samchain/econo-pairs-v1 huggingface dataset:
The forward guidance provided by the Committee in August can be seen as a response to these challenges. To retain the clarity and credibility of the inflation target but to augment the framework so that monetary policy is better equipped to address the exceptional challenges currently faced by the UK economy. In this talk, I will provide a post-crisis report card for the UK’s inflation targeting regime and explain how the MPC’s forward guidance responds to some of the areas exposed as having ‘room for improvement’. I will also show how a threshold for monetary policy defined in terms of the unemployment rate is particularly helpful in addressing two other challenges currently facing the MPC: the uncertainty surrounding the future path of productivity; and the need to provide greater clarity concerning the setting of monetary policy as the economy recovers. A bit of background Before doing so, it is worth highlighting three features of the UK’s economic performance over the past five years which should be borne in mind when evaluating the performance of the UK’s inflation targeting framework and understanding the Committee’s decision to provide forward rate guidance. First, CPI inflation has been above target for almost this entire period (Chart 1). Fifty four months out of the past sixty to be precise. Over this period, CPI inflation has averaged 3%. And, on the basis of the MPC’s central projection in the August Inflation Report, it is expected to remain above target until the second-half of 2015.

Heng Swee Keat: Monetary Authority of Singapore’s initiative to develop Singapore dollar sovereign-rated sukuks Speech by Mr Heng Swee Keat, Managing Director of the Monetary Authority of Singapore, at the 5th Annual Islamic Financial Services Board Summit, Amman, Jordan, 13 May 2008. *  *  *  Introduction It is my honour this afternoon to join my IFSB colleagues in discussion of this very current topic. I am very glad that we are addressing this issue of regional integration of Islamic Financial Services at this point. This is very timely and relevant to both the soundness and vibrancy of Islamic Finance. Let me explain. The global Islamic finance industry has grown rapidly – it is estimated that total assets are now over $ billion. This is impressive. Still, this is a small proportion of conventional finance. The potential for growth is hence very large. While each country is taking measures to promote Islamic Finance, we can grow much faster as well as increase the scope and depth of the industry if we work towards integration at an early stage. Integration increases market size, efficiency and liquidity. This in turn provides for more competitive cost of capital, spurring further growth. Second, having service providers from different regions allow risks to be distributed across a wider group of players, and can improve the overall stability of the financial system. Regional integration between Middle East and Asia, which may have different business cycles, provides a cushion for financial institutions and investors from country specific shocks.
By easing market-based financial conditions, and by putting downward pressure on the real interest rate that banks charge to borrowers, central banks can stimulate aggregate demand, even when short-term interest rates approach the effective lower bound. The validity of this relationship is also crucial for assessing the price effects of monetary policyinduced movements of the exchange rate. With policy being effective in boosting growth, any disinflationary effect of a stronger currency arising from expectations of a tighter future monetary policy stance might be mitigated, or offset, by the ensuing improvement in the economic outlook. However, exogenous shocks to the exchange rate, if persistent, can lead to an unwarranted tightening of financial conditions with undesirable consequences for the inflation outlook. Thank you. References Ahmed, S., M. Appendino and M. Ruta (2015), “Global Value Chains and the Exchange Rate Elasticity of Exports”, IMF Working Paper WP/15/252. Al-Eyd, A. and S. Pelin Berkmen (2013), “Fragmentation and Monetary Policy in the Euro Area”, IMF Working Paper No 13/208. Altavilla, C., G. Carboni and R. Motto (2015), “Asset purchase programmes and financial markets: lessons from the euro area”, ECB Working Paper No 1864. Andrade, P., J. Breckenfelder, F. De Fiore, P. Karadi and O. Tristani (2016), “The ECB’s asset purchase programme: an early assessment”, ECB Working Paper No 1956. 11 / 14  BIS central bankers' speeches  Ball, L., (1998), “Policy Rules for Open Economies”, NBER Working Paper No. 6760. Bernanke, B. and A. S. Blinder (1988), “Credit, Money, and Aggregate Demand”, American Economic Review, Vol.

The New Keynesian IS curve in the euro area This brings me to the second channel I would like to discuss this morning: the effects of monetary policy on real economic activity. 7 / 14  BIS central bankers' speeches  Much of our attention recently has been focused on the properties of the Phillips curve – that it may be flatter, non-linear or mis-specified in terms of the relevant economic slack. By now, we are fairly confident that non-linearities and broader labour market slack are likely to explain much of the weakness in inflation as of late.10 Some observers have interpreted the lack of stronger price pressures as a failure of monetary policy to stimulate the economy. They argue that persistently low inflation is testimony to the ineffectiveness of non-standard policy measures. If this were true, then also the reasoning behind the shock-based exchange rate pass-through would in part be misguided. I would argue, however, that such claims reflect a serious misunderstanding and simplification of how monetary policy works. There are very few instances, such as through the exchange rate, where policy can directly affect prices. In most cases monetary policy transmits to prices through its impact on the intertemporal allocation of consumption, savings and investment. If prices are slow to adjust, a cut in the key policy rate lowers the real interest rate, which, in turn, stimulates interest-sensitive spending.
Does the spectre of monetarism haunt our economies? i  These are serious charges, based on real anxieties. They merit sober, objective assessment. This evening I want to discuss the role of monetary policy in this time of great disruption. But first I will focus on the underlying causes and consequences of weak real income growth and inequality across the advanced world. That’s because any doctor knows that the importance of diagnosing the underlying causes of the patient’s symptoms before administering the cure. Monetary policy has been keeping the patient alive, creating the possibility of a lasting cure through fiscal and structural operations. It has averted depression and helped advanced economies live to fight another day, so that measures to restore vitality can be taken. II. The Great Disruption During the last quarter century there have been a series of profound disruptions to the way we work, trade, consume and live. The fall of the Berlin Wall and the reforms initiated by Deng Xiaoping led to the integration of a third of humankind into the global labour force. Those workers are increasingly linked by global supply chains that have spread from goods to services. In parallel, an explosion of technological innovations has brought access, at the click of a virtual button, to the sum of human knowledge to three-anda-half billion people (Chart 1).

So, as long as New York City keeps adding jobs at such a brisk pace, Fairfield County will benefit. In addition, research indicates that a strong central city is critical for the well-being of its suburbs, meaning that a healthy and growing New York City economy is critically important to Fairfield County. What else can the region do to foster economic growth going forward? It certainly helps for cities like Bridgeport and Stamford to be attractive locations for businesses to locate and grow. It is also important to focus on quality of life issues that make people want to live here – like good schools and low crime, and also amenities ranging from nice parks to good restaurants. Bridgeport has clearly been making progress in this regard, both along the waterfront at Steelpointe Harbor and along Main Street. With New York City’s large and booming economy nearby, and Metro North providing a convenient mass transit link, anything that makes people more inclined to live here – and perhaps even set up shop here – is bound to boost the local economy. And finally, one of the most important ingredients for a healthy urban economy is a well-trained and motivated work force. It cannot be overstated how important it is to help provide residents with the skills and tools they need to be productive and successful, so that they can realize their full potential.
To put this into perspective, consider the case of a large US automobile manufacturer. Often cited in the fields of organisational ethics and industrial psychology, this case was seen as a prime example of how conformity and group-think led to costly outcomes. In 2014, the motor company was forced to recall nearly 30 million cars worldwide as faulty ignition switches were found to have led to a loss of electrical power and sudden engine shutdown. 1/7  BIS central bankers' speeches  This malfunction also caused the airbags, power steering and power brakes to become dysfunctional, risking the safety of drivers. As the scandal was uncovered, it was found to have caused an estimated 124 deaths. What is particularly harrowing, was the fact that this faulty ignition switch was known by the company’s employees for at least a decade before the recall. An independent probe subsequently pointed to a corporate culture, which the then new CEO, described as “a pattern of incompetence and neglect". Various case studies on the crisis highlighted that the tight financial position in the early 2000s festered a corporate culture that was heavily focused on cost-cutting, shaping employees’ mindsets, conduct and ultimately values. Internal email transcripts revealed that it would have cost an extra 90 cents per unit to modify the ignition switches. An internal probe reported that the problem was misdiagnosed and dismissed as a “customer-satisfaction” issue, rather than a safety problem.

Maiava Atalina Ainuu Enari: Educating children about money matters Opening remarks by Ms Maiava Atalina Ainuu Enari, Governor of the Central Bank of Samoa, at the Awards Ceremony of the “Be Money $ Financial Literacy Poster Competition 2014, Apia, 14 March 2014. *  *  *  Greetings and welcome to you all, dear parents, school principals and most importantly the winning students of the 2014 Be Money $ poster competition. As I look across the room to the students, parents and principals/school reps,... without a doubt this is a Happy Friday for you all. It gives me great pleasure to say that, this is also a Happy Friday for us at the Central Bank – we are as much excited to reveal the winning poster entries as you are to be here today to receive your awards!! Talofa! Talofa Lava; I am delighted to be here today, at the conclusion of an important initiative for the Central Bank, to address this gathering and most especially the winners of – our first Be Money Wise Financial Literacy Poster Competition. This competition is one of many programs undertaken by the Central Bank to perform one of its mandates of promoting financial literacy under the “FINANCIAL FITNESS” or “FIT for FINANCE” campaign. The “Be Money $ Poster Competition 2014” was also conducted in collaboration with the Global Money Week which is coordinated by Child & Youth Finance International.
The economy moves from point B to point C, so employment recovers (to above its pre-crisis equilibrium), but wages continue to fall. BIS central bankers’ speeches  15  Weak wage growth With some additional structure, the simple model above can be used to understand unemployment and wage inflation.23 If wages are adjusted infrequently (ie there is nominal wage stickiness), then the following relation between wage inflation, 𝜋 𝑤 , and unemployment can be derived: 𝑤 𝜋 𝑤 − 𝛽𝐸𝜋+1 = −𝜆𝜑(𝑢 − 𝑢�)  (WPC)  𝑤 captures expected inflation, 𝑢� is the ‘natural’ rate of unemployment (which can where 𝛽𝐸𝜋+1 vary over time) and 𝜆 is a parameter capturing the degree of wage stickiness. Equation (WPC) is the Wage Phillips Curve. For a given natural rate of unemployment, WPC traces out the relationship between wage growth and unemployment. Chart 9 contains a reducedform representation of the WPC, taken from Broadbent (2014). As that chart shows, outturns for wages in 2013 and 2014 were considerably below the past relationship, which would otherwise suggest that unemployment would be expected to be around 10% given the observed decline in wages. In light of equation (WPC), one way to interpret this is as there having been a decline in 𝑢�, the natural rate, such that a given rate of unemployment puts greater downward pressure on wages. Broadbent (2014) discusses Chart 9 further. 23  16  See Gali, J (2011), “The return on the wage Phillips curve”, Journal of the European Economic Association, 9(3), June.

External sector of the economy continued to be characterised by a positive, though falling, contribution of foreign demand to economic growth. The correction pace of the trade deficit was slower in this quarter. Trade deficit reduced by 1.2% compared to two-digit correction rates recorded in the first half of 2010. This situation of the trade deficit is determined mainly by the acceleration of imports, which marked a year-on-year increase of 10.8% in the fourth quarter of 2010, recording a growth for the third consecutive quarter. On the other hand, Albanian exports increased by 48.8% year-on-year, maintaining high rising rates. The Bank of Albania holds that the Albanian economy will find it difficult to maintain the same growing rates of exports during 2011; among other things, this projection reflects temporary factors that influenced on 2010 growth and is in line with the global economy situation and basic statistical effects. Nevertheless, external demand is expected to generate positive contribution to the economic growth during 2011, as well. 2  BIS central bankers’ speeches  Monetary indicators, financial markets and inflation Performance of monetary indicators continues to generate controlled monetary inflationary pressures on the domestic economy. Money supply increased by 12.5% in December 2010, reflecting a good performance of deposits in the banking sector during the second half of the same year. Our assessments indicate that monetary expansion is in line with the private sector demand for real money.
9 The second question, whether a different monetary policy could have prevented the crisis, is relevant when assessing to what extent monetary policy can be blamed for causing the crisis, notwithstanding if it was reasonable from an ex ante perspective. The credit growth and the housing boom in the U.S. and elsewhere were very powerful. Real interest rates were low to a large extent because of global imbalances, the global saving glut and investment shortage. I believe that somewhat higher interest rates would have made little or no difference. Empirical evidence indicates that only a small portion of house-price increases can be attributed to monetary policy. 10 Bernanke (2010) shows that the recent phenomenon of a higher share of adjustable-rate mortgages was unlikely to have significantly increased the sensitivity of house prices to monetary policy. The availability of new, more exotic mortgage types mattered much more for initial mortgage payments than the level of shortterm interest rates. In my view, interest rates would probably have had to be raised very high so as to cause considerable damage to the real economy in order to stop the credit growth and housing boom. 11 That could have thrown the U.S. right into Japanese-style deflation and eventually a liquidity trap.

4  BIS Review 16/2010  the inflation target and resource utilization around a normal level. In the event of conflicting objectives, it achieves a reasonable compromise between the stability of inflation and the stability of resource utilization. Different central banks express this in slightly different words. The Riksbank has often used the term “well-balanced” monetary policy. 3 The forecasts of inflation and the real economy are then conditional on the central bank’s view of the transmission mechanism, an estimate of the current state of the economy and a forecast of important exogenous variables. The central bank uses all relevant information that has an impact on the forecast of inflation and the real economy. In this framework, the central bank takes financial conditions such as credit growth, asset prices, imbalances, potential asset price bubbles and so on into account only to the extent that they have an impact on the forecast of inflation and resource utilization. Inflation and resource utilization are target variables, that is, variables that the central bank tries to stabilize. Financial conditions are not target variables. Instead, they are only indicators, as they provide information to the central bank about the state of the economy, the transmission mechanism and exogenous shocks. Financial conditions then affect policy rates only to the extent that they have an impact on the forecast of inflation and resource utilization. 4 Now, is there any reason to modify this view of monetary policy given the experience of the financial crisis so far?
Increasingly, we are seeing pressure from stakeholders, pushing banks to become more engaged with the issue. And financial institutions have responded by paying more attention to their own exposure to climate risk, developing communication and business strategy that incorporates climate change, and engaging bank management and employees on the issue as part of the corporate social responsibility. Up to now, globally, evidence of the financial system’s response to climate change is positive, but still very much in an early stage. On lending, for example, fifty-four internationally-based banks have signed the Equator Principles which integrates environmental considerations into project finance. Banks like Citi, Merrill Lynch, Credit Agricole and HSBC have developed specific climate considerations on lending. But for developing and emerging market economies, evidence on environmental lending by domestic banks and by micro-finance institutions is more limited compared to international development banks and subsidiaries of international banks. 2  BIS Review 97/2008  On market development, Clean Development Mechanism (CDM) market growth is impressive and this has been the key driver of growth in primary and secondary trading in carbon market. On the issue of CSR, banks have done relatively less to elevate climate change as a governance priority. For example, only twelve out of forty of the world largest banks have board-level involvement in climate change initiatives. But in terms of banking operation, a growing number of banks are calculating carbon risk in their loan portfolios, with twenty-four banks having set greenhouse gas reduction targets for their internal operations.

The analysis in the June Inflation Report showed that a reduction in the sight deposit rate towards 3 per cent, combined with some depreciation of the krone, 2 could bring inflation up towards the target two years ahead. More moderate wage settlements in the 3 future would provide a basis for even further monetary policy easing and a weaker krone. Without considerable monetary policy easing, inflation might have remained too low for an extensive period. The short-term nominal interest rate in Norway has now reached a historically very low level. Interest rates have not been lower since the first nine to ten years following the Second World War. The real interest rate is also low, although by no means as low as it was when inflation plagued Norwegian savers in the 1970s and 1980s. The low interest rate must be viewed against the risk of persistently low inflation both in Norway and in other countries. So far, indicators of inflation expectations do not point to any substantial deviation from the inflation target of 2½ per cent. However, if inflation should remain too low for an extensive period, there is a risk that expectations of continued very low inflation will be generated. It may then prove difficult to fuel economic activity by stimulating demand. A marked easing of monetary policy has therefore been appropriate. The inflation target is symmetrical. It is equally important to avoid an inflation rate that is too low as it is to avoid an inflation rate that is too high.
I would like to offer a few thoughts to launch our discussion today. I will start with the risks and vulnerabilities caused by excessive volatility and procyclicality of capital flows; I will then turn to the policy responses, including means to address the volatility of capital flows directly and issues related to the GFSN (or Global Financial Safety Net). I. Regarding international capital flows, it is fair to acknowledge that we do not have a good benchmark on what would constitute an appropriate level of these flows. There is a trade-off between the costs and the benefits that they bring, and this trade-off varies across countries and over time. Yet, the fluctuations in gross global capital flows do seem to be very procyclical and volatile. If we look at gross inflows in advanced economies for instance, we see that they rose considerably in the years preceding the Global Financial Crisis, from less than 10% in the early 2000s to more than 20% in 2007. Subsequently, they plunged to virtually 0% in 2008 and 2009 and have remained low ever since. Not all types of flows show the same dynamics over time: FDI and portfolio equity flows have been fairly resilient, while bank flows and debt portfolio flows have been very significantly affected, resulting in a marked changed in the composition of gross flows. These sharp fluctuations are clearly not optimal.

Even bearing in mind the caveat that I have outlined earlier on the lack of a clear benchmark, it looks like international capital flows are too abundant in good times, potentially fueling domestic bubbles and destabilizing national financial systems, and prone to “sudden stops” in bad times. Emerging market economies have experienced numerous examples of “surge” episodes of capital inflows followed by perilous sudden stops. Current (and preliminary) data suggest that some EMEs are currently experiencing very large outflows. The potentially destabilizing effects of capital flows may be magnified in the current situation, with disappointingly slow economic growth (of a cyclical and structural nature), high volatility in commodity and asset prices, the persistence of both internal and external imbalances in key countries and regions, substantial amounts of currency mismatch on balance sheets in emerging market economies, etc. BIS central bankers’ speeches  1  II. So what should be done? I think that we should try to be both pragmatic and ambitious. If we are not pragmatic we will waste time exploring paths that will not lead us anywhere, but if we lack ambition we will never make progress. We should, first, develop a framework to prevent excessive capital flow volatility. Here I see three main avenues to explore: (i)  improving the monitoring of capital flows and hence taking forward the work on data gaps on foreign currency exposures and mismatches.