' speeches  R3 LRC, a specialist in distributed ledger research supported by a consortium of more than 70 financial institutions, will set up its first physical presence here. R3 Asia Lab will promote the cross-pollination of ideas between Singapore FinTechs and leading technologists around the world. The Fintech Association Singapore, another resident here, is a cross-industry initiative to facilitate collaboration among all stakeholders in the FinTech ecosystem.

In the presidential election campaign, both the conservative candidate Nicolas Sarkozy and the socialist Ségolène Royal argued that the ECB should, for example, do more to support economic growth. I will only remind you that, by the will of the French democracy, the Banque de France was made independent from French politics before the establishment of the ECB, with a primary mandate for price stability. To allow the central bank to become independent, both chambers of the French parliament changed the constitution of General de Gaulle with a three-fifths majority. It rather looks like people in your home country have forgotten that. BIS Review 18/2007  1  Certainly not the people, who, according to surveys, are firm supporters of our independence. In any case, the Maastricht Treaty calls for the full independence of the central bank. Under the Treaty, governments are not even allowed to try to influence the ECB. Nevertheless, would it not be better for the ECB to be a little more flexible and – like the Federal Reserve – react more strongly to the needs of the economy as a whole? Our mandate is unambiguous. Our primary objective is price stability. And price stability is a necessary condition for sustainable economic growth and job creation. The central banks of nearly all industrialised and emerging countries have policies based around the combating of inflation, and that is precisely what our fellow citizens want.
By contrast, the euro area was more exposed to the energy crisis than the US, given its proximity and higher energy dependence to Russia and especially Russian gas. As long as inflation is largely caused by supply side factors such as energy prices, interest rate hikes cannot address the problem. Hence the ECB reacted when the inflation rate in the projected horizon breached its 2% target and saw signs of infiltration of inflation into demand side factors of the economy. Consequently, the ECB started raising interest rates in July 2022. However, it had started normalising its monetary policy much earlier in 2022 by terminating the PEPP and APP bond purchases. The second main difference relates to the labour market dynamics of the two economies. The US labour market exhibited at a relatively early stage, a greater degree of tightness, evidenced by stronger wage growth in the US than in the euro area. This higher degree of US labour market tightness was another key factor in explaining the medium-term inflationary pressures. By contrast, in the euro area, the pick-up in wage growth is relatively a more recent phenomenon. Characteristically, US labour costs increased by 5.8% in 2022, and almost 12% in the two year period 2020-2022. In the euro area, data until the third quarter of 2022 show that labour costs have increased by 2.8%, with a cumulative growth of 7% over the same period of 2020-2022.

Second, a set of resolutionrelated reforms are intended to limit the consequences to the financial sector if a failure by such an institution still were to occur. Given the limited time on this panel, I will not review in detail the post-crisis comprehensive capital and liquidity framework that the Federal Reserve has put in place. However, from the perspective of addressing too big to fail, it is important to highlight the Federal Reserve rule finalized this year that imposes risk-based capital surcharges on the handful of U.S. global systemically important banking organizations (GSIBs). Under this framework, a GSIB’s riskbased capital surcharge will reflect the degree to which its failure would impact the financial system. In effect, the risk-based capital surcharge confronts each U.S. GSIB with the choice to either reduce its systemic footprint or instead to hold more capital. The policy approach to too big to fail recognizes, of course, that we can reduce but cannot completely eliminate the possibility of a large financial institution’s failure. Therefore, a second aim of our post-crisis reforms has been to limit the adverse consequences that would result if a large financial institution were to fail. That is, large financial firms need to be capable of being successfully resolved without creating unacceptable collateral damage to the rest of the financial system and to the economy.
2  All speeches are available online at www.bankofengland.co.uk/speeches  2  In part, the deceleration of the global economy reflects the shift from accommodative to tighter financial conditions that occurred initially in emerging economies, then in most advanced economies, and finally and sharply in the United States (Chart 2). Last year, the returns on all major asset classes from equities to credit to sovereign debt were negative. Cash once again was king. Chart 2: Global financial conditions indices tightened over 2018 United Kingdom  Standard deviations from historical average  8  United States  7  Emerging Market Economies  6  Global  5 4 3 2 1 0 -1  -2 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Sources: Bloomberg Finance L.P., Eikon by Refinitiv and Bank calculations. The tightening of financial conditions globally partly reflected the usual – if somewhat delayed – reaction to the tightening of monetary policy.1 Over the past year, the withdrawal of monetary policy accommodation gathered pace. The Fed raised interest rates four times, and the Bank of England and ten other G20 central banks also tightened policy. In addition, after five years in which there was no new net issuance of G7 government debt, new government borrowing outweighed central bank purchases by more than $ trillion for the first time since 2012. Potentially more seriously, the slowing in global momentum may also be the product of rising trade tensions and growing policy uncertainty.

This specific point highlights the more general progress that has been made improving the resilience of the core of the financial sector. Banks in most regions are now more likely to be stabilisers rather than amplifiers of shocks. Regulation has made banks less complex and more focused. They lend more to the real economy and less to each other. Trading assets have been cut in half, and interbank lending is down by one-third. And their resilience in most jurisdictions has been transformed. For example, UK banks have CET1 ratios of about 15%, more than three times their pre-crisis level. Their aggregate MREL is 26%. They hold £ trillion  21  Based on all widely traded CLOs in the US and Europe. 12  All speeches are available online at www.bankofengland.co.uk/speeches  12  of high quality liquid assets, a four-fold increase over the past decade. And their short-term wholesale funding has fallen from 15% to 4% of balance sheets. There is also greater supervisory scrutiny, not least through stringent stress tests. Indeed, in the past few years, major UK banks have been tested against all the major risks I will cover today (from China to inflation scares plus a few others for good measure). The Story Thus Far While there are pockets of risk and global growth is still decelerating, the combination of the policy response and the state of the current imbalances in advanced economies suggest that global growth is more likely than not to stabilise eventually around its new, modest trend.
(b)  Regulating the network  The first diagnosed case of Human Immuno-Deficiency Virus (HIV) in the United States came in June 1981. The first diagnosed case of HIV in Australia came in November 1982. In the early 1980s, rates of HIV and AIDS incidence in the US and Australia were roughly similar on a per capita basis. But from the mid-1980s onwards, things changed. By 1994, rates of incidence in the US were six times those in Australia. By 2003, the per capita prevalence of HIV in the US was ten times that in Australia. 29 What explains these differences? The short answer appears to be government policy. In the US, the policy stance since the early 1980s has been largely theological. The preventative response has taken the form of moralising about sexual abstinence and monogamy. Since the mid-1990s, the US government has invested in the less contentious areas of HIV/AIDS treatment. But as recently as 2007, the US administration remained opposed to the provision of condoms or needle and syringe programmes to prevent the spread of HIV/AIDS. Australian policy since the early 1980s has, by contrast, been grounded in biology rather than theology. It has been systematic, with policy evidence-based and preventative. Education and prophylactic measures have been widely available. But there have been targeted initiatives for high-risk groups – for example, sex workers and drug users – through subsidised needle and syringe exchanges and free condoms. The results of this programme are clear in the statistics.

Norway experienced a rapid automation of the payment market after banks altered their pricing and began to implement transaction fees that better reflected banks’ own costs. In Sweden, the introduction of transaction fees for cheques contributed to bank customers’ increased use of debit cards. As for cash, Swedish banks do not implement any fees for cash withdrawals while such fees do occur, for example, in other Nordic countries. Thus, differences in pricing can be expected to be an important factor in explaining the differences we observe in the use of cash. Given this, the Riksbank together with the four major banks initiated a study on the pricing of payment services in Sweden. Together these four banks account for more than 90 per cent of the Swedish retail payment market. Our aim was twofold: we wanted to estimate the costs that banks have in the  1  Sveriges Riksbank (2004), “Prices and costs in the Swedish payment system”, in Financial Stability Report 2004:2. 2  Cheques are no longer in use in Sweden. 1/3  production of these services, and we wanted to see whether the price mechanism is working well; whether prices provide users with information on what the different payment alternatives cost. Cost and price estimates The study was based on both fixed and variable cost and price data from 2002. Normally we would assume that users receive correct cost information when they face transaction fees that correspond to marginal costs in production.
I would like to address a more fundamental issue, concerning the ability of our current analytical tools to capture the changes which have taken place over the last two decades. As surveillance is ultimately based on a conceptual framework, then if that framework is biased, we are inevitably less able to capture imbalances and to detect risks to the world economy. So it’s important to assess whether the crisis has challenged some of the main assumptions of our framework. Work in this area has already started, to some extent. One key assumption which has been challenged, for instance, regards the efficient market hypothesis. In prevailing models, markets are assumed to price risk efficiently and to reflect underlying fundamentals. Thus, as long as asset prices do not reflect a change in the market assessment of risk, the risk is assumed not to exist or is underestimated. And often policy-makers behave as if the risk simply didn’t exist as has been the case for sovereign risk or inflation risk. I would also like to examine another fundamental assumption of our economic models which has largely gone unchallenged, or at least has been insufficiently considered in my view. It is the impact of “globalisation”, i.e. the strong and sustained growth of emerging market economies (EMEs), on the long-term trends of the world economy, including the effects on advanced economies (Charts 1 and 2).

Of course, this depends on supply elasticity. However, it may take time to develop new sources of supply that can keep up with demand. The increase in commodity prices weighs negatively on countries which consume more of these products – mainly the advanced economies – and on those with lower productivity growth. Another “negative-impact” channel is the Balassa-Samuelson effect, according to which prices of manufactures and services in EMEs increase more rapidly than in advanced economies. To the extent that these prices remain lower than those in advanced economies, any increase will worsen the latter’s terms of trade, especially if domestic production is limited or has been totally offshored. To sum up, there is a need for more analysis of how growth potential is affected by ongoing developments, such as globalisation. My impression is that there is too little work being done on this issue; I fear that we will exit from the crisis with the same old analytical instruments and assessment that we had prior to the crisis – the very same ones which were responsible for the insufficient surveillance of economic developments and policies. 3  L. Bini Smaghi (2009) “Towards the G8 – strategies for emerging from the crisis”, LUISS Guido Carli University, Rome 27 May 2009. BIS central bankers’ speeches  3  Inflation Inflation is the second way in which the strong, steady progress of the EMEs is affecting advanced economies (Chart 5).
It re-distributes income in favor of the rich people who normally save a greater proportion of their income than the poor people. So, a country would get the much needed savings as a result of inflationary redistribution. It makes available funds for investment and through investment, ensures long term sustainable growth. Due to the above reasons, inflation tax has been liberally used by many governments throughout the world. The evils of the use of inflation tax Though inflation tax has been preferred by many, it has been criticized on many grounds. The first criticism is leveled on the ground that, when governments learn of this easy way of funding budgets, they would tend to ignore the more solid and sustainable forms of raising revenue, namely, through taxation. This type of behavior is known in economics as “moral hazard” behavior. The danger of that behavior is that it deprives the society of the opportunity to carry out public expenditure programs based on a solid resource base. It would reduce the government to the same unfortunate position of a student who has passed all his examinations by cheating. Then, one day when he could no longer do so to pass an examination, he would painfully learn that he has no in-built capability to face it on his own strength. The second criticism has been advanced on the ground of the evils of inflation. They could be summarized as follows: •  Inflation causes the market system to fail in its resource allocation function.

Her sacrifice is a real sacrifice, because she could have enjoyed that time for her own pleasure. In contrast, the government’s real sacrifice is just 5 units of money, the value of real resources it spent on producing the note. So the government enriches itself at the expense of the teacher who now has been given a note with real sacrifice of 5 units for getting eight hours of real services. This type of an unfair transaction is known in economics as an unequal exchange. Why should the teacher agree to this unequal exchange? That is because she is promised that she could acquire a real basket of goods and services worth of 1000 units of money with that paper. For instance, if a kilogram of rice is 1000 units, she is promised one kilo of rice in exchange for eight hours of her time. If this promise is kept, then, there is no problem. But, if such currency is excessively produced, too much money would chase after too little rice and the price of rice would go up in the market. As a result, when the teacher goes to the market, if the price of rice has risen to 2000 units of money, she could now buy only a half of a kilogram of rice. In other words, she has been forced to give up eight hours of her time for half a kilo of rice.
In addition to problems in achieving the right pricing and quantity, there are also other aspects that must be considered in the event that the state-issued means of payment disappears from the payment market in the future. Social welfare maximisation is a broader goal than private actors’ interest in maximising their profits. For example, it is important for central government to achieve a good balance between socio-economic risks and costs. Central government also takes account of factors connected with ensuring accessibility for all groups in society, resilience to shocks, preparedness and equal conditions regardless of where in the country users may live, for example. What I want to say is that it would probably require increased state governance and quite extensive resources to ensure that the private market delivered on all these points. What would be required is something that needs to be analysed further in parallel with the analysis of the e-krona. The alternative to regulation is for the Riksbank to continue to supply a means of payment that sets the standard for the country’s means of payment and that also exposes the private sector to a certain amount of competitive pressure, just as we have done for 350 years. Several measures are needed for resilience on the payment market The Riksbank also carries out other work than the analysis of the e-krona to safeguard the resilience of the payment market.

Caleb M Fundanga: Zambia’s economic outlook - what have we learnt in the last 40 years and where do we go from here? Paper presented by Dr Caleb M Fundanga, Governor of the Bank of Zambia, at the CIMA Zambia annual business discussion on the theme “Zambia’s economic outlook - what have we learnt in the last 40 years and where do we go from here?”, Lusaka, 7 January 2005. * • • • •  *  *  Mr Chairman The President of CIMA Zambia, Mr Cleaver Mulundu Distinguished Invited Guests Ladies and Gentlemen  I wish to thank the President of the Chartered Institute of Management Accountants (CIMA) Zambia Chapter, Mr. Mulundu and his Executive for inviting me to present a paper to this distinguished gathering on the theme “Zambia’s Economic Outlook: What Have We Learnt in the Last 40 Years and Where Do We Go from Here.” The topic is timely, as it is very important to take stock of our past economic development efforts, including the mistakes and good policies of the past and assess the current economic conditions in order to put up a future strategy. In this respect, I will discuss what I consider to be the key lessons of macroeconomic management and present an outlook for the period ahead. In so doing, I will also highlight the challenges that lie ahead in our quest to develop our economy. Mr Chairman May I start by reviewing our economic performance during the last 40 years.