samchain/econo-pairs-v1 huggingface dataset:
Far from over is also the concern about the way in which monetary policy makers in emerging economies will continue to deal with inflationary pressures. This is especially relevant in Asia, where some economies show signs of narrowing output gaps and growth rates above the trend. The possibility of a sharper adjustment in these economies’ growth rates, particularly in China, would impact world GDP and commodity prices. The IEF looks at these risks, and concludes that the biggest challenges for the Chilean financial system are associated to a prudent management of the favorable external financing conditions that should exist in the baseline scenario, but that might be reversed in many of the risk scenarios I have just mentioned. Accordingly, this Report puts special emphasis in evaluating the creation of risks associated with increased borrowing abroad by financial intermediaries and firms, especially maturity and currency mismatches and an overvaluation of key financial assets. This, within a context of gross capital flows that are relatively high by historic standards and compared with other emerging economies (figure 14). Our analysis of the present situation yields as its main conclusion that there is no evidence of vulnerabilities being created associated to gross capital inflows with systemic implications. With regard to enterprises, the IEF highlights that the bulk of the funds they get from abroad comes in the form of foreign direct investment (FDI), particularly profit reinvestment. Meanwhile, although the external debt has increased, the main financial ratios of the larger firms and the currency mismatches have been stable (figure 15).

Alan Blinder, former vice chairman of the Federal Reserve and now professor at Princeton University, argues that “a central bank that speaks with a cacophony of voices may, in effect, have no voice at all”. 29 There is also another argument in favour of unanimous decisions. Central banks are important social institutions, which should not be too closely linked to individuals but have a  27  See Alan S. Blinder (2007): “Monetary policy by committee: Why and how?”, in European Journal of Political Economy, 23, no. 1, pp. 106-127 and Alan S. Blinder (2008): “On the design of monetary policy committees”, Norges Bank Working Paper, 2008/6. 28  The Executive Board at Norges Bank consists of seven members, appointed by the King in Council. The Governor and Deputy Governor serve as chairman and deputy chairman, respectively, of the Executive Board. They are appointed to full-time positions for a term of six years. The other five members are appointed for four-year terms and are not employees of Norges Bank. 29  Alan S. Blinder (2007): “Monetary policy by committee: Why and how?”, in European Journal of Political Economy, 23, no. 1, p. 114. BIS Review 140/2009  7  public identity. The institution and its mandate should take precedence over the individuals who occupy positions for limited periods. 30 There is no formula for deciding which system is best. Each system has its strengths and weaknesses. Detailed meeting minutes ensure accountability among committee members. This may give rise to good incentives.
So far there has been little sign of significant deterioration in these areas. But as you know, bad debts are a lagging indicator of the state of the economy. The most reasonable assumption is that bad debt provisions and charge-offs will increase, though we do not yet know to what extent. •  Provisions may also increase as a result of a decline in property prices and collateral values caused by SARS. The value of bank premises may also be affected. Some of these effects may prove to be short-lived. Others may take longer to emerge, as in the case of the impact on asset quality. The overall impact on earnings is thus difficult to quantify. As of now, and assuming that the SARS problem does not drag on for too long, most banks seem to think that the adverse effect on profits will not be too severe. It bears repeating that the balance sheets of the banks remain strong. We have updated our stress tests to take account of the SARS outbreak, and these continue to show that the banks can withstand a great deal of pressure from a variety of sources. We do not expect that this will actually be put to the test in practice, but it is comforting to know that the banks are more than adequately capitalised in case of need. What can the banks do to limit the potential downside risk from SARS?

It is important that banks adopt a consistent approach to dealing with restructuring requests across the organisation and provide ready access for customers in difficulties to approach the bank to discuss relief. Working together, banks and their customers can help one another to deal with the effects of  BIS Review 21/2003  3  SARs and position themselves for recovery. I am confident that the banks have been taking the right action, and will continue to do so. 4  BIS Review 21/2003
Caleb M Fundanga: Bank of Zambia’s Information Dissemination Programme Speech by Dr Caleb M Fundanga, Governor of the Bank of Zambia, on the launch of the Bank of Zambia Information Dissemination Programme, Lusaka, 28 May 2007. *  *  *  Governor, kindly give brief introductory remarks On behalf of the Bank of Zambia Board, management and staff, and indeed on my own behalf, I wish to sincerely thank the Zambia National Broadcasting Corporation (ZNBC) for this opportunity to launch the Bank of Zambia Information Dissemination Programme. This programme is part of our comprehensive strategy to inform the general public and all our stakeholders on the role of Bank of Zambia in the economy. What is the primary role of the Bank of Zambia? Just to remind the listeners, the Bank of Zambia’s primary role is to formulate and implement monetary and supervisory policies that will ensure price and financial system stability. Our vision, in this regard, is to become a World Class central bank. What is your general assessment of the recent performance of the Zambian economy? In the past few years, the Zambian economy has performed relatively well, recording positive real Gross Domestic Product (GDP) growth, with inflation and interest rates coming down. Specifically, what have been the developments in output? During the period 2001-2005, growth in real GDP averaged 5.0% per annum. More recently, in 2006, it is estimated that the economy grew by close to 6%, marking the eighth consecutive year of positive real growth in output.

In addition, the historic debt relief under the Heavily Indebted Poor Countries (HIPC) initiative and Multilateral Debt Relief Initiative (MDRI), as well as the increased budget support from our cooperating partners, further strengthened the external position. Preliminary information indicates that the country’s external debt position of US $ billion as at end-2004 fell to US $ million at endDecember 2006. The foreign exchange market, in 2006, was characterised by a general depreciation of the Kwacha against major currencies. In order to moderate exchange rate volatility, the Bank implemented a number of measures, including purchasing and selling foreign exchange. What is your assessment of the financial sector? In the banking sector, there have been no bank failures in the recent past, reflecting stability in the financial system. To consolidate this stability, in 2006, Bank of Zambia undertook a number of measures, which included increasing the minimum primary paid-up capital for banks and non-bank financial institutions. What is the economic outlook for the year 2007 and the long-term vision of the Government? The Government, on its part, has shown commitment to continuing the economic reform programme. To this end, measures are being taken to ensure that the macroeconomic gains attained so far will be consolidated in 2007. Accordingly the Government is targeting real GDP growth of 7.0% and inflation of 5.0%. Pursuit of these objectives is within the context of the long-term development objectives, well articulated in the national long term Vision, 2030.
Such a communication would be reminiscent of the reverse situation, when the central bank is concerned about fiscal dominance – a situation where an unsustainable fiscal policy makes it impossible for the central bank to restrain inflation – and communicates this. 16 Personally, I do not think that an independent monetary policy presumes a total lack of dialogue between the Riksbank and the political system on such matters. The second question concerns the effectiveness of various measures and the risks they entail. For example, assume that the Riksbank can make monetary policy more expansionary by purchasing certain financial assets. This could increase the risks on the Riksbank’s balance sheet considerably and lead to future losses for taxpayers. Assume now that it had been possible to achieve an equivalent effect by means of mild fiscal policy stimulation measures. This would probably be possible in a situation where monetary policy is at its lower bound. The Riksbank would then not have to raise the interest rate as economic activity rises and fiscal policy would thereby become more effective than normal. 17 In this case, there should be conditions for holding a discussion over which policy mix would be most appropriate. In addition, Blanchard (2019) makes the point that, if the real interest rate is lower than the growth rate in the economy, the cost for debt-financed public investments will be very low.

I maintain that all the measures taken during the pandemic include elements of both monetary policy and financial stability. Sweden has been a member of the EU for a long time and, like other Swedish authorities, the Riksbank must somehow relate to what happens and what applies in the EU. Other central banks in the EU have the right to far-reaching purchases of various securities for monetary policy purposes. It would therefore be strange to have national legislation giving the Riksbank a markedly different toolbox to what could be argued is the standard in the EU. In addition, the Inquiry’s proposals mean that certain measures may only be adopted under extraordinary circumstances. Such proposals are in sharp contrast to the flexibility central banks have needed to show over the last ten–fifteen years to manage shocks that few could have predicted. One critical issue concerns how much we believe (or fear) that the balance sheet will also have to be used under more normal circumstances in the period ahead. As I am one of those who believes there is a great probability that this will be the case, and who does not see the point of giving monetary policy a narrower interpretation than has been normal from a historical perspective, I do not consider it reasonable to introduce the type of restrictions that the Inquiry advocates. Accessible foreign exchange reserves provide security in crises As regards the matter of an appropriate size for the foreign exchange reserves, I have two comments.
In the following, I will discuss the temptations facing issuers of notes and coins, the binding mechanisms that have been tested, and the potential gains for society associated with a central bank that keeps its word. 2. A king’s word is worth a throne – but sometimes not a krone  It has always been tempting for issuers of money to exploit this privilege. It costs less to produce a coin or a banknote than the value printed on it. The added value accruing to the issuer is called seignorage. Over-issuance of notes and coins leads to inflation and a fall in the value of money, and holders of money pay a so-called inflation tax. A sharp fall or strong rise in the value of money also impairs the functioning of the economy because it becomes more difficult to keep track of changes in the price of one good relative to another. It is important that changes in relative prices are easy for both consumers and producers to observe. Otherwise, the function of prices as conveyors of information for consumption, production and investment decisions will be impaired. The economy will operate less efficiently, resulting in lower growth and welfare. In the earliest monetary systems, the value of money corresponded to the metal value of the coin. Measured in metal, the value of money was inevitably stable. This system was not as dependent on confidence, since the metal content of the coin could in principle be verified in every transaction.

Jan F Qvigstad: On the topic of keeping promises Speech by Mr Jan F Qvigstad, Deputy Governor of Norges Bank (Central Bank of Norway), at a seminar arranged by Norges Bank and Det Norske Videnskaps-Akademi (The Norwegian Academy of Science and Letters), Oslo, 11 November 2008. * 1. *  *  Why is keeping promises so difficult? This house, which now belongs to the Norwegian Academy of Science and Letters, was built by Hans Rasmus Astrup in 1886-87. Astrup was an entrepreneur. At the age of 20, he left Norway for Barcelona on a ship laden with a cargo of dried cod. He gradually built up a large trading business and later became an industrialist, not unlike businessmen of our own era. 1 For innovators and the business sector, a stable operating environment has always been important, providing a foundation for adaptation, economic growth and social progress. A stable value of money is also a component of this foundation. We were taught as children to keep our promises. If we made a promise, we had to make good on it. But we were also taught that we should not promise too much. If we do not keep our word, others lose confidence in us and our credibility takes a toll. In recent months, we have witnessed that this is of particular importance for the financial system. A proximate example is the situation in our neighbouring country Iceland.
The Reserve Primary Fund “broke the buck,” and investors rushed to withdraw their funds from prime institutional money market mutual funds in a modern version of a classic “bank run.” The funds generally did not have sufficient cash available to meet these runs because they offered overnight liquidity at par value against a portfolio of assets with weighted average maturities that were considerably longer. Another important source of instability was the large volume of bilateral OTC derivatives positions outstanding among the major firms and the right of a firm to immediately close out such positions if their counterparty became insolvent. For example, when Lehman Brothers failed in September 2008, counterparties to Lehman terminated OTC derivatives in which the contract was in the money (i.e., Lehman owed money to the counterparty) and liquidated the collateral held against 3/7  BIS central bankers' speeches  those obligations, but kept open obligations in which the exposure went the other way, from them to Lehman. Not only did this create an imbalance in the risk exposures of the failed firm, but it also generated significant market churn and risk as firms scrambled to rebalance their own risk exposures. The contagion generated by the complex web of outstanding bilateral OTC derivative exposures significantly worsened the crisis and was responsible for much of the losses Lehman incurred in its bankruptcy.2 The near-collapse of the U.S. financial system underscores three critical lessons. First, financial institutions must be robust to stress.

There are two essential requirements: the ability to initiate an effective resolution strategy over the weekend, and a government entity—be it the Federal Reserve or the FDIC—that can provide a credible liquidity backstop to the recapitalized entity when it opens for business on Monday morning. If resolution cannot be accomplished in this timeframe, confidence would suffer and there would be contagion. Without a credible liquidity backstop, clients and counterparties would run, making it much more difficult for the recapitalized firm to conduct its business. I would also preserve the authority of the FSOC to designate non-banking firms as systemically important and subject to supervision by the Federal Reserve. As I see it, the designations of GE Capital and AIG were successful in two important respects. First, Federal Reserve supervision resulted in improved corporate governance and risk management. Second, it created incentives for the firms to alter their operations to become less systemically important in order to be dedesignated. We should also retain this designation tool because we cannot predict which firms and activities may emerge and become systemically important in the future. After all, I do not think many were focused on or worried about the activities of AIG’s Financial Products Group several years before the financial crisis, though in retrospect those activities proved to be systemically important. That part of the firm should have been better supervised and regulated.
Finally, let me also address the risks of overheating in some parts of the financial markets. We do not currently see compelling evidence of overstretched asset valuations at the euro area level, but we do see that real estate dynamics or high household debt levels in some countries signal the risk of increasing imbalances. Such risks also exist in the Netherlands: they relate to the continued very high level of household indebtedness and the low level of mortgage collateralisation. For this reason, we share the concerns expressed in the warning issued by the European Systemic Risk Board in November 2016 and recognise that there is a case for mitigating measures. That being said, monetary policy is not the appropriate tool for addressing local and sectoral financial risks. Rather, targeted macroprudential policies, which can be tailored to local and sectoral conditions, are the right answer.1  The way forward Against the backdrop of a recovery that is becoming increasingly solid, the benefits of our policy clearly outweigh potential side effects. Also due to the pass-through of our monetary policy, there is now more and more evidence that economic growth is firming and broadening. Incoming data confirm that the cyclical recovery of the euro area economy is becoming increasingly solid and that downside risks have further diminished. Nevertheless, it is too early to declare success. Underlying inflation pressures continue to remain subdued and have yet to show a convincing upward trend.

It therefore benefits households in their capacity as workers, entrepreneurs, investors, borrowers and taxpayers. Similarly, there are several channels through which our policies affect pension systems. Yes, lower rates increase the present value of future liabilities of pension schemes. However, the liability side of pension schemes is only one part of the equation. What happens on the asset side is also important. And our monetary policy has had a beneficial impact on this side of the equation as the value of the investment portfolio has increased. Also, let’s not forget that our monetary policy supports pension systems indirectly by supporting employment growth and thus pension contributions. In any case, it is ultimately up to sound governance structures and longterm strategies to ensure the financial health of pension systems. Equally, monetary policy can have an impact on bank profitability through various channels. Our assessment is that so far these effects tend to largely offset each other in aggregate terms. Low rates might reduce bank profits through the narrowing of net interest margins. Yet, at the same time, by supporting the recovery, accommodative monetary policy reduces delinquencies and defaults, including on mortgages. Improved credit quality coupled with higher lending volumes and an improved market value of assets supports bank profitability. Of course, depending on the strength of their balance sheet, some banks may be more affected than others. Also banks facing structurally high cost-to-income ratios or limited diversification of income sources might have to revamp their business models regardless of the low interest rate environment.
In fact, telephone interviews that complemented the questionnaire indicated that layoffs are already occurring, affecting mainly those lacking a formal contract with the companies, those hired on a fixed-term basis, and those with the shortest seniority in their jobs (Figure 6). Actually, another transmission channel is the effect that the emergency will have on employment and labor income. The need to prevent contagion has led to the halt of activities highly intensive in personal interaction, 1  “Unidad de Fomento”—inflation-protected unit. 3  such as retail, education, restaurants and hotels, among others. Although some of these activities can be partially done remotely (e.g. education), in other areas this is not possible and uncertainty about how long the shutdowns will last puts at risk the employment and income of many households. The government has announced a package of measures that aim to ensure that, without losing their job, workers can resort to their employment insurance funds to cope. Initiatives have also been announced to supplement people’s income, including transfers and postponement of payment of utility bills of lower-income households. The magnitude of the erosion of the workers’ employment and income, particularly for the self-employed or employed without a formal contract, will determine the extent of the impact on consumption and the overall performance of the economy. Investment projects’ development is also being affected by the emergency. Some of the country’s larger-scale projects under way have announced that they will stop work for a few weeks to prevent the spread of the virus among their workers.

This brings us to the second part of our event today – the launch of one of ICLIF’s research studies which has been written by Mr. Rajeev Peshwaria, the CEO of ICLIF, published globally as a book entitled “Too Many Bosses, Too Few Leaders” by Simon Schuster of New York. The book illuminates on what it really takes to be an effective leader. The book extends beyond the advice on the distinct behaviors and attributes required of leaders to providing “a clear path”, “a road map” to achieving leadership excellence at every level in the organisation. In my own experience, the core foundations to achieve superior performance set out in the book is essential. Defining with great clarity the purpose and values of the organisation and articulating it throughout the entire organisation is key towards achieving these desired results. Then, it is sustaining the high level of energy and talent at all levels of the organisation is what will ignite the motivation to achieve the breakthroughs – that will achieve the ground breaking results – that will bring the organisation to the frontier of the business. Energy is the one thing you need heaps of in order to lead. Such energy to stay on course despite the most formidable of obstacles needs to be sustained. Not only must you find your own sources of energy, but you also have to energise others around you. The book discusses how to find that personal energy and how to energise others in an intrinsic way.