samchain/econo-pairs-v1 huggingface dataset:
6 [16]  Other arguments for a large bond holding The arguments for large bond holdings in normal circumstances that I have so far discussed seem not to be particularly relevant to the Riksbank’s monetary policy in a future normal situation. Another argument put forward by some is that a large bond holding, and thereby a larger liquidity surplus in the economy, may strengthen the monetary policy transmission mechanism. 16 The arguments basically say that a liquidity surplus – when the banking system has plenty of central bank reserves – can mitigate the risk of frictions on the money market. During the financial crisis, the interbank market functioned poorly, causing market rates to become more volatile and making it more difficult for financial institutions with no direct access to central bank facilities to get access to liquidity. With a large liquidity surplus, the economy becomes less dependent on a well-functioning interbank market. Regardless of the soundness of these arguments, they have no implications for the Riksbank’s bond holdings. The fact is that the liquidity surplus in Sweden will, in all likelihood, be large irrespective of how the bond portfolio develops in the future. We already had a structural liquidity surplus in the economy before the Riksbank began its bond purchases in 2015, and the surplus has increased since then as a result of reduced cash use and the Riksbank’s dividend payments. The Riksbank’s bond holdings now amount to SEK 363 billion while the liquidity surplus, i.e.

This background is important in order to be able to assess how the Riksbank’s balance sheet should develop over the longer term and be able to relate to the discussion in other countries. Central bank balance sheets were quite different prior to the financial crisis, both in composition and size. We can expect countries in which monetary policy steers towards similar future inflation targets to have comparable interest rate levels. The balance sheets may, however, look quite different. My main message today is that the monetary policy arguments for a large balance sheet are, in my opinion, not particularly strong in the Swedish context. Indeed, there are also risks associated with maintaining a large balance sheet. The most likely scenario is therefore that the Riksbank’s balance sheet will, in a future normal situation, be substantially smaller than it is today. There is no “normal” balance sheet Figure 2 shows what various central bank balance sheets looked like just over a decade ago, prior to the global financial crisis. The most striking feature of the figure is that balance sheets looked different in different countries. In some countries, for example the United States and Canada, the central bank had a lean balance sheet, the size of which was determined in practice by the demand for banknotes in the economy. The asset side was dominated by domestic government bonds while the liability side was dominated by issued banknotes.
The existing tripartite framework needs to develop so that the authorities are able to reduce systemic risk not just by effective management of crises but by creating incentives for financial institutions to avoid excessive risks. Some of the elements of such a framework I described in my evidence to the Treasury Committee on 20 September last year. In line with international experience, they included a special resolution regime for failing banks, changes to deposit insurance to reduce the incentives for bank runs, and a proper regime for the regulation of bank liquidity. At the heart of the case for a special resolution regime is the need to find a way to allow banks to fail in an orderly manner. As the Treasury Committee said in its report The Run on the Rock, “Banks should be allowed to ‘fail’ so as to preserve market discipline on financial institutions”. It is clear from the responses to the Consultation Document that there is widespread acceptance of the basic case for a resolution regime. But that is tempered by concerns about the details of its design. I want to highlight three key features that will be central to the success of the new regime. First, responsibility for resolving a failing bank should be delegated to a resolution authority which should have a wide range of instruments available to help resolve a failing bank. Which body assumes the role of the resolution authority is less important than the granting of those powers to some body.

So I don’t find the argument convincing that we have to keep up the pressure. It is also not our task. It would not be democratic for a central bank to dictate to elected governments what they have to do. BILD: Mr Draghi, in your first interview with BILD four years ago, we spoke a lot about Greece. The country has still not got back on its feet, even though it has received hundreds of billions in emergency loans. When will the madness end? Draghi: Clearly, last year was an economic setback for Greece. Now everyone is aware that there can be no growth without reforms. And what the country and its people need above all is growth. Greece has implemented many reforms in the past few months and is committed to the path of reform. BILD: Is the euro a part of the solution for Greece, or a part of the problem? Draghi: Greece’s challenges have little to do with the euro. It would have to implement reforms in any case. In the euro area, Greece can do that with the support of its partners. But one thing must be clear: who belongs in the euro area and who does not is not for the ECB to decide. That is a matter for the Member States. BILD: They are now more fractious than ever. Is that the biggest danger for Europe? 2  BIS central bankers’ speeches  Draghi: We are experiencing several crises which are all interconnected and reinforce each other.
Malaysia has a proven track record over several decades in successfully dealing with difficult periods in our economic history. Each time, the flexibility of the economy, the agility of the private sector to adjust and reinforcement by the policy response, has allowed the economy to emerge stronger. This was demonstrated during the Asian crisis. Within a period of one year, our economy was able to resume growth, expanding by 6.1% in 1999 and by 8.9% in 2000. The current conditions are by no means of such threatening proportions. If managed well by all parts of the economy, the economy will in fact emerge more competitive and stronger. This will require concerted efforts by the private and public sectors to become more efficient and thus reduce costs. This will also require shifting resources to new areas of activities where Malaysia has the competitive advantage. With the aptitude for hard work and prudent  2  BIS Review 71/2008  practices, and the ability for reinvention, this can be realised. To a great extent this has been achieved in the financial sector which has now emerged as an economic sector that generates income and employment and accounts for 11% of the economy, from only 4.5% in 1990. The current increasing inflationary pressures is a global phenomenon, the result of rising international prices of energy and commodities prices. In Malaysia, domestic inflation has increased from less than 1% in April 2004 to 3% in April 2008, primarily reflecting higher food and energy prices.

The region however, still remains highly integrated to the global economy and international financial system and therefore will have to manage the risk of moderation in global growth in the event that a more pronounced slowdown occurs in the major developed economies. This risk is compounded by the high and rising energy and commodity prices, which are impacting inflation in most countries today. Stronger demand for grains, the diversion of land used for food crops to biofuel crops, the higher transportation costs and adverse weather conditions are some of the factors driving the rise in food prices. As a consequence, rising cost pressures on inflation in the global economy can be expected to persist. Should global growth however, continue to moderate in the second-half of 2008, this can be expected to slow the pace of increase in energy and food prices, which in turn, will moderate the inflationary pressures that are currently being felt. Several domestic factors have sustained the growth of the Malaysian economy indicating that external demand has thus far resulted in only a modest moderation in our overall growth as the underlying strength of the economy has been able to sustain the resilience of the growth process. This has been underpinned by the strong domestic demand which has become a key driver of growth. The strong growth that has been achieved so far is on account of the robust expansion in private consumption and investment expenditure.
SPEECH DATE:  26/03/2018  SPEAKER:  Deputy Governor Cecilia Skingsley  VENUE:  Handelsbanken, Södertälje  SVERIGES RIKSBANK SE-103 37 Stockholm (Brunkebergstorg 11) Tel +46 8 787 00 00 Fax +46 8 21 05 31 registratorn@riksbank.se www.riksbank.se  Thoughts on technology and the economy* Thank you for your invitation to visit Södertälje. Many people come here to spend hours playing with their children at the science museum Tom Tits Experiment, which can be found here in town. This is a place where you can experiment with the laws of physics, puzzle over medical phenomena and observe chemical effects. I dare say that many of today’s and tomorrow’s Swedish scientists had their first insights into science there. My speech today does not deal with scientific laws but with how important technological advances are redesigning the playing field for the economy and thus the way in which economic policy is conducted. I will also discuss how the Riksbank assesses the current economic situation and its forecasts for the years ahead. Finally, I will describe how monetary policy can facilitate economic development in Sweden. Technological breakthroughs transform our society. We human beings constantly strive to make things a little better. When we achieve technological breakthroughs, lives and entire societies are revolutionised. Important examples include steam power, which made mechanised industries independent of water power possible, followed by rail transportation.

I would like to stress just two ideas which may help us understand the exceptional situation we face and justify the urgency of the measures Spain needs. The first is that there is a feedback loop between the vicious circles in which the economy is caught and the contractionary forces at play. And if prompt action is not taken, these may inhibit the operation of the factors that should underpin a turnaround towards recovery. The second is that, once the worst of the crisis is behind us, i.e. when international financial markets regain stability and the world economy begins to pick up, the Spanish economy will not be able to resume growth at rates similar to those in the recent past if substantial structural changes are not addressed. This is because we will no longer be able, as previously, to resort to growing debt to stimulate domestic demand. The fiscal drive to date had been notable. This is evident in the rapid deterioration in public finances in recent months. Accordingly, in order to infuse economic agents with confidence, a strategy should be designed immediately to allow a return to budgetary stability, which was of such benefit to Spain. The current priority, therefore, is to focus on applying forthwith structural measures to promote a growth pattern with a greater emphasis on productivity, in contrast to that followed in the past 15 years. Specifically, among the aspects requiring the adoption of immediate measures are those relating to the workings of the labour market.
William C Dudley: The national and regional economy Remarks by Mr William C Dudley, President and Chief Executive Officer of the Federal Reserve Bank of New York, at Rensselaer Polytechnic Institute, Troy, New York, 7 October 2014. *  *  *  Good afternoon. I am pleased to be here today at Rensselaer Polytechnic Institute (RPI). It is always a pleasure to speak with members of the different communities that make up our region, and it is particularly exciting to have the opportunity to speak with the students and faculty here at the Lally School of Management and Technology. Much of my day in the Albany area has been focused on the intersection of technology, the workforce and innovation, so it is a pleasure to speak with the people who are the future leaders in this fascinating evolution. My meeting with you today is part of our continuing efforts to understand what is going on at the grassroots level of our economy. Earlier on this trip, I met with government and business leaders to learn about some of the challenges the region faces as well as the collaborative efforts being taken to further economic development. I listened to community leaders describe the problems in affordable housing, workforce development and employment facing many in the lower income communities. I was also impressed by the potential innovations in energy production at the GE Global Research Center. These could have large consequences not only in the United States but in developing nations as well.

Regional economic conditions Let me now turn to economic conditions a bit closer to home. While Upstate New York outperformed the nation during the Great Recession, it has now returned to its more typical pattern of modest growth. This is not unexpected as many regions in the Northeast have tended to grow more slowly in recent decades as the population has shifted to other parts of the country and as jobs in the once dominant manufacturing industry have diminished. That being said, some parts of the region are really struggling: Syracuse, Utica, Binghamton and Elmira have all yet to see a meaningful recovery in employment, which is troubling. The Capital region, on the other hand, is a true bright spot. While Upstate New York as a whole has gained back only a little more than half of the jobs lost during the Great Recession, Albany is close to regaining all of the jobs that were lost. Though the Capital region’s public sector has exerted some downward pressure on job growth during the recovery, the education and health care sectors have been an ongoing source of stability and strength for the region. Employment in the education sector has climbed nearly 25 percent since the end of the recession, an increase of around 5,000 jobs, and the health care sector has added about 3,000 jobs.
Even with a sustained extra currency income in the form of the return on the Petroleum Fund, the main share of Norwegian imports must be financed using revenues deriving from exports of goods and services from mainland Norway. This places demands on profitability in exposed industries. In the long run, cost competitiveness must be adapted to the need for financing imports and securing balance in the external economy. Imports currently account for more than 30 per cent of GDP in Norway. The return on the Petroleum Fund will range between 4-5 per cent of GDP when the bulk of our oil resources have been extracted and converted into financial wealth. This means that no more than close to 1/5 of imports can be financed on the basis of oil in the long run. In other words, if the share of imports is to remain at the current level, a sizeable internationally exposed sector will be needed to finance imports. Both our petroleum wealth and financial wealth are sizeable. However, it is the discounted value of our own labour that is our predominant asset. Our livelihood essentially depends, and will continue to depend in the future, on our ability to produce goods and services efficiently through our labour, and to use our creativity and innovation to become ever more efficient.

Zeti Akhtar Aziz: Focus on human capital development in Malaysia Welcoming remarks by Dr Zeti Akhtar Aziz, Governor of the Central Bank of Malaysia, at the INCEIF Strategic Partnership 2006, Kuala Lumpur, 14 December 2006. *  *  *  Yang Berhormat, Dato' Mustapa Mohamed, Minister of Higher Education, Distinguished Guests, Ladies and Gentlemen, It is my great pleasure and honour to welcome you to INCEIF Strategic Partnership in conjunction with the signing of Memorandum of Understanding between INCEIF and nine institutions of higher learning in Malaysia. This occasion is of particular significance as, on this day, with the grace of Allah, we are laying the foundation for the promotion of collaborative efforts in human capital development which will benefit the Islamic financial services industry. Against an environment of a rapidly evolving Islamic financial industry and the growing significance of Islamic financial institutions globally, human intellectual capital has become the defining factor in sustaining the performance and competitiveness of the Islamic financial industry. Indeed, the fast pace of innovation in global financial services in general and in the Islamic financial services sector in particular, demands new expertise and skills. In this environment, the creation of a substantial pool of talent is indispensable for the future growth of Islamic finance. In this regard, Malaysia has placed strong focus on human capital development through training and education.
In Europe, the ECB’s deposit facility rate was already set at -0.5% before the COVID-19 crisis.6 In our statements, we have stressed that this rate could be further lowered in the future. Yet in any event, looking back it seems clear that conventional monetary policy — i.e. that based on controlling the short-term interest rate — has less scope for action than, for example, a few decades ago. The lower bound on interest rates generates asymmetry in monetary policy conduct. As I commented earlier, if inflation rises above its target, central banks may increase interest rates as much as necessary in order to “cool” the economy. However, in the face of deflationary shocks driving inflation below its target and leading the central bank to cut its interest rates, these may ultimately “collide” with their lower bound. This asymmetry makes monetary policy potentially very effective for combating inflation, but less so for combating deflation or even persistently low inflation. The latter may lead to a dangerous vicious circle. Against a backdrop where central banks’ hands are expected to be frequently tied by the lower bound on interest rates, economic agents will expect any inflation overshooting to be corrected swiftly. However, this is not the case for undershooting. Therefore, average expected inflation over a long period will tend to run below target.

A second course of action is the possibility of imposing restrictions on the saving of own funds prompted by the use of the advanced as opposed to the standardised approach which, at an extreme, could lead to the results of the standardised approach being used as a floor for the required capital. A third proposal is the use of a leverage ratio as a complement to the traditional solvency ratios. As you know, the Basel Committee published, scarcely two weeks ago, a document detailing the work performed to introduce, in the near future, a minimum leverage ratio in the regulatory framework of banking activity. As a concept, the leverage ratio can be defined very simply as the ratio of the bank’s highquality capital to its total exposure. However, transposing the concept to regulation requires, in practice, adopting complex decisions on how to measure certain exposures (such as repos and derivatives) and the extent to which these exposures should be netted or not for the purposes of calculating the ratio denominator. And all this must be done bearing in mind the existence of various approaches in the different jurisdictions linked largely to the heterogeneity of the accounting frameworks in place. The definition proposed by the Basel Committee is a pragmatic approach to the problem that should provide for the application of a similar methodology for the calculation of the leverage ratio worldwide.
I suggest that each speaker delivers a 10-minute presentation before we start the actual discussion between the members of the panel and turn later on to the audience. Mrs Bair will speak first, followed by Mrs Novick, then Professor Philippon and eventually Mr Papiasse. Sheila, would you start? 2  BIS central bankers’ speeches

Indeed, developments in recent years have demonstrated that monetary policy and financial stability, in many ways, are more intimately connected than we may previously have imagined. One of the challenges I intend to address today deals with the difficulty of assessing the effects on potential output and growth of the financial crisis and the regulations following in its wake. Another challenge concerns the impact of these regulations on monetary policy’s transmission mechanism. Finally, I will also discuss the possibility of preventing a credit-driven property boom. One highly current and significant challenge is that of preventing the central government finance problems primarily facing Greece, but also a number of other countries, from leading to new problems on the financial markets. The solution to this must primarily be sought on the international political level. This is a matter both of implementing measures to maintain confidence and of solving the most acute problems. The comprehensive support package for countries with serious budget problems, recently presented by the EU countries and International Monetary Fund, should be considered one such measure. Of course, a more lasting solution will also require the problem to be tackled at its root – for the regulatory framework for central government finances to be reviewed so that similar situations can be avoided in the future. Discussions on how best to do this have also been initiated. Hopefully, this will be enough to restore calm and for the process of recovery and normalisation following the financial crisis to continue.