samchain/econo-pairs-v1 huggingface dataset:
Weaker price and cost pressure Although we have not changed our views of developments in economic activity, during the autumn and at the beginning of this year we have gradually changed our view of inflationary pressure in the Swedish economy. This is connected with the labour market showing a weaker development than was forecast in December. Another factor is that productivity has increased more rapidly than expected, resulting in lower domestic cost pressure. A further factor is that the recent decline in inflation appears to have had some effect on inflation expectations, which have fallen slightly. Some of these are factors we pointed to already in December. At our meeting in early February we were able to base our decision on statistics from a further couple of months which reinforced the picture. Inflation was expected to be below target level and we therefore cut the repo rate by 0.25 percentage points. Let me go into these factors more closely and comment on them in the light of events since February. This is because it is essentially these factors that lie behind the decision we made yesterday. During the latter part of 2003 unemployment rose relatively sharply. A number of factors contributed to this. Demand for labour declined both in the business sector and in the public sector, and there were cutbacks in labour market policy measures.

The result of our endeavour to act consistently and symmetrically has been fairly good; inflation has remained in line with the target level during the years of inflation-targeting policy. Nevertheless, I would like to point out that we do not follow our rules of action mechanically. Our focus is on the inflation rate one to two years ahead, and in this perspective we are clearly below the target level and today’s decision is therefore well-motivated. In addition, inflation will probably be well below target level for the greater part of the coming year, while it is difficult to envisage any strong reasons why it should accelerate rapidly beyond the forecast horizon. This is connected with the fact that there is presently a high level of unutilised resources in the economy and that resource utilisation is expected to increase slowly. Given this background, there should be plenty of time to take action and raise the rate in future; when and if there is reason to believe that inflationary pressure is growing. We also try to take into account in our actions risks to financial stability. This is primarily done on the basis of information on how lending and so on affects the banks, and through them, the payment system. However, there is also a more difficult problem concerned with how credit expansion and asset prices affect the conditions for the stability of the payment system, as well as for developments in the real economy in a slightly longer-term perspective.
More-aggressive-than-usual policy responses may be appropriate to avoid the negative implications of an encounter with the zero bound. Paradoxically, though, once the lower bound on interest rates is binding, a less-than-usuallyaggressive monetary policy response may be appropriate. I have tried to articulate this in FOMC meetings ever since we started down the path of quantitative easing, drawing on anecdotal reports from my CEO contacts and what I thought was common sense. But my arguments fell on deaf ears until my more learned counterpart at the San Francisco Fed, John Williams, produced a formal study that posited that the aggressive use of unfamiliar policy tools like quantitative easing and Operation Twist add to aggregate economic uncertainty and, if applied at all, should be deployed more cautiously than our more familiar tools.7 Large margins of error In general, the objective of monetary policy is to provide households and firms with an economic environment that makes it attractive to use money as medium of exchange and store of value. Since many private contracts, including labor and debt contracts as well as capital expenditure commitments, extend out several years, a multiyear policy perspective is needed. A multiyear perspective is especially important when the economy may encounter the zero bound. The explanation is that by interfering with the normal conduct of monetary policy, the zero bound increases the likelihood that policy will miss its objectives year after year in the same direction, so that the errors accumulate over time.

BIS central bankers’ speeches  5  multiyear contracts is a multiyear nominal stability. A policy that “lets bygones be bygones” from year to year may not achieve this kind of stability, especially when policy options can become constrained, in the short term, by the zero bound. A policy that takes a longer-term perspective and is properly communicated and executed – so as to instill confidence that monetary policy will hew to a 2 percent inflation target rather than fixate on the run-rate of the past four quarters or the outlook for the next four – may better supply the longer-term comfort that households and businesses need to plan and budget. Such a policy would reduce the uncertainty that monetary policy as it is currently conducted spawns and would be more effective in doing its part to assist in economic expansion.8 A dime between two nickels I hope this is enough to get a conversation started. I will now turn the microphone over to John Taylor. In doing so, I am reminded of Ross Perot’s quip when he was placed between Bill Clinton and George H.W. Bush for a predebate photograph in the 1992 presidential election. Noting that Mr. Perot was substantially shorter than the other two men, a reporter asked him how he felt. His reply: “I feel like a dime between two nickels.” In contrast, compared to John Taylor, I feel like an intellectual dwarf – a mere penny sitting on the dais next to John’s $ bill brain.
As a platform to promote greater cooperation among Muslim countries and further promote IIFM, a proposal that can be explored is the creation of an Islamic universal bond, structured similar to the universally-accepted asset-backed Ijarah sukuk. Under this proposal, interested countries and selected organisations could be invited, where each country sells its assets to an SPV, which in turn would lease back the assets to the country. Proceeds could then be transferred to the participating country for the general purpose of socio-economic development. This could be an avenue for countries that have not secured stronger ratings to get more competitive funding. Indeed regional and multilateral entities would be well positioned to explore the viability of this proposal. The role of Shariah is one of the key elements that can spur the innovation process and enhance the global integration of the Islamic financial system. To effectively enhance Shariah governance, the understanding of the mechanics of finance by the Shariah experts is imperative to assist in the deliberation process in deriving a sound Shariah decision. The Shariah decision should then be made transparent. With such disclosure, the ability for others to appreciate the juristic reasoning based on contemporary analysis and logical inference of process could lead to wider acceptance of a Shariah decision, especially if it has implications on cross-border transactions.

Limitations in practice The problem is that it is difficult to apply this model for rules and regulations fully when there are many different national peculiarities which are hard to do away with. This has therefore provided some scope for the authorities also in the host countries to apply supplementary provisions, which have in practice impeded cross-border competition. Such provisions are often attributed to some form of general good, which can be hard to define - and for which it is even harder to disclose a hidden protectionist background. Another problem with the legislative work within the EU is that it has been so difficult to continuously modernise the rules and regulations and adapt them to new market conditions. The legislators have in several cases been one step behind the market, which has meant on the one hand that new products and operations may not have been encompassed by the new freedom of movement on the single  market, and on the other hand that the protection the legislation aims to provide has been undermined. This problem came under particular focus last year, with regard to the securities markets within the EU, and a Committee of Wise Men headed by former EMI head Alexandre Lamfalussy proposed a simplified procedure for the entire legislation process. As you know, directives are adopted by the Council of Ministers and the European Parliament in a co-decision procedure, which is in itself a complex process and even more so when the directives include detailed provisions on what is to be regulated.
What does one gain by conducting a policy that  9  As the CPI is to a great extent affected by repo-rate cuts in connection with the financial crisis, it has been natural to focus more on underlying inflation measured in terms of the CPIF. 10  Households’ total assets are much higher than their debts. A large part of this concerns housing. But there is also a considerable part that consists of more liquid assets, the value of which need not fall if housing prices were to fall. BIS central bankers’ speeches  5  deliberately allows it to take longer for inflation to return to the target and for resource utilisation to return to a normal level? Is it worth the cost in terms of poorer target attainment? This is not easily illustrated. It is a question of a “new” type of trade-off being included in the material on which the analysis and decisions are based and it takes time to find good forms for this. It also involves illustrating risks and uncertainty and making them more concrete, and this is always a challenge. The Riksbank has been carrying out work on developing this for some time, and an outline as to how financial imbalances can be included in the monetary policy assessments has begun to take form.

This working partnership paves the way for the financial services industry and the academia in Malaysia to work with the University of Nottingham, one of the top ten universities in the United Kingdom. The combination of academic excellence from the University of Nottingham and in-depth market knowledge of the financial services industry will spur greater innovation in financial services, leading to higher value added products and services. All of us can agree that the University of Nottingham is not new to us, as it is among the first foreign universities to establish a campus in Malaysia. It is also known as the university of choice by many Malaysians for its academic excellence and its forte in research. The University has also produced many prominent Malaysian leaders including the Deputy Prime Minister, YAB Dato' Seri Najib Tun Abdul Razak. Ladies and Gentlemen, Top-tier financial institutions are known for their commitment in research and development to enhance innovation, especially in process and product innovation to drive competition. In the process, such financial players will be able to better position themselves to be part of the global financial community. Bank Negara Malaysia encourages and supports a strong culture of research and development in the financial services industry in Malaysia in both the conventional and Islamic finance. We believe that the encouragement and support is important to ensure a wider range of high quality financial products and services to meet the changing demands of a progressive and dynamic Malaysian economy.
In the absence of flexible supply mechanisms, unbacked cryptos are incapable of effectively responding to temporary fluctuations in demand and thus fail to stabilise their value. Similarly, bitcoin’s limited supply – at 21 million coins – means that it does not offer protection against the risk of structural deflation. 18. Di Casola, P., Habib, M. and Tercero-Lucas, D. (2023), “Global and local drivers of Bitcoin trading vis-à-vis fiat currencies”, ECB Working Paper Series, forthcoming. 19. The industry’s trend towards centralisation is clear. Since 2015 approximately 75% of the actual bitcoin volume has been associated with exchanges or exchange-like entities, including online wallets, over-thecounter (OTC) desks and large institutional traders. See Makarov and Schoar (2022), op. cit. 20. Staking is the foundation of the proof-of-stake consensus mechanism, which entails individuals locking up their assets (native coins) on a blockchain to secure the protocol. The stake acts as a form of collateral to ensure that validators, who are responsible for verifying and appending the blockchain, act in a manner that is in line with the protocol's rules. See Oderbolz, N., Marosvölgyi, B. and Hafner, M. (2023), “The Economics of Crypto Staking”,. Swiss Economics Blog, 1 March. 21. They back their value with securities, commodities, as well as fiat money. Interestingly and inevitably, major stablecoin issuers – such as Tether or Circle – adopt centralised organisational structures, directly contradicting the initial ideas as laid down in Satoshi Nakamoto’s white paper.

BIS Review 77/2008  3  This could not have been more important. It has made innovation in central banks’ liquidity provision imperative during the turmoil. And, when we regain peacetime, reforms will be needed to avoid a recurrence of this problem. Open-market operations (or auctions) against wider collateral, and the Bank’s Special Liquidity Scheme launched on 21 April, should both be seen in that light. Such measures need to be constructed so that they do not interfere with the implementation of monetary policy, which depends on the central bank’s net supply of reserves matching demand in the economy so as to stabilise (risk free, or secured) overnight money market interest rates broadly in line with the policy rate. The monetary part of central banks’ market operations is simply the injection of reserves. The other characteristics – counterparties, maturity, collateral etc – are essentially nonmonetary interventions. In most circumstances, central banks want to make them as neutral as possible, so as not to interfere with relative asset prices in the economy. When markets break down, however, central banks may need to calibrate their interventions to contain the spillovers to the economy. Thus the SLS is designed to underpin the liquidity of the banking system, and so confidence in the system as a whole. Taming the credit cycle But can we, the authorities, do more to avoid the system getting into such a fragile state in the first place? We really must consider how to do that.
Financial stability, as I have suggested on several occasions, can be achieved only by the interaction of three basic necessities: sound leadership at the firm level, strong prudential regulation and supervision, and effective market discipline. These three elements provide the foundation for the health and soundness of the financial system as a whole. Sound leadership at the firm level is the first bulwark against financial system instability. It begins with good corporate governance: capable and experienced directors and management, a coherent strategy and business plan, and clear lines of responsibility and accountability. Boards of directors are meant to oversee the development of the overall strategy of the organization and the decisions made by senior management in pursuit of those strategic objectives. This means that individuals with skills and competencies consistent with the institution's strategic focus must be represented. In addition, boards should establish clear guidelines regarding the independence of their directors. The Senior management is meant to set the business strategy, oversee day-to-day decisions, and ensure that these decisions support the long-term objectives and policies as determined by the board. To ensure financial stability, execution of the overall objectives of the firm must be supported by rigorous internal controls and effective risk management. An effective internal control apparatus is critical to provide reasonable assurance that the information produced by the organization is timely and reliable and that errors and irregularities are discovered and corrected promptly.

16 On the supply side, we too have seen healthy interest from Asia-Pacific issuers in the development of an APAC market for catastrophe bond issuances, due to the proximity to and better understanding of the underlying risks. 17 Given the above, the MAS has thus taken progressive strides towards developing the catastrophe bond market in Singapore. 18 As a first step, we have formed an alternative risk transfer work-group comprising industry experts in the ILS space. Chaired by Jon Paradine of Renaissance Re, the work-group advises the MAS on specific initiatives that will support the development of Singapore as an ILS hub. 19 Today, I am happy to announce one such initiative – the newly created ILS grant scheme. To catalyse the development of Singapore’s ILS market, the MAS will fund 100% of the upfront costs incurred in issuing catastrophe bonds out of Singapore. This grant will run from 1 January 2018 and will be applicable to ILS bonds covering all forms of risks beyond just natural catastrophe risks. 20 It is my hope that this grant scheme will encourage insurers and reinsurers to consider issuing a catastrophe bond here. In fact, MAS is already working with key industry players such as IAG Re Singapore with a view to issuing a catastrophe bond in Singapore. This is but the first step of a longer journey, as we look forward to working more closely with the industry to further deepen our ILS ecosystem here.
All in all, these factors clearly indicated that the repo rate and repo-rate path should be lowered in July (see Figure 11). As you know, I entered a reservation against the decision to cut the repo rate by 0.5 percentage points and advocated a smaller cut of 0.25 percentage points, and to wait until 2016 before making the first policy rate increase. There are several reasons for this. Firstly, I consider that the smaller repo-rate cut entails a better balance between bringing inflation up towards the target and taking household indebtedness into consideration. As I see it, there are also clear signs that economic activity is about to improve, and the conditions are therefore right for stabilising inflation around 2 per cent by means of a smaller cut in the repo rate. Moreover, the smaller repo-rate cut is more in line with our earlier actions, which was reflected in the market expectations of a 0.25 percentage repo-rate cut. I do not think one should surprise economic agents unnecessarily, and our actions should as far as possible be predictable and long term. I would like to emphasise that there is, on the whole, consensus among the Executive Board with regard to economic developments and monetary policy. As I have said before, it is a question of a difficult balancing act, and it is natural that there will be some minor differences of opinion on the assessments.

In this regard, I am worried about two current shortcomings:   The reach of Title II’s one-day stay on the close out of qualified financial contracts is incomplete and does not extend to contracts governed by non-U.S. law with nonU.S. counterparties.   The placement of the parent company into receivership may be treated by these counterparties as an event of default due to the presence of a parent guarantee or other cross-default provisions triggered by the parent-level insolvency. Unless market participants make the appropriate contractual changes that will ensure that the placement of the parent company into Title II will not trigger the close-out provisions of over-the-counter derivatives and other qualified financial contracts that are outside the reach of Title II’s U.S. application, foreign counterparties to a SIFI will tend to exercise this right  4  BIS central bankers’ speeches  whenever it is in their individual economic interest to do so. This would create significant difficulties. Such actions could greatly complicate the operations of the firm during a time when it is already under considerable stress and could propagate stress more broadly in financial markets. There are two main courses of action for addressing this concern, and they are not mutually exclusive. First, existing derivative contracts need to be amended and future contracts need to provide that the parent’s entry into the Title II proceeding does not trigger the close out option.
At the same time, we recognize that it’s not just individual business lines or firms that are affected, but regulatory changes are having an impact on markets as well. We, collectively, need to spend more time identifying and understanding these impacts as well – and we need to work across jurisdictions to do that. Conclusion In conclusion – we all have a lot to do! First, though, firms need to focus on fixing what was so completely broken – firms were too complicated, MIS was weak, risk management was poor, compliance programs were ineffective and governance was questionable. Once that hard work is on track – and substantially in place – we need to engage in a productive two-way dialogue about the challenges that firms are facing. As I said earlier, rhetoric is fine (and I understand much of this), but without specifics, it’s difficult to know whether the outcomes were intended or not. Yes, we did intend for you to be less complicated and complex; yes, given the weaknesses, we did intend for capital and liquidity to provide assurances to home and host supervisors; and, yes, we do want to know more about your senior management and expect much more interaction with them. 6  BIS central bankers’ speeches  At times, our outcomes may appear to be in conflict: we want smooth efficient markets that support global growth AND we want a strong, resilient, safe financial system. Our challenge is how to balance those.

I think we’ve been clear in our expectations around AML/BSA: •  That AML/BSA needs to be managed on an enterprise-wide basis;  •  That AML/BSA needs to be a high priority for the board of directors, senior management and line management;  •  That the message on compliance needs to be carried down well into the organization, so that those who are on the front lines making daily decisions understand the importance of compliance and the consequences for failing to meet the requirements; and  •  That AML/BSA shouldn’t be treated as a static exercise – standards and best practices evolve and you are required to keep up with and adhere to the latest requirements. As I know you are also aware, we are seeing keen competition for talent/resources in this area. While we recognize that it may be difficult to identify and retain talent, having a solid recruiting strategy and ongoing training in place, as I mentioned earlier, are important components to addressing the problem. You might wonder why this topic remains on my list – and it’s because in spite of the heavy public attention on the matter, including a range of public enforcement actions, it remains a work in progress for many firms. And, for firms that haven’t yet been faced with MRAs or a public enforcement action, I worry about complacency. So, I raise it again because it seems that another warning shot is warranted. 2.