samchain/econo-pairs-v1 huggingface dataset:
In the Central Bank’s view, the real estate market will cool down significantly in the near future and private consumption growth will normalise next year. It might seem natural to ask whether the Bank’s concerns about inflation will not vanish overnight then, because housing prices have been the only factor keeping inflation figures high. Unfortunately the matter is not  BIS Review 28/2006  1  so simple. There is no doubt that the Central Bank’s policy rate measures have played a crucial part in helping the other index components to counteract house price inflation in the recent term. The movements in the exchange rate of the króna in the past few weeks exacerbate the challenge of steering inflation back onto a more moderate course. Of course it would be easy to cite repeated comments and Central Bank declarations that the strength of the króna was unsustainable in the long run, and the many arguments supporting them. However, the Central Bank had hoped that the inevitable exchange rate adjustment would have occurred somewhat later than it actually did and would also have been more measured. The exchange rate adjustment would preferably have taken place after a slowdown in house price inflation and a substantial easing of the pressures which, according to newly published national accounts figures, were even greater than previously thought. Under these circumstances, what the Central Bank must do is clear and it has no alternatives.

The ease of the lending rates was pertinent both for households and corporate sector, though in some of the countries, like the Baltic States, Romania, Bulgaria and Serbia, the correction of the interest rates on loans was more pronounced at the corporate segment. Macedonia and Poland have the feature of a sharper correction at the housing segment, compared to the corporate. The magnitude of the correction along different sectors is conditioned upon many specific factors, the initial levels, the riskiness of the portfolios, for instance, and hence it is difficult to infer which banking sectors had larger “progrowth” adjustment in the interest rate policy. What is also important is the fact that the costs of financing were reduced, and the intensity of the reduction did not differ much compared to the changes of the key policy rate (highest difference of about 2 p.p. is observed for Macedonia, Serbia and Bulgaria). Thus, access to financing for both households and corporate sector was facilitated, contributing to higher propensity to borrow and underpinning economic recovery.
There are many ways for banking groups to reconfigure their corporate structure. In the end, what counts as a FHC is a matter of substance, and not of the form of the organisation chart. MAS reserves the right to declare any company which owns a substantial share of a bank, directly or indirectly, as an FHC. Such an FHC will be subject to MAS regulation and will not be allowed to own non-financial activities. BIS Review 53/2000  4  Cross-shareholding The financial entities will not be allowed to own, directly or indirectly, the shares of non-financial firms affiliated to the same principal shareholder. Within the financial arm, shareholdings should only be in one direction. We will not allow two companies in the financial arm to have mutual shareholdings in each other. For example, if a bank takes a stake in an insurance company or securities firm, then the insurance company or securities firm would not be allowed to hold a stake in the bank. The Companies Act already prohibits subsidiaries of banks from owning shares in the bank. We will extend this principle to all entities below the bank or FHC, whether or not they are subsidiaries of the bank or FHC. Ideally, we should also disallow the non-financial entities from owning shares in the financial entities. However, we do not start from a clean slate. Requiring the banks to divest themselves of the nonfinancial activities will already be a major structural change.

And although consumer price inflation here is close to target at 2.1%, three developments now threaten to push it significantly above target this year. First, oil prices are around $ a barrel, although they have fallen back in recent days. In August, the price was $ Second, oil price increases have been accompanied by rising gas prices in wholesale markets. And this month we have seen announcements from suppliers of increases in household gas and electricity bills of the order of 15%. Third, world food prices have risen sharply as a result of strong demand growth on the one hand and poor harvests from South Australia to North Carolina on the other. Food prices on world markets are a third higher than they were six months ago, and that has been feeding through to prices in the shops. Food price inflation in our own Consumer Price Index reached almost 6% in December. So 2008 is likely to see higher energy prices, higher food prices and, with a lower exchange rate, higher import prices, pushing inflation above the 2% target. It is possible that inflation could rise to the level at which I would need to write an open letter of explanation, possibly more than one, to the Chancellor. Although there is little we can do now to avoid some rise in inflation this year, the task of the Monetary Policy Committee is to ensure that it is short-lived.
The conclusion is that “the stance of monetary policy has not generally been a good leading indicator of future house price busts… There is some association between loose monetary policy and house price rises in the years leading up to the current crisis in some countries, but loose monetary policy was not the main, systematic cause of the boom and consequent bust.” Further-more, the overall relationship between the stance of monetary policy and house-price appreciation across countries in the years before the current crisis is statistically insignificant and economically weak, and monetary policy differences explain only about 5 percent of the variability in house price appreciation across countries. 13 Lessons for flexible inflation targeting What conclusions can we draw so far from the financial crisis about the conduct of monetary policy and any need to modify the framework of flexible inflation targeting? One obvious conclusion is that price stability is not enough to achieve financial stability (Carney 2009, White 2006). Good flexible inflation targeting by itself does not achieve financial stability, if anyone ever believed that. Specific policies and instruments are needed to ensure financial stability. Another conclusion is that interest-rate policy is not enough to achieve financial stability. Other instruments like supervision and regulation, including appropriate bank resolution regimes, should be the first choice for financial stability. In many countries, the responsibility for these instruments rests on authorities other than the central bank.

Real interest rates were low to a large extent because of global imbalances, the global saving glut and investment shortage. I believe that somewhat higher interest rates would have made little or no difference. Empirical evidence indicates that only a small portion of house-price increases can be attributed to monetary policy. 10 Bernanke (2010) shows that the recent phenomenon of a higher share of adjustable-rate mortgages was unlikely to have significantly increased the sensitivity of house prices to monetary policy. The availability of new, more exotic mortgage types mattered much more for initial mortgage payments than the level of shortterm interest rates. In my view, interest rates would probably have had to be raised very high so as to cause considerable damage to the real economy in order to stop the credit growth and housing boom. 11 That could have thrown the U.S. right into Japanese-style deflation and eventually a liquidity trap. Certainly, higher interest rates would have had no impact on the regulatory problems, distorted incentives and information problems mentioned above  7  I remember this period very vividly, because I was fortunate to have the opportunity to discuss and debate the problems of current monetary policy, deflation and liquidity traps in a group of great economists at Princeton University that included Ben Bernanke (before he left to be a Governor on the Federal Reserve Board), Alan Blinder, Paul Krugman, Chris Sims and Michael Woodford. 8  See Svensson (2003) for a discussion of policy options before and in a liquidity trap.
The impact on the Danish economy has therefore been more limited. BIS Review 81/2008  3  Nordic countries. The growing number of people outside the labour force and on benefits is increasingly becoming the Achilles’ heel of the Norwegian economy. On balance though, the picture is fairly positive: We have managed to keep macroeconomic developments on a steady course, we have avoided dramatic changes in industry structure, and we use our resources fairly efficiently. It is, however, too early to draw definite conclusions. We probably have to wait another generation or two to see the long-term impact of this huge windfall. The debate on sovereign wealth funds Let me wind up with a few words on the sovereign wealth funds debate. Typical features of many sovereign wealth funds are long investment horizons, no leverage and no claims for the imminent withdrawal of funds. This differentiates such funds from for instance the rising number of leveraged funds and investors with short time horizons. Hence, sovereign wealth funds have a strong risk-bearing capacity and an ability to accommodate short-term volatility. Sovereign wealth funds may reduce volatility in asset prices and increase efficiency. Again, transparency and disclosure of information is an important tool in building confidence. This runs both ways, of course.

Since 2005, we have published a projection of the future path of our key policy rate. This path reflects our view on the role of monetary policy. We consider an interest rate path to be appropriate when it meets three criteria. First, the interest rate should be set with a view to stabilising inflation at our 2.5 percent target. Second, the interest rate path should provide a reasonable balance between the path for inflation and the path for overall capacity utilisation. This implies that inflation targeting is flexible. Notwithstanding new macroprudential tools, we see a need to add a third criterion: The interest rate should be set so that monetary policy leans against a build-up of financial imbalances. At Norges Bank, we remain firmly committed to our flexible inflation targeting framework. But the global financial crisis has taught us to be both modest and inquisitive. Experience with new macroprudential policy tools is limited, and institutional frameworks are still in the making. Leaning against financial winds remains subject to debate. It is therefore important that we actively seek knowledge. It is our obligation as central bankers to continuously search for the best practice for monetary policy. And we do not have to agree with Friedman's prescriptions to revisit the important questions he posed. We are privileged to have such a distinguished group of central bankers and academics present at this conference to help us with this task.
In the U.S., we saw a spike in Treasury yields, with the 10-year rate rising by more than 100 basis points from early May before peaking in early September. Most commentary about this period has focused on the shift in expectations with respect to U.S. monetary policy – and, in particular, to uncertainty about the timing and implications of Fed tapering – as the catalyst for these moves. This focus seems generally right to me, although other factors also played a role. 1  1  Market participants also had to evaluate the possibility that growth in China and other EMEs might be slowing even as growth in the U.S. and other advanced economies was picking up. The subsequent market movements as investors withdrew funds from EME investments were an abrupt shock for these EMEs generally, especially after the long earlier period of abundant liquidity and ample inflows. BIS central bankers’ speeches  1  From one perspective, the unconventional nature of recent U.S. monetary policy adds little that is fundamentally new to the challenges that face the EMEs. These policies simply represent a way of easing, necessitated by our coming up against the zero lower bound. Central bankers have managed differences across countries in cyclical positions and policy stances many times in the past. This time should not be fundamentally different. But, from another perspective, we have less experience operating with unconventional monetary policy, and this creates more potential uncertainties.

Zeti Akhtar Aziz: Greater financial integration and financial stability Opening remarks by Dr Zeti Akhtar Aziz, Governor of the Central Bank of Malaysia, at the SEACEN 30th Anniversary Conference “Greater financial integration and financial stability”, Kuala Lumpur, 20 October 2013. *  *  *  Bank Negara Malaysia is honoured to welcome you to the SEACEN 30th Anniversary Conference on “Greater Financial Integration and Financial Stability”. We are especially honoured by the presence of Governors and senior officials who are here today, despite the pressing demands on our institutions during this period of persistent uncertainties in the global financial and economic environment. We continue to face challenging and often testing times. Over the recent five years, we have been confronted with recurring episodes of turbulence, followed by phases of transitory recoveries. We have seen, and have been part of, extensive collaborative measures and reforms pursued at both the regional and global level. Yet, the calm after the storm continues to evade us. The SEACEN and Asian economies have seen significant structural adjustments and wide ranging financial reforms in this decade. During this period intra-regional trade activity has rapidly increased, signifying the deepening of economic ties within the region. Intra-regional trade in East Asia has expanded from an average of 44% of total trade in 1995, to 50% in 2012. Intra-regional investment activity has also been on an uptrend.
While the gold initiative’s third demand – that all of the SNB’s gold holdings should be stored in Switzerland – may be unproblematic in monetary policy terms, this too runs counter to the notion of security. Gold is stored in multiple locations for reasons of risk diversification, in other words to improve security. The lion’s share of the SNB’s gold reserves (approximately 70%) is already stored in Switzerland and an appropriate regional diversification serves to enhance the SNB’s market access. Concluding remarks Please allow me to make a few closing remarks. Managing Switzerland’s substantial foreign exchange reserves in the country’s best interest remains our key investment policy challenge. New markets are playing an important role here. I have discussed the growing significance of Asia and explained the process by which we plan to be able to invest a small fraction of our foreign exchange reserves in China in the near future. Thanks to our branch office in Singapore, we are optimally positioned to monitor developments and manage our investments in the Asia-Pacific region efficiently. Within the scope of its mandate, the SNB needs a certain amount of latitude in order to continue fulfilling its monetary and investment policy objectives, especially given that the Swiss monetary policy landscape is set to remain challenging in the foreseeable future. A BIS central bankers’ speeches  5  “yes” vote for the gold initiative would severely restrict our scope for action. It would therefore make it considerably more difficult for the SNB to conduct successful monetary policy operations in future.

Its implementation would entail far-reaching implications on a wide range of issues relating to areas such as legal, regulatory, policy, financial stability, privacy, cybersecurity, and interaction with existing payment methods. We also understand that e-HKD would be a critical and complex financial infrastructure project that may take years to complete. Therefore, we announced in September last year that we would adopt a three-rail approach to pave the way for possible implementation of e-HKD: Rail 1 aims to lay the technology and legal foundations for supporting the implementation of e-HKD. Rail 2 focuses on application research and pilots, and it runs in parallel with Rail 1. Rail 3 is concerned about launching e-HKD, which will depend on the actual progress made under Rail 1 and Rail 2, as well as the pace of relevant market development. This comprehensive three-rail approach will ensure that Hong Kong continues to play a leading role in the global financial landscape by getting ourselves ready as best as we can in terms of implementing retail CBDC. 1/3  BIS - Central bankers' speeches  e-HKD Pilot Programme Today's event marks the commencement of the e-HKD Pilot Programme, which is a key component under Rail 2. It is a tremendous opportunity for the HKMA to work with the industry to consider different use cases and design choices, and co-create new payment functionalities and infrastructures that could add value to society. We look forward to this public-private partnership in shaping the future of money in Hong Kong.
At the same time, our increasing dependence on oil and gas increases the vulnerability of the Norwegian economy. We know that neither of these sources will spring eternal. The theme of my speech this evening is how to enhance the resilience of the Norwegian economy. Continued weak growth prospects, but less fear When the financial crisis washed over the Norwegian banking sector in autumn 2008, we were reminded of how dependent we are on the world around us. Nonetheless, the Norwegian economy weathered the crisis well. After about a year, the downturn in Norway was over. Chart 1: Emerging economies are driving oil demand One of the main reasons is that there is strong demand for Norwegian goods in countries where economic growth remains robust. The centre of gravity in the world economy is shifting. In the course of the next few decades, China will most likely be the largest economy in the world. Emerging economies – with China at the forefront – are the main driving force behind the increase in demand for crude oil and other commodities. As a result, prices for Norwegian export goods have remained high, even in the context of declining growth among our traditional trading partners. Chart 2: Strong improvement in terms of trade  1  From Johan Borgen’s novel “De mørke kilder” [The Dark Springs], first published in 1956, Gyldendal Norsk Forlag. BIS central bankers’ speeches  1  The emergence of newly industrialised economies has also led to lower import prices in Norway.

Percentage change from previous year 8  8  7 6 5  7  GDP Mainland Norway Employment  6  Average 1990-2001 = 2.8%  5  4  4  3  3  2  2  1  1  0  0  -1  -1  -2  -2 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001  Source: Statistics Norway SG 240802  Correlation with world index.
Their view of the Swedish economy has continued to deteriorate and they have also become gloomier with regard to their own economy. At the same time, households’ inflation expectations one year ahead have risen significantly. However, it can also be noted that households perceive the current inflation rate to be much higher than it actually is. Prior to our next monetary policy meeting we will receive measures of inflation expectations among other groups which must also be analysed (Prospera). The new National Accounts for the first quarter that were published earlier today show that growth in the first quarter was weaker than we had expected. They also show that labour productivity increased slightly in the first quarter of this year, after having fallen for most of 2007. We will be closely analysing what the new GDP statistics otherwise entail for our assessments prior to our next meeting in July. Preliminary statistics indicate a lower rate of wage increase than we had estimated – both for blue-collar and white-collar workers – during the first months of this year. One possible reason for this is the composition effects in the wage statistics. If, for example, new groups are being employed at low entry wages to a greater extent than before, then the average rate of wage increase will be lower. But so far there have not been any signs that the rate of wage increase has accelerated. Of course, this is something we are monitoring closely. Inflation is still high, just as I said before.

Let me briefly outline our concept regarding the new investment process:  BIS Review 58/2003  3  •  The Bank Council approves the principles laid down for risk policy and the investment process. •  The Governing Board decides each year on the investment strategy based on the aforementioned criteria of liquidity, risk and returns. •  The organisational unit Asset Management, which is part of Department III, is responsible for the market-oriented implementation of this investment strategy. An investment committee chaired by the head of Asset Management makes the strategic investment decisions and sets the targets for each portfolio manager. •  A well-tested risk control process ensures that risk taking at the different levels is duly supervised. Responsibilities and competencies are clearly assigned at all levels of the investment process. Performance at the different levels is assessed through the consistent use of benchmarks and the corresponding measurement techniques. The process described above is applied to the management not only of the international reserves but also of the proceeds from the sale of gold no longer needed for monetary policy purposes. How the gold reserves deemed “free” at the time are finally used will be a political decision. Managing these assets is not part of the SNB’s statutory mandate. Thanks to the new NBL and the SNB’s internal know-how, however, the Bank is well qualified to perform this task. 4  BIS Review 58/2003
A number of the proposals being considered are international in nature, like those improving supervisory cooperation between regulators, and requiring higher loss absorbency capacity for G-SIFIs. However, primary responsibility for these G-SIFIs lies with national regulators, who must retain discretion over the specific supervisory stance to take with respect to these institutions. Conclusion 25. Let me conclude. This is a fertile time for the study of finance and risk. The financial landscape is undergoing dramatic change. The three dimensions of rebalancing that I outlined are still being played out, with many unanswered questions. What should be the balance between markets and regulation? What is the optimal level of capital in the banking system? How can we minimise the risk of liquidity shortfalls? Should trading activities be separated from commercial banking? How should incentives be structured to promote sound risk management? Can financial innovation help to reduce financial risks? What do we do with financial institutions that are both too big to fail and too big to save? How should macroprudential policies be designed? 26. The Sim Kee Boon Institute can play a key role in advancing our understanding of these issues and providing thought leadership. The Institute has already published a number of interesting papers on topics ranging from securitisation to the effects of poison pills on corporate governance. I look forward to more insights from the Institute in the years ahead. We can expect nothing less from an Institute named after one of the pioneers of the Singapore Civil Service.

Sim Kee Boon helped to chart Singapore’s economic development through the turbulent 1970s, when stagflation and oil price shocks shook the world’s economies. We are living in even more interesting times today. 27. The Institute has gathered an impressive collection of talent here today. I wish you fruitful discussions. Thank you. 4  BIS central bankers’ speeches