samchain/econo-pairs-v1 huggingface dataset:
Distinguished ladies and gentlemen, I dedicated most of my last year’s speech arguing that the stable Denar exchange rate is still the best solution for the Macedonian economy. In the public debate concerning this issue last year, on many occasions, I presented additional arguments that underpin my view. On this occasion I will discuss the two theses recently presented by the advocates of floating Denar exchange rate. The first thesis is that the floating exchange rate will ensure more relaxed monetary policy, and accordingly, higher economic growth. The second thesis is that the Denar exchange rate is not realistic, i.e. it is overrated. Yet, so far, I still have not heard any explanation of how would the floating exchange rate relax the monetary policy, nor arguments supporting the view that the Denar is overrated. Considering the first thesis, note that the exchange rate regime does not determine whether the monetary policy will be restrictive or relaxed. You could have floating rate and restrictive monetary policy, or fixed exchange rate and relaxed monetary policy. What is important for the monetary policy is whether there are imbalances in the economy or not. Just because of the absence of imbalances in the Macedonian economy, as I elaborated at the beginning, we can afford relaxed monetary policy. Conversely, due to the nature of our economy, the floating exchange rate would fuel uncertainty and create imbalances and high inflation, the alleviation of which would require extremely restrictive monetary policy.

To summarize, we face low level of risk in the external and the banking sector, low to moderate level of risk in the public sector, the Denar exchange rate is stable, the inflation is lower than in the euro area, and the economic activity decelerates. What would be more suitable in a situation like this than to send signal that there are conditions for enhanced banking activity without jeopardizing the stability? This is exactly the goal of our measures. It is not our intention just to conclude that the credit growth does not develop as expected, and to revise the rate downward all over again. We consider that the credit growth could range around 7–8% without jeopardizing price and financial stability, and we clearly signalize this. BIS central bankers’ speeches  1  The question is whether the banks will follow our signal? The promptness and intensity of banks’ response depend on the power of monetary policy transmission. The recent researches conducted by my coworkers show that the power of monetary policy transmission in our banking system is limited. This was yet another reason to redesign the monetary policy instruments. We hope that the new monetary framework will improve the monetary transmission. Otherwise, we will keep on advancing the monetary instruments setup. CB bills are the National Bank basic instrument used to absorb excess liquidity by banks. CB bills are not investment vehicles. In many countries there are no CB bills.
If one claims this, one is also implying that central banks and governments do not have the possibility to choose the level of the inflation target, but that this is something determined by structural conditions in the economy. Ultimately, one thus also says that inflation is not a monetary phenomenon, which does not concur with what is widely accepted today. Important to maintain confidence in the target A slightly milder interpretation is that one did not literally mean that the inflation target should be lowered, but that the Riksbank, and all other participants in the Swedish economy should accept that inflation will continue to undershoot the target over a long time to come – despite the fact that it has already been below the target for several years. The main reason would be that the expansionary monetary policy required to bring inflation up to the target would also contribute to a further increase in house prices and household debt. I have some understanding for these thoughts, but I consider that they disregard a number of important circumstances as well. I believe that above all, one underestimates the importance of maintaining confidence in the inflation target and the problems that can arise if this confidence is lost. We have lived with an inflation target of 2 per cent for more than twenty years and few would claim anything other than that it has been a good system with good results for the Swedish economy.

Today I intend to take up a couple of questions that I consider relevant to both the debate in Sweden and the international debate. The first question is what role monetary policy should play with regard to promoting financial stability. This is a question that is still raised as one of the most important ones in the international discussions on possible changes in the inflationtargeting framework, although in many countries this has been overshadowed by the recent low inflation figures. A second question that, for natural reasons, is always topical when discussing whether the inflation-targeting policy needs to be modified is whether the level of the central banks’ current inflation targets – usually around 2 per cent – needs to be changed. This is also something that has been discussed quite a lot by academics and in various policy forums since the financial crisis. Internationally, the discussions have focused  BIS central bankers’ speeches  1  on the question of whether the target should be raised, while in Sweden the focus has instead been on whether the target has been set too high. I intend to address the arguments for both points of view and to give my own views on the subject. Should monetary policy take financial imbalances into account? But let me begin with the question of monetary policy and financial stability. One lesson from the financial crisis is that price stability is not sufficient to ensure financial stability in the economy.
To put this in historical perspective - no region of the world saw sustained growth exceeding 5% for any period before the middle of the last century, except for Australia and New Zealand in the 19th century. No one expects growth to be linear or to continue unbroken, in either Asia or the Middle East. There will be bumps along the journey, sometimes flash floods, and sometimes a cave-in. But the basic trajectory is upward. The growth story that we are seeing is not an aberration, or a flash in the pan before growth in Asia or the Middle East recedes to the very modest norms that were seen for much of economic history before World War II. Growth is being propelled by fundamentals. First, both our regions have an abundance of natural resources, and are benefiting from the natural interplay between industrialization and demand for natural resources. Asia’s industrialization alone is driving an unprecedented global demand for raw materials, energy and other commodities. China and India alone have contributed over 35% of the increase in global oil demand over the last 15 years. Yes, there are huge inefficiencies in energy use, and concerns over the environment, that have to be addressed before long. But the basic interplay between industrialization and natural resources will continue for many years to come. Further, both our regions are not just opening up to global markets, but developing domestic demand in our own economies. They are diversifying, and growth is becoming more balanced.

In time, several aspects of transition differed from one country to another: smaller countries, such as the Baltic states or Slovenia and Slovakia, opted for a fast track towards Eurozone entry, inter alia because of geopolitical and security reasons, while states with larger and more complex economies, such as Poland, Hungary, Czechia or Romania, focused their efforts more on internal development. For instance, in Poland there is talk of “Polish-ization” and “nationalisation” of development, the spotlight being on the requirement to increase the country’s power resources: “if you cannot stand on your own feet, no one will listen to you”. In Romania, we had a very difficult transition in the first post-communist decade, with half-hearted, gradual reform, yet after 2000 our economy has evolved more coherently, having two important anchors: the EU and NATO. Events that were hard to foresee in the early ’90s took place as well. For instance, who would have thought that Slovakia, the less developed part of Czechoslovakia, would join the euro area and Czechia would not? Under the circumstances, does euro adoption testify to a high development level?
The system’s vulnerability can be reduced in a number of ways, for example through wellestablished cooperation within the financial industry and between the industry and the authorities, sound security procedures and recovery capabilities. System owners are responsible for the resilience of their own systems. Norges Bank monitors the systems under its supervision to ensure that satisfactory defence mechanisms are in place. A number of payment system participants have outsourced the operation of their systems to a few ICT service providers. This is a source of concentration risk. The failure of key service providers could bring important parts of the payment system to a halt. The problems at EVRY on 6 October 2017 affected approximately 40 banks in Norway, as well as Norway Post and Telenor. This incident illustrates the potential broad repercussions of the failure of a key ICT service provider. Such concentration risk is difficult for individual system owners to address alone. The entire infrastructure served by the provider is exposed to risk, not merely the individual system. ICT service providers are not subject to the same regulation and supervision as licensed banking and payment system participants. It is Norges Bank’s view that the authorities should explore how 3/5  BIS central bankers' speeches  key ICT service providers can best be supervised. Such an evaluation must be based on the work of the ICT Security Commission, which publishes its report in December 2018. Distributed ledger technology Distributed ledger technology (DLT) offers interesting opportunities.

When the P27 initiative was announced, the BRO project was put on hold in order to consider whether a future common Nordic infrastructure as proposed by the P27 banks could be a satisfactory replacement. Norges Bank has engaged in joint discussions with the other Nordic central banks since P27 was launched. The central banks have given preliminary feedback on the P27 project and appreciate the project’s ambition to improve payment system efficiency in the Nordic area. At the same time, there are issues that need to be addressed before the authorities can take a position on any transition from domestic infrastructures to a common Nordic solution. This process may take time and will also involve authorities other than the central banks. Security legislation is one of these issues. If P27 is realised, it will probably be viewed as an important critical infrastructure for the countries involved. National security concerns may influence the conditions governing whether a payment system infrastructure can be operated across national borders. In the case of Norway, one likely condition could be that satisfactory contingency arrangements must be in place in Norway. Domestic control of the payment system must be possible in a crisis. The European Central Bank has launched a European solution for real-time payment settlement in central bank money called Target Instant Payment Settlement, or TIPS. The system is scheduled to commence operations this month and may be expanded to include non-euro area countries.
High income growth and a sharp rise in the number of households laid the basis for a sharp, long-term rise in house prices. Self-reinforcing mechanisms were also at work, generating an atmosphere approaching euphoria. People hurried to buy dwellings in order to take advantage of the rise in value. It now appears that the housing market is cooling after an almost three-fold rise in prices in real terms in the course of the past 14 years. House price inflation has been accompanied by strong growth in household debt. Household debt in Norway is now about twice the level of disposable income, making the debt-income ratio higher than ever. At the same time, saving is declining and now seems to be negative. This means that in addition to fully financing their housing investments through mortgages, households are also raising loans to finance current consumption. As I mentioned earlier, the favourable developments in the Norwegian economy of the past few years are primarily due to supply-side changes. A flexible inflation target for monetary policy – as in Norway and a number of other countries – provides a sound basis for coping with the shocks to our economy that have occurred in recent years. The aim of preventing  1  See Elisabeth Fevang og Knut Røed (2006): ”Veien til uføretrygd i Norge” (The road to disability pensions in Norway), Report No. 10 2006, Ragnar Frisch Centre for Economic Research. Norwegian only.

As was the case before the crisis and indicated in the June 2011 principles, the Committee intends to adjust the policy stance during normalization primarily through actions that directly influence the level of the fed funds rate and other short-term interest rates rather than through active management of the size or composition of the Fed’s securities holdings. Specifically, when economic conditions and the economic outlook warrant a less accommodative stance of monetary policy, the Committee will raise its target range for the fed funds rate. During normalization, the Committee intends to move the fed funds rate into the target range primarily by adjusting the rate of interest on excess reserve balances (IOER) that it pays. We expect changes in the IOER rate to have a significant influence on the fed  BIS central bankers’ speeches  1  funds rate and other short-term interest rates. However, to help control the fed funds rate, the Committee also intends to use an ON RRP facility and other supplementary tools, as needed. The Committee will use an ON RRP facility only to the extent necessary, and will phase it out when it is no longer needed to help control the funds rate. With regard to the Fed’s balance sheet, the Committee intends to reduce securities holdings in a gradual and predictable manner, primarily by ceasing to reinvest repayments of principal on securities held in the SOMA.
Seven awkward questions Speech given at a roundtable to mark the fifth anniversary of the PRA's Secondary Competition Objective Sam Woods, Deputy Governor, Prudential Regulation and Chief Executive Officer, Prudential Regulation Authority Bank of England Thursday 17 January 2019  1  All speeches are available online at www.bankofengland.co.uk/publications/Pages/speeches/default.aspx  Thank you all very much for coming to our event today, and in particular to our panellists for agreeing to take part. Indeed, I speak on competition with a degree of humility in front of this panel – and particularly in front of Sir John because my first real engagement with these issues took place under his chairmanship when I was working for the Independent Commission on Banking back in 2010. For that reason, and in view of the expertise of this audience, you will be relieved to hear that I am going to avoid giving you a fifteen-minute-long list of all the things we’ve done over the last 5 years to advance our secondary competition objective. Of course I have to do a bit of that or I’m not doing my job! But I’ll just pick out a few items and keep it brief. Nor will I focus too much on some of the hardy perennials of this debate such as low switching rates, because I’m sure others on the panel can do better on those if we want to get into them.

Let me now turn to seven more awkward questions for us. First, how do we square the principle of proportionality with the steeper slope of regulatory requirements this inevitably causes for growing firms? This arises in many ways, where we take a softer approach for smaller firms but this has to be withdrawn as they grow. One example is the steps in our Systemic Risk Buffer regime, which we’ve debated with Sir John in the past – it’s true these could be smoothed to some extent by greater granularity and/or an ‘income tax’ approach, but the basic problem of gradient remains. This issue also arises on the resolution side, which is of course outside the scope of the competition objective – it must be right that we exempt small firms from bail-in debt, but this inevitably leads to a moment when successful firms stop being small and need to start issuing. Second, and related to the first, although we have in my view been pretty successful in encouraging new entrants, it is so far notable that no small bank has successfully become a large bank. Perhaps this will change through time, and it may have much more to do with behavioural stickiness of current accounts than regulation, but it would be complacent to be relaxed about it. As an aside, there may be lessons to be learned here from the general insurance market: it is notable that some of today’s largest GI firms started as small challengers within the last 20-30 years.
The Bank of England has been working intensively with the City for the past few years to ensure that it is as thoroughly prepared for the start of the euro next year as the financial centres in any of the participating countries. We will be ready to provide financial services denominated in euro to all those that want them from day one. And we are already taking the initiative with our European partners in creating regional market structures, as you see, for example, in the talks between the London Stock Exchange and the Deutsche Börse, which are designed to lay the foundations for an inclusive, pan-European, equity market. You will be able to account, trade and settle in euro-denominated assets in London just as you can now in Deutsche Mark or French francs or dollars or yen. The financial markets of the City are our wedding present to the euro marriage partners. They are not just a national - but a European - asset. There are, of course, some here on the Continent who regard this role of the City as something of a mixed blessing - perhaps even a threat rather than a promise. There is a view that the euro should somehow ‘belong’ exclusively to the participating countries and that its introduction should be used as an opportunity to confer competitive advantage on national financial centres within the euro area.

Hamad Al-Sayari: A brief overview of the Saudi Arabian banking sector Speech by His Excellency Hamad Al-Sayari, Governor of the Saudi Arabian Monetary Agency, at the opening of a branch of the National Bank of Kuwait, Jeddah, 6 May 2006. *  *  *  Dear Audience, It gives me great pleasure to be here tonight to inaugurate the branch of the National Bank of Kuwait (NBK) in Jeddah, a city which has long been known for embracing the business sector due to its closeness to the sacred places and its unique location on the Red Sea. The commencement of NBK of its banking operations in the Kingdom of Saudi Arabia marks further consolidation of cordial relations between the two brotherly countries (Saudi Arabia and Kuwait). This is one of the fruits of mutual Gulf work which the leaderships of the two countries are keen to enhance. Dear Brothers, The inauguration of NBK branch comes at a time when the Kingdom is witnessing robust economic performance. In 2005, the Saudi economy grew in real terms by 6.5 percent; the private sector registered a real growth of 6.6 percent. What is reassuring is that the private sector has become the main impetus of the Saudi economy. Its average growth rate for the past years stood at 5.3 percent.
One example worth mentioning is that IT exports now account for almost 40 per cent of India’s total export income. All in all, the percentage of manufactured goods in developing countries’ exports has increased from 20 per cent in 1980 to just over 70 per cent in 2001 (however, in Africa the figure is less than 30 per cent). In addition, ICT developments, which have enabled more efficient production in networks and at a distance, have led to new sectors in the service industries being opened to trade and international competition. An important element in this process is the increasingly strong cooperation between ICT, trade and efficiently-functioning product markets that allows labour-intensive stages of goods and services production to be moved to low-wage countries, and that emphasises how closely linked the various components of the globalisation process actually are. The effects of increased internationalisation on people’s daily lives I consider it particularly important to point out that although integration and technological developments entail large, and in many cases difficult, adjustments for individuals, they also have direct, positive effects on people’s daily lives. The percentage of people living in extreme poverty - with a daily income of less than USD 1 - fell from 40 per cent of the world population in 1981 to 21 per cent in 2001. In absolute terms, this is a reduction from 1.5 billion to 1.1 billion people. A large part of this improvement is due to the rapid growth in China and India.

However, a historical warning may be appropriate; experiences show that confidence in integration, the market and the open society can be rapidly undermined in the event of major economic crises and political instability. This happened in the First World War, which broke off the globalisation process of the time. Later, the spread of Communism after the Second World War forced the previously successful industrial nations in central Europe out of the international community. At present, the main threat to a free exchange perhaps stems from the risk of an escalation of terrorism leading to more closed borders. It is therefore important that we constantly explain why tendencies towards increased protectionism and introversion are not good for growth. Globalisation cannot be taken for granted - it must be defended. Future possibilities and challenges I now intend to look ahead to the possibilities and challenges that follow in the wake of the increased integration and technological changes. I have already mentioned the importance of safeguarding and developing the advances already made, and this cannot be stressed too much. Nor should we forget that macro stability, that is to say, price stability and sound public finances, is an important condition for stable growth. The Swedish experiences over the past decade are a very good example of this. A stable economic policy framework is particularly important in the light of the demographic challenges that will soon have a major effect on the economies of many countries, particularly in Europe.