samchain/econo-pairs-v1 huggingface dataset:
22  All speeches are available online at www.bankofengland.co.uk/speeches  22  Chart 10: Inflation Report forecasts of productivity growth from 2012 Four-quarter growth (per cent)  5 4 3 2 1 0 -1 -2 -3 -4 -5  2001  2003  2005  2007  2009  2011  2013  2015  2017  Latest ONS data Source: ONS, Bank of England and Bank calculations Note: Chart shows latest estimate for four-quarter output per hour growth and vintages of May Inflation Report forecasts from 2012 to 2017. Chart 11: Out-of-sample wage equation fit for the past 5 years Wage growth (per cent) 7 6 5 4 3 2 1 0 -1 -2 -3 1992  1995  1998  2001 Data  2004  2007  In-sample fit  2010  2013  2016  Out-of-sample fit  Sources: ONS, Barclays and Bank calculations. Notes: Wage equation is specification (1) in Table 1. Sample period used for estimation is 1992Q2-2013Q1. 23  All speeches are available online at www.bankofengland.co.uk/speeches  23  Chart 12: UK labour share since 1955 Share of GDP  70% 65% 60% 55% 50% 45% 40% 35% 30%  1955  1963  1971  1979  1987  1995  Labour share minus special contributions  2003  Labour share  2011 Wage share  Source: ONS and Bank calculations. Notes: Labour share is wages and salaries plus employers’ social contributions plus a fraction of mixed income as a share of GDP.

But credit cards are not common in Zambia as only a few banks issue them while most cards held by residents have been issued offshore. This initiative taken by Access Bank should directly contribute to an increase in the number of people holding such cards and taking advantage of the range of benefits that can be derived from their use. In countries where credit cards are used extensively, their benefits for users are commonly recognized and include: •  Elimination of the risk associated with carrying large amounts of cash as it may be lost or stolen. Credit card companies have over the years developed a variety of anti-theft practices which protect the cardholder in the event of theft of the card. In any case, the cardholder is protected from fraud on the card except in event of negligence on his/her part;  •  Cards make it easier to buy things as one can pay for a range of goods and services from small items to airline tickets, hotels, car-rentals etc.
We therefore recall the importance for those countries that still have not achieved a balanced budget position to honour their commitments to catch up with the other countries of the euro area by 2003/04. Let me now turn to some other issues raised in the draft resolution on the ECB’s Annual Report. We welcome the draft resolution’s clear support for the ECB’s monetary policy strategy. The draft resolution concludes that short-term movements in monetary aggregates should not be overemphasised and that there should not be any mechanical reaction to deviations of M3 growth from the reference value. This is fully in line with the ECB’s monetary policy strategy and practice. The first pillar of our strategy, which gives a prominent role to the analysis of monetary developments, is based on the empirical evidence of a close and stable relationship between money and prices in the euro area over the medium term. There is no evidence yet to suggest that this link has weakened over time. The ECB is fully aware that monetary developments may be subject to portfolio shifts in the short term, which are not directly related to future spending decisions. Indeed, what matters is to identify and understand the underlying reasons for monetary developments in order to assess the implications for the risks to price stability over the medium term. In this respect, the analysis of monetary developments has provided useful guidance to the ECB’s monetary policy also over the past year.

Benchmarking against the OECD principles and the practices of some advanced economies, the HKMA is of the view that Hong Kong has been doing quite well in protecting bank customers’ interests. We also strive to make changes and improvements from time to time. Yet, I believe there is a need and room for further improvements as to how banks deal with their customers. This is because bank customers are essentially entrusting most of their liquid assets or funds with banks that they trust. Trust between banks and their customers is beyond that between general service providers and their customers. Also, as compared to other financial institutions, it is indeed easier for banks to earn confidence and trust of their customers. In addition to bringing business opportunities and profit to banks, customers’ confidence and trust in banks are also the cornerstone for banking and financial stability. 4. Let me borrow a famous quote and put it simply that with “great trust” comes great responsibility. First, banks should ensure their prudential operation and risk management are in place to safeguard customer deposits. Second, banks should treat their customers fairly when providing various services and financial products to them, and should stand in customers’ shoes in pursuing profit. But how can we achieve this? In the past few months of discussion with the industry, we found that the basic principles of fair treatment to customers are indeed not so complicated. Mr Benjamin Hung, Chairman of the HKAB, will brief us on the five principles in the Charter. 5.
Inflation target and transparency When the Riksbank originally decided to adopt an inflation target, time was short and did not permit extensive analyses. In my opinion, experience to date of the inflation target policy has been favourable. One major advantage of having an established and distinct inflation target for monetary policy is that this can be combined with transparency. Market agents can form a clear picture of the grounds for the Riksbank’s actions. It is, moreover, comparatively easy to understand how the policy functions, which should help in gaining public support for the target. The inflation target is an instrument for stabilising expectations about the conduct of monetary policy; a lack of transparency and distinctness in monetary policy makes it more difficult for inflation expectations to adjust to the target. This in turn can make it more difficult to achieve high, stable growth. In recent years the Riksbank has accordingly been aiming for greater transparency. A highly qualified staff has been built up, intensive efforts have been devoted to developing models and analyses, routines have been constructed for monetary policy preparations and decisions, and a new interest rate management system for monetary policy has been launched. The endeavour to promote transparency is evident in the Riksbank’s participation in public hearings by parliamentary committees, in inflation reports, speeches, discussions and seminars of various kinds, and in the publication of specialist reports.

The cantons – our majority shareholders – are well represented in our supervisory body for operating matters, the Bank Council. As you see, the special characteristics of the Swiss system are taken into account. Federalism is mirrored in the composition of the Bank Council and in the distribution of our shareholdings and – not least – in the distribution of profit. The Swiss constitution and the National Bank Act provide for the SNB’s profit to be paid to the Confederation and the cantons. Two-thirds accrue to the cantons and one-third to the Confederation. However, a distribution can only be carried out if the balance sheet and the SNB’s result allow for this to be done. The robustness of our balance sheet, in other words, setting aside provisions for currency reserves, takes first priority over a distribution. This can be derived directly from the legislation. The appreciation of the Swiss franc against most other currencies weakened our balance sheet last year. In addition, very volatile results may be expected in the next few years because of the current size of the balance sheet and the uncertain situation in the capital markets. Consequently, the possibility that distributions to the Confederation and the cantons will have to be suspended in certain years cannot be excluded. Fiscal interests must take a back seat when it comes to ensuring our long-term monetary policy freedom of action and independence. The Governing Board is also genuinely Swiss.
Since these instruments can absorb losses in the event of difficulties, their interest rates upon issuance are usually higher than those of ordinary debt instruments, so there is much more room for them to decrease, particularly in comparison with deposits. Analysis of the average loan-deposit spread, in terms of outstanding balances, shows that there is indeed a historically positive relationship between this variable and the level of market interest rates. However, since 12-month EURIBOR turned negative in February 2016, not only has this spread not narrowed, but it has actually widened. There are three reasons for this. First, average loan remuneration has been underpinned in recent years by the decline in non-performing loans, which has lowered the proportion of loans that do not generate any interest. Second, banks have to a certain extent rebuilt their portfolios, focusing more on business such as consumer lending that provides higher net interest income, albeit at the expense of increasing the risk profile of their credit portfolios. Third, in February 2016 there was still some room for a further decline in the cost of deposits which averaged 0.35% for outstanding balances and 0.20% for new business. Since then deposit rates on new business have fallen by an amount similar to the decline in average loan remuneration. However, the cost of deposits is currently very close to zero, so it will be more difficult to pass through any further falls in loan remuneration.

Some European countries have also provided bilateral financial support. Third, the private sector, represented by the foreign banks active in the region, has by and large maintained its exposure to the region, helped by the informal forum known as the “Vienna Initiative”. By avoiding a large-scale uncoordinated withdrawal of cross-border banking groups from Central and Eastern Europe, a systemic crisis in the region could be avoided. BIS central bankers’ speeches  3  Finally, the ECB is also making a key contribution. For example, by providing extensive liquidity provision to parent banks established in the euro area, the subsidiaries of those banks in Central and Eastern Europe are indirectly benefiting from this ample liquidity. Ladies and gentlemen, let me draw to a close. I am sure that the three aspects of convergence that I have mentioned will be better understood thanks to the discussions, which will take place during this impressive conference. Achieving sustainable convergence requires the conduct of sound economic policies, both before and after adoption of the euro. The present global crisis is demonstrating, once again, to which extent continuous resolute sound macro policies are the best way to improve economic and financial resilience in times of unexpected challenges and shocks. Thank you very much for your attention. 4  BIS central bankers’ speeches
In addition, the pool of financial products would increase and competition in financial services would be enhanced, thereby reducing the cost of capital. Simulations using the stylised dynamic stochastic general equilibrium model in Chapter 7 indicate that domestic real interest rates would decline, the domestic capital stock would grow, and GDP per capita would rise permanently if a small country such as Iceland were to join a larger currency area (see also Chapters 2 and 21 for a discussion of other countries’ experience). •  Upon joining the euro area, consumers would have access to a large market in which they could use their home currency. This would facilitate price comparison and boost competition. It would also be easier for domestic firms to gain a foothold in larger markets and benefit more from economics of scale in their operations and production. BIS central bankers’ speeches  5  •  With euro area membership, the risk associated with cross-border banking operations would be reduced, as banking would take place in the home currency to a larger degree and the ECB would be responsible for providing liquidity. As a result, it would be possible to ease the restrictions on cross-border banking that would otherwise be necessitated by foreign exchange risk and maturity mismatches in the banks’ foreign-denominated assets and liabilities. •  EU and euro area member countries are subject to requirements concerning public finances and other aspects of economic policy, which aim to improve policy discipline.

The króna is now worth only 0.05% of its value prior to the 1922 devaluation; in other words, it has depreciated by 99.95%. In terms of consumer prices, the króna has eroded in value even more, or about 99.99%. In other words, its purchasing power in terms of goods and services is currently only 0.013% of what it was in June 1944, when the Republic of Iceland was founded. Nevertheless, over this period, Iceland developed from being one of the poorest countries in Europe to one of the richest in per capita terms, despite the economic costs of persistent inflation. Currency depreciation and subsequent inflation episodes have sometimes expedited the necessary adjustment following economic shocks, however, thereby returning the economy more quickly to a path of economic growth. Chapters 3 and 12 focus on certain aspects of Iceland’s experience with an independent currency. In Chapters 9 and 13, two key questions are asked. First, how effective is monetary policy in achieving the goals with which it is tasked? Second, has the flexibility of the exchange rate facilitated economic adjustment and stability, or has it instead been a source of shocks? Summarising these findings reveals that Iceland’s experience of independent monetary policy and a flexible exchange rate has been poorer than that in many other countries, in that monetary policy has not been successful in achieving its goals and the flexible exchange rate has tended to be a source of shocks rather than a shock absorber.
In the early 2000s, for example, Claudio Borio and Philip Lowe had pointed out in a BIS article that low and stable inflation could not only promote financial stability, but that financial imbalances could also be built up in such an environment.16 While the development of supply will slow down price developments, it can also lead to overly optimistic risk assessments, strong credit expansion and rising asset prices.17 Although it may be difficult to use monetary policy to limit the build-up of financial imbalances, they nevertheless considered it possible and desirable to take financial stability into account in certain situations. They also advocated more cooperation between central banks and supervisors for this purpose. In the wake of the financial crisis, there was an intense debate on the possibilities for monetary policy to counteract financial imbalances and to what extent this would be desirable. Some economists, such as Frank Smets, argued that monetary policy should take into account the build-up of financial imbalances.18 Smets noted that the costs of financial crises are very high and that macroprudential policy has the most effective tools for maintaining financial stability. However, macroprudential tools are relatively untested and their effectiveness is not fully evaluated, while there is much evidence that the monetary stance affects credit build-up, liquidity and risk-taking more generally. Monetary policy tools such as large-scale asset purchases can also be difficult to distinguish from macroprudential tools in their sub-objectives and in their effects on the economy.

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Sources: Corporation for Technological Development of Capital Goods (CBC) and National Statistics Bureau (INE). 4  BIS Review 39/20086  Copper $ MM; US cents/Lb.) 900  450  600  300  300  150  0  0 96  98  00  02  04  06  III  07  Mining investment (2)  III  08 (1)  Copper price  (1) Figures as of February. (2) Includes investment in buildings, engineering, equipments and others. Sources: Corporation for Technological Development of Capital Goods (CBC) and Bloomberg. For countries that are net exporters of commodities, the impressive price hikes results in a positive terms-of-trade shock. In Chile, terms of trade have increased by almost 70% in the last three years, mostly due to the sharp increase in copper prices. Not surprisingly, this shock has resulted in an appreciation of the real exchange rate. However, the macroeconomic policy framework, as well as particular characteristics of the Chilean mining sector, has mitigated the effects of terms of trade gains on domestic demand, inflation and the exchange rate. Half the income from copper (after tax) goes to foreigners and almost none of it remains in Chilean territory. The other half is from a state-owned enterprise and taxes from private companies. There is a fiscal rule for government spending that stipulates that all income above certain long-term price has to be saved. Government surplus has been 7% on average the last three years, and foreign assets reached about 13% of GDP in 2007.

If agents expect inflation to go down towards a target, they will price their goods accordingly and inflation persistence will be lower. If, in contrast, agents expect inflation to persist in high levels, they will price goods higher, making inflation more persistent and more difficult for the central bank to bring it down. As stated in Bernanke (2007): “a one-off change in energy prices can translate into persistent inflation only if it leads to higher expected inflation and a consequent “wage-price spiral”. With inflation expectations well anchored, a one-time increase in energy prices should not lead to a permanent increase in inflation, but only to a change in relative prices.” Credibility of the target in an inflation-targeting regime is therefore a key asset. If we were to give up on the inflation commitment, the future adjustment of interest rates to rein in inflation would have to be much larger, with adverse consequences on economic activity and relative prices, in particular the exchange rate. Indeed, we have witnessed many experiences where a persistent rise in inflation has required strong monetary policy actions, the most notable case being the great inflation of the USA in the 1970s and early 80s. The control of inflation in Chile has also come with a decline in inflationary persistence. Therefore, a credible commitment to price stability brings along output stability. Output stability, in turn, is an important factor to foster economic growth and the consequent social progress that comes with it (Ramey and Ramey, 1995, and Fatas, 2002).
Today, many of the ASEAN-5 countries have fairly deep and liquid local bond markets. Central banks, whose operation is contingent on a deep and liquid bond and foreign exchange markets, have been part of the development process for the government bond market. Over the years, our financial markets have become more efficient, more sophisticated and more balanced. ASEAN-5 have moved from a predominantly bank-based or credit market to a growing capital market, both equity and bond. We have also strived to better manage the impact from volatile capital flows as we seek to balance between foreign inflows and capital outflow. Here bond markets have been instrumental to help absorb the impact from the volatilities and sudden reversal of these flows. These developments have facilitated central banks in their conduct of monetary policy, manage market expectations, and guide the path of monetary policy. Today, the ABMI is taking this development further from a domestic orientation to a regional level. This is timely in view of the increasing need for Asians to find new sources for growth and new markets for their exports, and in recognition of the need for “Asian savings to finance Asian investment”. Initiatives such as the Credit Guarantee and Investment Facility (CGIF) is a case in point that aims to foster cross border fund mobilization using the tools of a regional credit guarantee vehicle.

First, the notable increase in risk premia, in a very sharp pendulum swing, has surely over-corrected the abnormally low levels reached in summer 2007, so these levels will foreseeably not be regained when conditions in the international financial markets return to normal. Second, the persistent difficulties in obtaining funding on the wholesale markets, which are also unlikely to regain the rate of expansion seen in the past, have led to notably heightened competition for new deposits, particularly time deposits, the cost of which is higher than that of other alternative sources of  BIS Review 52/2009  3  funding. Lastly, it should be recalled that in a setting of low interest rates, the cost of bank deposits has a floor, and this also contributes to the narrowing of margins. For these reasons, the net interest margin will foreseeably come under downward pressure in an environment in which it is not, and will not conceivably be, offset by increases in the volume of activity. Fees and commissions fell slightly in absolute terms. Firstly, analysis of the various components of fee and commission income shows that those directly related to more traditional banking activity have, in line with their lower rate of expansion, grown more moderately. Secondly, Spanish deposit institutions have been marketing non-bank financial products and securities services to their customers, which has generated significant fees and commissions. However, the data for December 2008 reflect a fall in fee and commission income from business of this type.