samchain/econo-pairs-v1 huggingface dataset:
William C Dudley: Prospects for the economy and monetary policy Speech by Mr William C Dudley, President and Chief Executive Officer of the Federal Reserve Bank of New York, at the New York University’s Stern School of Business, New York, 28 February 2011. *  *  *  It is a pleasure to have the opportunity to speak here today. My remarks will focus primarily on two areas. First, what is the outlook for economic activity, employment and inflation? In particular, what are the areas of vulnerability that we should be most concerned about? Second, what does the outlook imply for monetary policy? As always, what I will say reflects my own views and opinions, not necessarily those of the Federal Open Market Committee (FOMC) or the Federal Reserve System. In my talk, I’ll argue that the economic outlook has improved considerably. Despite this, we are still very far away from achieving our dual mandate of maximum sustainable employment and price stability. Faster progress toward these objectives would be very welcome and need not require an early change in the stance of monetary policy. However, I’ll also focus on some issues with respect to inflation that will merit careful monitoring. In particular, we need to keep a close watch on how households and businesses respond to commodity price pressures. The key issue here is whether the rise in commodity prices will unduly push up inflation expectations. Inflation expectations are well-anchored today and we intend to keep it that way.

In the early phase a significant part of this income came from liquidity programs. More recently, the main contributor has been net interest on the expanded SOMA portfolio. At this juncture, SOMA continues to generate abnormally high net income. As policy eventually normalizes and the cost of financing assets via interest on excess reserves goes up, the net interest margin on the SOMA assets will return to more normal levels. However, the net interest margin is unlikely to turn negative because roughly $ billion of assets are – and have been for many years – funded by notes and coins in circulation, on which the Fed does not pay interest.
There is psychological research, in the field of cognition, demonstrating that people have an easier time understanding conditional statements if they’re less abstract and more rooted in real-world experience. In addition, I suspect there may be sometimes a degree of wishfulness involved. None of us likes uncertainty. Longstanding research has identified related, and deep-seated, cognitive biases. We are all prone to over-confidence in our own predictions and, after the event, to the belief that what has happened was entirely predictable (and, indeed, that we predicted it[19]). I think there may be something of the same underlying phenomenon at work in people’s desire to know the “plan” for interest rates. In a letter to the FT in 2018, my former colleague Martin Weale made a similar point: “The pressure on the Bank of England for clearer communication is a consequence of people wanting the future to be less uncertain than it is.”[20] Anyhow, whatever the true cause, I sometimes worry that there’s a potential cost to this (one that matters more than the odd “unreliable boyfriend” tag). If people come to rely too much on explicit steers from the central bank, forward interest rates and other asset prices may become insufficiently sensitive to economic events. And if in turn the central bank acquiesces to the desire for more definitive statements about the future path of interest rates, and feels the need to signal policy changes well in advance, this could compromise its ability to respond to surprises that occur in the meantime.

This would institute a process by which these businesses, which are important infrastructure in the Thai foreign exchange market, are given attention and importance to ensure that they contribute to building confidence and trust. 12. In conclusion, let me congratulate once again the winners of this year’s FX Award. Let me also thank Thomson Reuters again for inviting me today. With the support and continued cooperation from all side, the Thai financial markets would continue to press on with the reform efforts that have been made over the years. These improvement will help raise the standard of practice and ensure that our financial market continue to make a positive contribution to the growth and development of the Thai economy which is the ultimate goal for sustainable development. Thank you. 2  BIS central bankers’ speeches
A single supervisor with a single rulebook entails that supervisory and regulatory activities should be implemented in a harmonized and consistent manner, therefore lowering or eliminating the current cost of compliance for banks with cross-border operations. 4  BIS central bankers’ speeches  Currently, there are widespread differences in terms of the interpretation and application of regulatory and prudential definitions across Member States, and especially in what concerns supervisory forbearance. In terms of the latter, the National Bank of Romania has chosen a very transparent and tough approach, with the result that non-performing loans indicators have soared. At the moment, the non-performing loan ratio calculated based on prudential regulations stands above 22 percent. However, considering the new indicator on asset quality defined by the European Banking Authority, which covers both government and non-government exposures, the ratio declines to around 17 percent and is seen falling even further when fully provisioned non-performing loans are written off. In this context, the recent increase in provisioning by the Romanian subsidiary of Erste Bank should not be interpreted as a tightening of the supervisor’s stance in the run-up to the asset quality review, but simply as business as usual, in the sense that the bank is correctly applying the same regulations and accounting standards as the rest of the system. Fifth and final argument, apart from the potential benefits mentioned so far, I believe that not opting for the Banking Union may entail significant costs for non-euro area countries as they are vulnerable to contagion effects.

Tharman Shanmugaratnam: MoneySENSE launches new programmes to reach more Singaporeans Speech by Mr Tharman Shanmugaratnam, Deputy Chairman of the Monetary Authority of Singapore, at the launch of the MoneySENSE 2006 Roadshow, Singapore, 31 March 2006. *  *  *  Distinguished Guests Friends from NTUC and various community organizations Ladies and Gentlemen Boys and Girls  Introduction 1. I am pleased to launch the inaugural MoneySENSE 2006 Roadshow, which seeks to bring financial education to Singaporeans from all walks of life. MoneySENSE has done well 2. MoneySENSE is on a roll. Since its launch in October 2003, it has seen over 140 talks, seminars and workshops on financial education, attracting over 15,000 participants. It has also published 16 consumer guides with a total circulation exceeding one million. 3. These achievements are results of collaboration between government, industry, community groups and our media partners. I encourage MoneySENSE to build on and expand these strong partnerships, and bring financial education to even more Singaporeans. 4. Let me now touch on a few new programmes that MoneySENSE has lined up this year. MoneySENSE launches new programmes to reach more Singaporeans MoneySENSE 2006 Roadshow 5. Today's MoneySENSE 2006 Roadshow presents simple financial education messages and tips to adults and children through fun activities. A simple game of shooting basketballs into nets from different distances is used to highlight risk-return tradeoffs.
In Germany, as in other euro are countries, there were and are forces in disagreement with the Monetary Union, analysts and economic agents who considered the break-up of the euro as likely. But what counts is what the German Government’s position was and its support, at key moments, to save the Monetary Union and the euro, its support to the programmes for stressed countries and the Banking Union process. Rather, we can say that the new hegemon is the culture of monetary and fiscal stability that has gained in strength over the course of the crisis. The strengthening of the institutions and of the rules to ensure fiscal stability is essential for maintaining the stability of the Monetary Union and of the euro. This is because, as we all know, the source of the Monetary Union crisis lay basically in certain countries’ fiscal performance, even more so than in the banking crisis which has also affected – to differing degrees of intensity – virtually all the euro area members. 2  BIS central bankers’ speeches

Christine Lagarde: ECB press conference - introductory statement Introductory statement by Ms Christine Lagarde, President of the European Central Bank, and Mr Luis de Guindos, Vice-President of the European Central Bank, Frankfurt am Main, 4 May 2023. *** Good afternoon, the Vice-President and I welcome you to our press conference. The inflation outlook continues to be too high for too long. In light of the ongoing high inflation pressures, the Governing Council today decided to raise the three key ECB interest rates by 25 basis points. Overall, the incoming information broadly supports the assessment of the medium-term inflation outlook that we formed at our previous meeting. Headline inflation has declined over recent months, but underlying price pressures remain strong. At the same time, our past rate increases are being transmitted forcefully to euro area financing and monetary conditions, while the lags and strength of transmission to the real economy remain uncertain. Our future decisions will ensure that the policy rates will be brought to levels sufficiently restrictive to achieve a timely return of inflation to our two per cent medium-term target and will be kept at those levels for as long as necessary. We will continue to follow a data-dependent approach to determining the appropriate level and duration of restriction. In particular, our policy rate decisions will continue to be based on our assessment of the inflation outlook in light of the incoming economic and financial data, the dynamics of underlying inflation, and the strength of monetary policy transmission.
Nor is this a complete assessment, focusing as it does on the prudential angle as opposed to market liquidity considerations. I make them to illustrate the point that it is sensible for us to maintain a spirit of active enquiry about these sorts of issues, and to track developments so that we can intervene if we are concerned that the regulatory system is being arbitraged or simply encouraging the wrong behaviour at firms. Conclusion  We, together with many others, have done a huge amount to make the financial system safer over the last 10 years. But the lesson of financial history is that unless we are absolutely vigilant, and keep questioning both firms and ourselves about evolving and emerging developments in the markets we oversee, then this safety can easily slip through our hands. So our horizon-scanning will be an important part of our effort in the coming period. And as the PRA is holding itself to a flat nominal budget this year I would like to finish by asking any birdspotters present here today to lend us their binoculars, in the national interest.

With reference to the question above, I can tell you that there have been several reasons to begin with these three countries, but the main reason for which we compare today the present situation in Sweden, Turkey and Romania is due to the diligent and assiduous activity of the Ambassadors of these two countries in Bucharest. Then, I would like to salute their presence here today: His Excellency Mr. Anders Bengtcén, Ambassador of the Kingdom of Sweden, and His Excellency Mr. Ömür Şölendil, Ambassador of the Republic of Turkey and to particularly extend my gratitude to them and to all the persons involved in the materialization of this conference. I also thank Mr. Klas Eklund, Senior Economist at the Swedish Bank SEB and Adjunct Professor of Economics at the Lund University and Mr. Çağri Memişoğlu, Deputy General Manager at Garanti Bank Romania. There are, of course, historical links between the three countries. I do take this opportunity to highlight a few of them. With the Republic of Turkey one could go back to the proclamation of the new state as a republic, last century, and even more, centuries of ties between the Romanian Principalities and the Ottoman Empire. I also like to notice the connection between our two central banks. In the National Bank of Romania’s archives there are letters, exchanged between Governor Mitiță Constantinescu and Governor Salâhattin Çam, regarding the organization of a conference for the governors of the central banks in the Balkanic Coalition, in November 1937, in Ankara.
Moreover, when the sharp decline in non-agricultural employment is taken into account, it is estimated that the level of disposable income will remain low for a while and the precautionary saving tendency will continue to curb domestic demand. Within this framework, we believe that the recovery in economic activity will be gradual and the downward pressures on inflation will continue. Despite the downward revision in the outlook for economic activity, there have been no major developments that require revising the oil and food price assumptions stated in the past Report. Therefore, the forecasts have been based on a framework in which oil prices would hover around USD 55 per barrel throughout the forecast horizon. The previous assumptions for oil prices at 55 USD per barrel, and food inflation of 7.5 percent for 2009 and 6 percent thereafter are maintained. Distinguished Members of the Press and Dear Guests, In line with the framework that I have presented so far and based on the assumption that there will be measured policy rate cuts in the short run and after that policy rates will be kept constant for a while, our revised forecasts suggest that with 70 percent probability, inflation will be between 4.8 percent and 7.2 percent (mid-point 6.0) at the end of 2009, and between 3.5 percent and 7.1 percent (mid-point 5.3) at the end of 2010. We expect inflation to come down to 4.9 percent by the end of 2011 (Graph 27). Graph 27.

Market-making dealers have not been able to allocate much capital to holding inventories of bonds and hence the market is still not functioning as well as it might. This was one reason why, in January this year, the Bank introduced operations to sell as well as to buy bonds. Further market evolution may be needed to overcome this illiquidity. One possible way forward would be more trading on exchanges. It will be interesting to see whether the recent listing of bonds on the LSE in retail-size amounts is successful. Secured commercial paper and supply chain finance The Bank also considered intervening in other markets such as secured commercial paper (SCP), supply chain finance, syndicated loans and more broadly in ABS markets, as set out in the Chancellor’s original letter to the Bank. 7 Taking secured commercial paper first, this is a form of asset-backed commercial paper (ABCP) based on a bundle of relatively short-term loans to a variety of borrowers. Due to over-collateralisation, the security might be investment grade even if the underlying borrowers are not. By catalysing this market, smaller or lower-rated-firms could gain  6  The difference in price between a cash bond and the Credit Default Swap can be interpreted as a measure of the liquidity premium in cash bonds. 7  The Bank also made provision to buy securities issued under the Credit Guarantee Scheme, using the same format as for its corporate bond purchases. To date, it has not been deemed necessary to activate this facility.
During the same period as the volumes of credit derivative have grown most, interest rates have gradually fallen and credits have increased. There have been unusually few bankruptcies. The interest rate differences between high-risk and low-risk bonds have therefore declined, that is, credit spreads have shrunk. The price of credit derivatives has fallen correspondingly. The compensation for risk has thus reached a level far below the historical average. The question is what will happen when economic activity shows a downswing and the number of bankruptcies begins to increase again. If investors have in general underestimated the credit risk, we may see a substantial adjustment in risk premiums. This will also lead to a fall in prices of corporate bonds and credit derivatives. In this situation, individual actors with large net exposures in credit risks may be affected by significant losses. But I would like to emphasise that this is a general line of reasoning. If risk premiums rise, this would have effects on most markets. There is no particular reason to assume that the credit derivatives market would be hit harder than others. My opinion is that each of these risks should be taken seriously. But they are nevertheless not so large that they risk bringing about a serious systemic crisis in the international financial system. I have now discussed the credit derivatives trade in the international market. Here in Sweden trade in credit derivatives is still very limited. But let me nevertheless round off with a few comments on the Swedish market and its potential.

What would happen, for instance, if several credit events were to occur simultaneously? Perhaps there would suddenly be only sellers and no buyers in the market. Then prices will plummet. This was the case during the Russian debt crisis in 1998, for instance, when the LTCM hedge fund suffered problems. A crisis of  4  BIS Review 24/2007  this nature risks spreading rapidly to other financial markets and possibly threatening the lending banks. Such situations do not last particularly long, as buyers always appear when prices fall. This was also the case after the LTCM crisis. Remember also that the credit derivatives market and the market for the underlying bonds are tightly interwoven. If the premiums on credit derivatives increase substantially, this will mean that at the same time the return on the underlying bonds increases. Unless something important has happened that affects the credit rating of the company that has issued the bonds, it will sooner or later become profitable to buy them – or to buy the credit derivatives. Several large-scale credit events in recent years, such as the downgrading of Ford’s and GM’s credit ratings last spring, have also shown that more or less serious problems could be solved without liquidity in the market being affected to any great extent. 4. Risk of mispricing  Finally, I would like to bring up the risk of mispricing, a risk that in many respects is closely related to the liquidity risk.
But, meanwhile, investors are putting their money where this unusual phenomenon is allowed, by structural flexibility, to be manifested in full force, notably in the United States. This is seen to be a factor contributing to the strengthening of the dollar and the weakening of the euro, and reinforcing the scepticism about the euro. One thing that we have learned from the Asian financial turmoil is that global financial markets, made highly efficient by financial liberalisation and the advance of information technology, have become rather intolerant about policy mistakes. Strengths as well as weaknesses are magnified in financial market behaviour to a disproportionate degree as a result of the explosion of international finance. What until recently were considered to be small aberrations in policy can now be brutally punished by the market. Even those who have been particularly prudent can be tossed around rudely, as market sentiment sways and, occasionally, succumbs to manipulative forces. So far, the emerging markets have been the ones affected, overwhelmed by international finance, perhaps to an unjustifiable degree relative to their economic fundamentals. Although they found the situation difficult to cope with at the time, most of them pulled through and are now recovering strongly. The one common quality that they possess, which is responsible for this rapid turn-around, is structural flexibility. The explosion of international finance is poised to continue, after the current lull, and will be made even more potent by further advances in information technology.

Euroland is, of course, much bigger and more sophisticated than the emerging markets in Asia, and so the risk of Euroland being similarly overwhelmed by international finance is distinctly lower. But, seen from Asia, even for the large and sophisticated markets, the risk is not so low that it can be safely ignored. And if problems materialise, structural rigidities that inhibit adjustment may exacerbate and prolong the pain and disruption. I sense also that there are still doubts about whether Euroland will cope well with the discipline of adjustment imposed upon it by currency union and therefore be able to realise fully the potential of such a union. Let me draw your attention to an interesting and highly significant parallel between your system of a unified currency across eleven countries and Hong Kong’s currency board system fixed to the US dollar. We both depend to a very much greater degree than would otherwise be the case on internal market flexibility as a mechanism of economic adjustment. As you are aware, Hong Kong has always enjoyed a reputation as a flexible economy. It is precisely that flexibility in the labour, property and other markets that has ensured the sustainability of Hong Kong’s high rate of economic growth and currency stability over the nearly seventeen-year history of our currency board system. It is that flexibility, involving sizable and quite swift price adjustments, accompanied by a considerable degree of labour mobility within and between sectors, that has enabled Hong Kong to cope with economic shocks.