samchain/econo-pairs-v1 huggingface dataset:
Still, I do not believe the crisis has shattered the consensus on what central banks should be pursuing – central banking has always been about the preservation of, to quote Charles Goodhart, “the three aspects of stability”, namely price stability, (external) currency stability and financial stability. Nor has the crisis brought about the sudden realisation that these aspects of stability do in fact condition each other – central bankers, maybe even more so emerging-market central bankers, have long been keenly aware that failure to ensure one kind of stability is bound to jeopardise the achievement of the others. What the crisis has indeed challenged is the widespread conviction that meeting one particular stability criterion,  BIS central bankers’ speeches  1  while necessary in order to achieve the others, is also a sufficient condition to do so – after all, maintaining price stability, while valuable in itself, has proved insufficient to ward off major financial or macroeconomic instability. As a matter of fact, Andrew Crockett claimed ever since 2003 that the “peace dividend” yielded by the successful war against inflation had not lived up to expectations and therefore the battlefront against financial instability should not be overlooked. Nevertheless, it is widely accepted that price stability should remain the overriding objective of a central bank and I do not see this approach changing in the future, at least in Europe.

If the importance of macro-prudential instruments was revealed by the global crisis and the forex interventions of central banks went back in fashion during the same period, there is a fact well known from the conventional economic wisdom, but highlighted once again by the crisis: the countercyclical stance of both monetary and fiscal policies is essential for ensuring a smooth trajectory of the economy. We all saw how unsustainable public finances and high levels of debt have impeded the effectiveness of a stability-oriented monetary policy. This was also the case of Romania, where the fiscal impulse was positive during the period of rapid growth before the financial crisis, contributing to the overheating of the economy and fuelling the imbalances accumulated in the economy. Moreover, the pro-cyclicality of the fiscal policy during the pre-crisis period exhausted the fiscal space needed to stimulate the economy in recession, leading to the need to reduce the budget deficit during the crisis (primarily due to financing constraints) and to perpetuating the pro-cyclicality of fiscal policy. As stated by Fritz Zurbrügg (2012), successful monetary policy is predicated on healthy fiscal policy, and vice versa, and to achieve stability and prosperity in the long term, fiscal and monetary policies must both focus on sustainability. In the past, the high fiscal deficit has resulted in the fiscal dominance of monetary policy with its inevitable monetisation of the government debt, but nowadays most central banks no longer directly finance government expenditure.
Armed with Big Data on someone’s genome and health history, an algorithm could diagnose many ailments, and prescribe treatments, as well as humans if not better. Would doing so sound the death knell for doctors and surgeons? I suspect not. Medical professionals are likely to draw increasingly on data and algorithmic insights. But there will be an accompanying, increasingly important, role for human judgement, explanation and empathy. Indeed, it is already the case that these human skills are often among the most highly-valued by patients. In a world of robo-medical advice, the balance of doctors’ skills will shift further in this interpersonal direction. As with much of human history, this will be a case not so much of humans versus machines as humans with machines. The evolutionary arc of humankind will not switch, discretely, from one defined by neurology to one defined by technology. What we could see instead is a co-evolutionary arc with minds and machines, neurology and technology, co-mingled and complementary.34 In a number of tasks they already are. 31  https://www.bbc.co.uk/news/technology-34066941 Bughin et al (2018) Bakhshl et al (2015). 34 Tegmark (2017). 32 33  14  All speeches are available online at www.bankofengland.co.uk/speeches  14  Take chess. A generation on from Deep Blue beating Gary Kasparov, you might expect machines to have taken an unassailable lead. In fact, they have not. The world chess championship is not waged between mainframes.

Would it be remunerated or not and how appealing should any remuneration be versus commercial bank money held on deposit accounts? Would we apply limits or restrictions on its use to control demand in normal times or in stress? How and to what extent should data and privacy be protected? And crucially, running though all of these design questions of the question where the public/private boundary lie; which functions and services should be provided by the central bank and which by the private sector? These are profound questions and choices that would inform any decision to launch a CBDC. We certainly do not have the answers today. We should however recognise a couple of realities. First, that the form of money has always been evolving and that technology and consequent changes in the way we want to live and transact with each other are now driving rapid change in money and payments. We cannot hold that back. We need to think about and debate these issues now. And in thinking about CBDC, we should think about the role it could play in the future and how money and payments might evolve in its absence. Second, changes in the form of money have implications that go wider than finance and economics. We should recognise there are questions about privacy, competition, inclusion, the role of the public sector and other broader societal issues. These will require the engagement of the political authorities and will need broader debate.
And at the Bank of England, we had recently created a directorate dedicated to ensuring financial market infrastructure, including payment systems, meet the necessary standards of robustness and resilience. Overall the pace of technical, structural and regulatory change in payments was poised to pick up. And I have not been disappointed with the level of ambition and innovation we have seen in the past three years. Collectively, we have been on a journey; inching and in some cases taking great strides towards a payments landscape that is competitive, resilient and ready for the future. But, while considerable progress has been made, the journey to best in class payments is far from complete. Whilst important milestones have been reached, many more lie ahead. For example, one catalyst for change in UK retail payments was the creation of the Payments Strategy Forum (PSF) in March of 2015. And, with the formal consolidation of the Bacs and Faster Payments systems into the New Payment System Operator (NPSO) just last month, we can say that a key recommendation of the PSF has been delivered. But the NPSO now needs to turn its attention to developing and implementing the remaining critical recommendations which I will come on to discuss. We now need, collectively, to refocus our energies for the next leg of this journey towards best in class payments.

Our priority throughout this transition has been to ensure that it has been and continues to be managed in a way that promotes the robustness and resilience of the payment systems, and of wider financial stability. And a considerable amount of work was undertaken to achieve this - by the retail scheme operators, their participants and the NPSO. What we now expect to see: Tangible progress has been made, and this should rightly be recognised. But, as with any journey, we cannot lose sight of the work that lies ahead to deliver these benefits from consolidation. The NPSO’s primary focus should be on completing integration of the payment systems and embedding robustness and resilience within all of its activities, including the New Payments Architecture (NPA) programme. There is still much to do to complete the integration of these systems, from an organisational perspective, but also at the system level; completion of which will allow the NPSO to begin realising the ultimate goal of strategic leadership and higher standards of management and control. For this to succeed, the NPSO’s strategy will need to be realistic and consistent with its objectives and capabilities. It will also need to include an appropriate focus on reviewing and enhancing the activities the NPSO has inherited, to manage its own risk profile, its outsourced infrastructure partner, and risks to the wider system emanating from participants.
A range of indicators is reviewed in these reports, accompanied by a discussion of risks and opportunities in the field of inflation. The present situation In the latest inflation report, published this March, GDP growth in 1997 and 1998 was expected to be around 2 and 3 per cent, respectively. It was also argued that sizeable capacity restrictions should not arise in the course of the period. Given that, and inflation expectations being low, underlying domestic inflation (measured with the CPI excluding transitory effects on inflation) in the coming two years was put at between 1.5 and 2 per cent. As we all know, to forecast inflation is a complicated task. In view of the shortcomings in such estimates, it is more a matter of assessing the balance of risks. Our latest  BIS Review 47/1997  -4-  inflation report therefore includes a discussion of two alternatives in which future inflation might be either lower or higher than in the main scenario. One alternative is that inflation could be lower than in the main scenario, mainly if private consumption were to be weak. The other envisages the opposite - higher inflation - on account of a weaker exchange rate that stimulates a stronger growth of exports and GDP, leading to increased inflationary pressure. What are the economic tendencies that have appeared during the last months? During winter there were signs of a slowdown in manufacturing.

The current state of the Maltese economy The prospects for the creation of new economic activities opened up by EU membership come at an opportune moment. For while Malta’s growth rate in 2004, estimated at around 1.5%, registered a marked turnaround since 2003, it was low compared to the rates achieved by other new EU members whose level of development is comparable to Malta’s. This relatively weak performance, moreover, did not suddenly materialise last year, but has now been persisting since 2001. A relatively sluggish pace of export activity underpinned the low growth rate in 2004, while imports rose at a faster pace, partly in response to the removal of tariffs on certain products. This wider trade gap led to a current account deficit of over 10% of GDP, a development that was to a certain extent anticipated. For, while it is possible to absorb larger volumes of imports at short notice, penetrating new export markets is a medium-term project. It is nevertheless imperative that the country manages to exploit the new market openings, because the current account deficit experienced in 2004 is not sustainable. The economy’s relatively subdued performance last year can also be attributed to the short-term effects of the process of fiscal consolidation aimed at narrowing the budget deficit. Malta is still one of the EU Member States with the highest levels of general government deficit and debt expressed as percentages of GDP.
At the current juncture, however, a scarcity of funding and capital is likely to make banks cautious about doing this. That was exactly what happened in Japan during its so-called “lost decade”. But there are signs that the extra reserves may be contributing to a decline in the interest rate that banks pay to borrow from each other. It will take some time before we can assess just how effective Quantitative Easing has proved to be. Our latest assessment is that the combined stimulus from policy easing and the lower value of sterling should be sufficient to lead to growth resuming as we move towards the end of the year. But the continuing drag from the financial sector means that the ensuing pickup is likely to take place relatively slowly. There is, however, considerable uncertainty surrounding that assessment. Our primary objective is, of course, to control inflation, not growth. Our target measure, the Consumer Price Index, has been running above the 2% target for the past eighteen months, reflecting in particular the surge in energy and other commodity prices during the first part of last year. But it is now dropping back, reflecting both the sharp decline in energy prices in the latter part of 2008 and the growing margin of spare capacity in the economy. We expect it soon to fall below target and it is more likely than not to remain there for the next year or two.

But given the strong contractionary tendencies in the economy, we decided that further stimulus was needed. So in March, we announced a programme to purchase £ bn of public and private financial assets, financed by issuing extra Bank of England reserves – an action going by the unlovely description of Quantitative Easing. And at our meeting at the beginning of this month, we upped the total amount of purchases to £ bn, about half of which have so far been made. The ultimate aim of these measures is to boost the annual rate of growth of nominal spending in the economy, which has been roughly flat over the past year, to a level consistent with a sustainable level and rate of growth of real activity and inflation meeting our target. Quantitative easing has been described in some quarters as “printing money”, though it is not literally that. It is more akin to us buying the asset with a cheque drawn on the Bank of England, which the seller then deposits with his own bank. As a consequence, the quantity of bank deposits in the economy goes up, while the claims that the banks hold on the Bank of England also increase. The immediate impact of these purchases should be to drive up the price of the assets that we are buying, or equivalently to reduce their yield. That is indeed what we have seen, with gilt yields falling nearly ½ percentage point when the programme was initiated.
Therefore, the inflation outlook in two years may be viewed as a derived objective in monetary policy. In some situations, where unexpected events lead to an inflation rate that is too high, it may be appropriate to apply a longer time horizon than two years. For example, reducing inflation to 2½ per cent within this time horizon may be associated with unnecessary real economic costs. A precondition for applying a longer time horizon is that there is clear evidence of strong confidence in low and stable inflation over time on the part of economic agents. Gradually, as we gain experience with setting interest rates according to an inflation target, the possibilities for placing emphasis on stability in the real economy will probably increase. Low and stable inflation is a necessary precondition for stability in the foreign exchange and financial market and the property market. However, there have also been episodes where bubbles have accumulated in these markets, in the form of sharp increases in asset prices, while inflation has been low. Price increases in property and financial markets may have a considerable impact on wage growth and consumer price inflation after a period. When the bubbles burst, the result may be an economic downturn. In this way, developments in financial and property markets may be a source of a more unstable inflation environment. In principle, it would be appropriate to use the interest rate to counter this. In practice, however, it is difficult to assess whether price trends in property and financial markets are sustainable.

Islamic securities has also maintained its dominance in the Malaysian bond market, accounting for 58% of total bond market. And almost two thirds of the equity market comprises Shariah compliant securities. Growth has also been experienced in the takaful sector in which the funds asset has registered an increase by 8.2%. This recent decade has also seen the increase in number of Islamic financial institutions including full-fledged Islamic banks, development financial institutions that engage in Islamic banking, takaful, re-takaful and capital market intermediaries. Several of these players have strategic partnerships with foreign players. In April this year, as part of the liberalization initiatives announced, new mega Islamic banking licenses and up to two family takaful licenses will be issued this year. On the global front, Islamic financial assets are projected to grow to USD1.6 trillion by 2012 while the global sukuk outstanding valued to date at approximately USD152.8 billion. In the third series of this seminar in 2007, the vital role of a strong legal and Shariah framework in the sustainable development of Islamic finance was extensively discussed. It is key to providing certainty and predictability to financial transactions. The current international financial crisis has demonstrated the importance of recognizing that the rapid transformation of the functioning of the international financial system had to be accompanied by the need to ensure that regulatory and legal framework was aligned with these developments.
This seems a sensible outcome, and it is reasonable therefore to test whether the equivalent treatment for collateral swaps, which captures only the CCR add-on in the exposure measure, really captures all the leverage firms are taking on. This is a big business – for example, a recent survey of 14 UK-based broker dealers found a stock of £ trillion in collateral swaps. As a thought experiment, had Basel chosen to capture these exposures for leverage purposes in the same way as it captures repo (so counting the collateral borrowed, in the same way as the cash leg is counted for repo) then, under some worst case assumptions, and bearing in mind that the data can vary from year to year, the aggregate leverage ratio of firms in our sample could fall by 50 basis points (from 5.3% to 4.8% - see Chart 9). Two other parts of the leverage framework should also be in the sights of our horizon-scanning teams as they ask whether we are missing anything important. First, the proportion of repo activity which is netted 6  All speeches are available online at www.bankofengland.co.uk/publications/Pages/speeches/default.aspx  6  – which (based on initial data) grew from 14% to 19% from 2015 to 2017 for firms in our sample. This matters because the netting of cash payables and receivables in repo transactions reduces the exposure measure – this seems perfectly reasonable, but is out of line with the general philosophy of the leverage ratio of not recognising collateral.

Third, on the insurance side we have been putting a lot of effort into making sure that equity-release mortgage holdings are treated appropriately on insurance companies’ regulatory balance sheets. We think it likely that this product will grow in the UK for reasons unrelated to financial regulation, and that it makes sense for annuity-writers to be an important part of the picture. But this has been a classic example of a weak spot in the regulatory regime, which was simply not designed with this product strongly in mind. The result of this has been an excessively wide variation of approaches for these assets at insurance companies, with practices at the more aggressive end of the market presenting a risk in our view to policyholders and to our competition objective. We have therefore shored up this part of our framework and put in place a much more solid basis for this asset class going forward. I know that some building societies have exposures to this asset class as well, and would urge them to proceed with caution given the complexities involved. So even within the important but relatively straightforward asset class of UK residential mortgages there are several juicy topics for our horizon-scanning enthusiasts to get their teeth into. Fortunately, or unfortunately depending on your approach to life, there are further targets available if we move onto other asset classes – asset classes which I very much hope are much more remote to building societies!
In 2012, that figure rose to 22%. By 2017, Western firms expect Asia to contribute 32%. However, this will still be below Asia’s estimated 35% share of the global economy in 2017.” 5. The use of RMB is now catching up with China’s rising economic clout. Starting from scratch in 2009, the portion of China’s trade settled in the RMB quickly surged to 20% in 2014, amounting to 6.6 trillian yuan, equivalent to more than $ trillion. And, in the same year, over 30% and 16% of China’s inward and outward direct investment respectively were denominated in the RMB. Increasingly, MNCs will find it advantageous and necessary to trade with their Asian counterparts, and to conduct the related financing, investment and hedging activities in the RMB. 6. In parallel, riding on her rapid economic growth in the past decades, Mainland China now has a growing cluster of home grown MNCs in a wide range of sectors. Chinese companies now account for 95 of the Fortune 500 companies. These MNCs are now flexing their muscles in the international arena, typically starting with trade and eventually venturing into mergers and acquisitions and global portfolio investment. We can safely assume that they will take even bolder steps with the supportive policies under the “One Belt, One Road” strategy, bringing new business and business partners for other global MNCs. 7. These favourable macro trends are indeed good news to the corporate treasurers.

Nevertheless, such reflection does provide an opportunity for a realistic assessment of the prospects and challenges that lie ahead for the RMB. There are at least 5 key factors. Let me list them without going into the details. •  Currencies that rise to dominance are often of countries that are dominant in global trade. •  Currencies often become internationalised because the country is a key global exporter of capital. •  Every successful currency had official support. •  Currencies can only rise to international prominence when backed by liberalised and developed markets. •  There needs to be confidence in the currency and the economy. How does China fare against these signposts? I would say that it is three out of five. As far as trade dominance is concerned, China surpassed the US economy as the largest goods trading nation in 2013. The internationalisation of the currency, despite its cautious nature, is certainly getting a lot of official support – not just from Chinese policymakers but also from policymakers in other countries. As for confidence in the currency and the economy, there would not be so much enthusiasm for RMB internationalisation were such confidence missing. The fact that countries are queuing up to be able to trade RMB within their borders, or to gain access to China’s domestic financial markets, shows a strong desire on the part of these countries to participate in what they see as an economy with a potential for continued strong growth.