samchain/econo-pairs-v1 huggingface dataset:
One particular development I’d like to highlight, and one that’s quite fitting for discussion at today’s forum, is the development of derivatives markets. Derivative markets offer cost-effective ways to manoeuvre investments; more importantly, they are effective risk mitigation tools. In the context of Asia, where cross-border flows are large and where 2/4  BIS central bankers' speeches  opportunities for foreign investors are plentiful, derivatives can help investors deploy capital without being subject to excessive short-term price fluctuations, by hedging out currency and interest rate risks. The upshot here is that capital can then be allocated to usages that benefit long-term economic development in the region. Now, I note this as a “development”, because there’s plenty of room for growth in Asia’s derivative markets: according to a recent report by the Committee on Global Financial Systems, or the CGFS, in most Asian economies, average daily trading volumes for derivatives remain strikingly low compared to advanced economies, even those that are not major financial centres. In addition, almost half of the market participants surveyed by the CGFS expressed at least “some” concerns that the functioning of derivative markets in emerging market economies in general do not adequately complement their respective capital markets, with about 20 percent indicating “significant concerns”. Aside from the limited turnover size, I suspect that geography also plays a role in this rather downbeat assessment – many Asian-related derivative trades are in fact not booked or risk-managed in Asia!

We will really try hard to explain that what we are doing is in the interest of the euro area, Germany included. 2  BIS central bankers’ speeches  In your book, you talk about the isolation of the central banks. Do you feel that strongly at the moment? Central banks are independent, but they are not isolated. In Europe, however, we need a coherent approach across monetary policy, fiscal policy and structural reform policy, as emphasised by President Draghi at the Jackson Hole conference (at the end of August [ed.]). The understandable instinct of the governments is to respond to their voters. This is never easy and it becomes even more difficult in an environment of low growth and high unemployment. But our plea to the governments is to always remember Europe’s common interest, because the actions of one affect all the others. That is why they must be coordinated. Do you feel more mature, at the ECB, after last Thursday? This is not about being mature, but about providing the right answers to a new situation, as the ECB has always done throughout the crisis. Now, with asset purchases, we are like the other central banks, but with an instrument that is adapted to our specific environment, i.e. an environment which does not foresee a common fiscal policy. We are conducting QE in our own way. BIS central bankers’ speeches  3
The basic skills that economists can bring to such meetings are a framing of developments based on the efficient markets hypothesis, which holds that financial markets will quickly incorporate all relevant information in asset prices, along with an understanding of economic fundamentals. Many commentators have associated a blind faith in efficient markets by market participants and regulators as one of the main underlying causes of the crisis.6 This seems an overly simplistic and mostly incorrect characterization. A partially correct aspect of this critique is that market discipline failed in the period before the crisis. However, this is not a true rejection of the efficient markets hypothesis, as expounded by Gene Fama, but rather a failure for incentives to be appropriately aligned.7 An efficient markets explanation usually involves a great deal of the Monday morning quarterbacking: after observing market moves that prove an analysis incorrect, there is usually a tweak to this previous analysis prompted by the market move, which does not require any substantial changes to an underlying view. To outsiders this might sound like cheating, but if the efficient markets hypothesis has validity, then unexpected market moves always contain new information over the original analysis. Indeed, the ability of individual markets to efficiently aggregate diverse sources of information most of the time is why the efficient markets hypothesis gained empirical support.8  6  See Adam B. Ashcraft and Til Schuermann (2008), “Understanding the Securitization of Subprime Mortgage Credit” Federal Reserve Bank of New York Staff Reports No.

Simon M Potter: Role of central bank interactions with financial markets Remarks by Mr Simon M Potter, Executive Vice President of the Markets Group of the Federal Reserve Bank of New York, at New York University’s Stern School of Business, New York City, 27 November 2012. *  *  *  It is a pleasure to have the opportunity to speak to you today. Having taught classes at New York University (NYU), I know firsthand the quality and analytical rigor of the students and faculty. You should all be proud of the excellent curriculum and education you are receiving here at NYU. I would like to thank Kim for giving me the opportunity to speak this evening and the public service he is providing through his leadership of the center. My remarks today will focus on the role of central bank interactions with financial markets. Because of the New York Fed’s position within the us financial system, our staff is in continuous contact with financial market participants, including investors, intermediaries, financial market utilities and analysts. Much of this contact occurs through the Markets Group at the New York Fed. For most of my professional life prior to becoming head of the Markets Group earlier this year, I had been a research economist working at the New York Fed. Like many research economists, I was trained to understand the economy with mathematical models that contain at best a rudimentary description of a financial system.
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).

Consumers get lower prices and new product varieties, and, over time, benefit from the spur to innovate and higher productivity. Some workers, however, lose their jobs and the dignity of work, or see their “factor prices” – in plain English, wages – equalised downwards. Such dynamics have been recognised by trade theory for over 75 years. xvi  And they are felt by those at  either end of the great convergence. Survey evidence shows that 70% of Chinese workers believe that trade creates jobs and increases wages, equivocal. xvii  US households think the opposite, and UK public opinion is  xviii  People’s attitudes towards trade shocks are being hardened by the effects of accelerating technological innovation. As my colleague Andy Haldane has explained, up to 15 million of the current jobs in Britain could be automated over time. xix  The fundamental challenge is that, alongside its great benefits, every technological revolution mercilessly destroys jobs and livelihoods – and therefore identities – well before the new ones emerge. This was true of the eclipse of agriculture and cottage industry by the industrial revolution, the displacement of manufacturing by the service economy, and now the hollowing out of many of those middle-class services jobs through machine learning and global sourcing. The combination of open markets and technology means that returns in a globalised world amplifies the rewards of the superstar and the lucky. Now may be the time of the famous or fortunate, but what of the frustrated and frightened?
Although output is estimated to have contracted in the third quarter of this year, there is a range of evidence from business surveys, from the Bank’s regional Agents, and from recent indicators that the economy has begun to stabilise and that we are likely to be moving into a period of renewed expansion. Whenever an economy is in recession, especially a recession as deep as this one, it can be hard to see where growth will eventually come from. However, as I have discussed, the easing in monetary and fiscal policy is providing considerable support to the emerging recovery. That stimulus is reinforced by the substantial depreciation of sterling. Sterling is around a quarter below its mid-2007 level and – as many of you here today will know from your own experiences – this has helped to improve the ability of UK companies to compete in both overseas and domestic markets. Output will also receive a further fillip as the adjustment of inventories by companies runs it course. However, the on-going structural adjustments that I mentioned are likely to give rise to a number of economic headwinds that may impede the recovery. Credit conditions are likely to remain tight for some time as banks repair their balance sheets. And the need for public and household finances to adjust to the changed economic environment will weigh on spending. Balancing these factors, my view of the outlook for GDP growth is in line with the projections contained in the Bank’s Inflation Report published last month.

4  Commodity cycles may be linked to global business and financial cycles at critical junctures, but commodity long cycles are more related to technological progress, changes in the composition of demand, and global trade patterns (see Figure 2). 20 15 10 5 0 -5 -10 -15 -20 -25 -30 1980  Figure 2: Commodity super cycles and global conditions (†)  1985  1990  1995  2000  2005  2010  2015  40 30 20 10 0 -10 -20 -30 -40 -50 -60  EMEs Business Cycle AEs Business Cycle VIX (inverse, standardized, 10x) Comm. PX Cycle (excl. Fuel) [RHS] (†) Business and commodity prices based on HP filter. Source: Central Bank of Chile based on IMF and FRED databases. The experience of Chile since 2000 Chile has been traditionally exposed to global cycles, speeded-up growth in the mid-1980s, once a major financial crisis led to a major upgrade in financial regulations. This bonanza period was halted by the Asian Crisis in mid-1997. The Central Bank tried to sustain the Chilean currency, by then under crawling bands, in the middle of a substantial external shock. This led the Central Bank to raise the interest rate to 14%, by then a real interest rate. Thus, the financial system face overnight rates of nearly 100%. The Chilean economy enters into a recession in late 1998. Floating ER was added to forward-looking inflation targeting, and then complemented by a Structural Balance-based fiscal policy in the early 2000s.
On the health front, combating the virus obviously continues to be a priority objective until an effective medical solution has been developed. This may require continuing to adapt the capacity of the health system to ease the effects of the second wave on public health and to manage potential and subsequent fresh outbreaks. At some point further ahead, the objective must be to purchase the necessary doses of the treatment or vaccine, for distribution to the population at large. Beyond the health sphere, the short-term priority must be to continue to support households and firms until a sound and sustained recovery is in place. This is something we will very likely not see until a medical solution is available that will render restrictions on people’s movements and on certain sectors of economic activity unnecessary. Until this is the case, budgetary support for private economic agents is crucial to minimise the risk that the present health and economic crisis may trigger a financial crisis, which would entail much higher and longer lasting costs in terms of production and employment. However, these support measures must now be more selective, concentrated on the population groups and businesses most affected by the crisis, to maximise their effectiveness in a setting in which public funds are necessarily limited. This was the backdrop for the extension of the furlough schemes up to January 2021 agreed between the Government and the social agents.

The ruble’s strengthening since the beginning of the year made an additional contribution to inflation slowdown. Higher oil prices and overall favourable conditions in financial markets helped. International investors’ interest in Russian assets recovered, which was the most distinctive in the OFZ market. The agreements on retail fuel prices between the Russian Government and oil majors are continuing to play a significant role. Consumer petrol prices rose in May by 2.8% year on year, and their growth is likely to be moderate in the near future. That said, the new regulation in this market, in particular, the offsetting mechanisms (including reverse excise duties), is rather complicated. Currently, it is hard to accurately estimate its medium-term economic effectiveness, especially for scenarios providing for tangible oil price fluctuations. Moderate domestic demand is also curbing inflation. This calls for a deeper insight into the economy. This is the second most important factor that we took into account. Economic growth in the first half of the year has been lower than expected. We predicted that business activity might slow down somewhat at the beginning of the year on the back of the following factors: the VAT hike, a likely slowdown in growth of the global economy and demand for Russian goods and services, and the implementation period of the major national projects scheduled for the second half of the year. Some of these factors had a stronger effect than expected. In particular, budget expenditure dynamics.
The risk otherwise is that we will create new problems that may lead to low growth further on and new difficulties for monetary policy to reach the inflation target. I am concerned about Sweden’s position as one of a handful of countries in Europe that has not succeeded in getting a functioning macroprudential policy into place. With such a large financial system and the obvious major vulnerabilities present in the Swedish economy, our focus should be on urgently adopting measures. Valuable evaluation of monetary policy We thus have an unusual time behind us that has required unusual measures over the past year. Under such circumstances, it is natural to wonder, for example, how well the inflation target is functioning and which areas monetary policy should be responsible for. It therefore seems appropriate that the Riksdag Committee on Finance has just published its latest assessment of monetary policy.6 First and foremost, I would like to say that it has been a privilege to have my work reviewed and assessed by people with such impressive academic and practical credentials in the area of monetary policy as those possessed by Messrs. Goodfriend and King. Assessments are a key ingredient in every kind of work to improve operations and this assessment contains many reasonable opinions and suggestions for discussion and further work. We will do this over the spring, before submitting our consultation response in April.

A cautious combination of a negative repo rate and bond purchases So how have we chosen to act, and what have the results been, so far? Up to this point, we have kept to changes to the repo rate and repo rate path, and purchases of government bonds. As it has not been completely certain how these would function in practice, there has been reason to proceed cautiously. We have combined several measures over the past year to make the combined effect sufficiently great. Over a number of stages, we have cut the repo rate and/or the repo rate path, at the same time as we have announced and initiated bond purchases in amounts that have been increased in several stages (see Figure 4 and Figure 5). In addition, in our communication, we have emphasised our preparedness, if necessary, to also rapidly increase monetary policy stimulus between the ordinary monetary policy meetings held every second month. In March 2015, we did exactly this – we took a decision on new monetary policy stimulus between two ordinary meetings. The repo rate cuts have largely worked As regards the repo rate cuts, so far we have been able to observe that lending rates followed to a normal extent, while deposit rates have stopped at zero for everybody except some larger companies.
Three decisions of the Central Bank of Chile to intervene the foreign exchange market during this decade can be interpreted as decisions under extreme circumstances. They were associated to severe stress in foreign exchange markets or to the need to strengthen the international liquidity position. To avoid conflicts with price stability, the intervention that was begun in April has been implemented mechanically and transparently in order to orient monetary policy in consistency with the required convergence of inflation to the target. It is hard to find a financial crisis as severe as this one since the Great Depression. Still, its real consequences are still much milder than those of other episodes, including of course the Great Depression and even the Great Inflation of the 1970s. We have learned two lessons from these occurrences and which are clearly present in the acts and statements from central bankers around the world. One is that central banks are the lenders of last resort and must supply the necessary liquidity so that financial markets can operate, even in critical times. The other is that inflation must be fought with determination and letting it settle down and stay in the economy is very costly. Different perceptions and assessments can alter the short-term course of monetary policy, so flexibility and realism are necessary to timely correct the route, and this has been happening around the world and in Chile in particular.

(2) Short term nominal interest rate minus CD. Sources: Bloomberg, OECD and Survey of Professional Forecasters. Figure 8 Banking credit approval standards (*)  Corporate credits (big and medium)  Consumption credits  50  50  40  40  30  30  20  20  10  10  0  0  -10  -10  -20  -20  -30  -30  -40  -40  -50  -50  -60  -60  -70 1t03  1t04 US  1t05 Euro area  1t06  1t07 UK  1t08 Japan  -70 1t03  1t04  1t05  US (credit cards) UK  1t06  1t07  1t08  Euro area Japan  (*) Positive value is more flexibility in credit approval. Sources: ECB, Bank of Japan and Federal Reserve. 12  BIS Review 124/2008  Figure 9 Oil WTI prices and GSCI grain and cereals and GSCI energy (dollars per barrel; index 01/01/2007=100) 240  160 140  200  120  160  100 120  80  80  60 40 Jan .07  May.07  Sep.07  Jan .08  May.08  40 Sep.08  GSCI energy GSCI grains and cereals  OIL WTI Source: Bloomberg. Figure 10 Annual inflation (*) (percentage) 10 8 6 4 2 0  07  Jul Latin America (1)  08 Asia EM (2)  Europe EM (3)  Jul G3 Economies(4)  (*) Geometric average of countries each region.
But we also need policies for containing systemic stress more generally; and, if possible, for heading off the risk of systemic problems in the first place. Like others, in speeches I have identified three elements in that armoury: monetary policy; central bank liquidity policy; and policies towards bank capitalisation and liquidity. Monetary policy I have for some years openly queried the notion that it is enough to rely on monetary policy “mopping up” after the event. 2  BIS Review 77/2008  The “mopping up” doctrine came out of a view that monetary authorities could not spot bubbles but that policy could cushion the bursting of what turned out to be a bubble. The doctrine effectively assumes that, faced with the possibility of systemic stress, the monetary authority can always reduce its policy rate without taking risks with inflation. The current conjuncture tests that assumption. There is a nasty shock to demand from tightening credit conditions, here and abroad. And that may get worse rather than better in the coming months. So far, the financial system has faced a “trading book” problem; but we cannot rule out a “banking book” problem caused by rising defaults. We face a race involving whether the deleveraging process can be sufficiently advanced for financial conditions to stabilise before macroeconomic slowdown, here and abroad, raises loan defaults and so brings a new dimension to the challenges in the banking sector and so to the supply of credit to the real economy.

Zeti Akhtar Aziz: Strengthening linkages in the Islamic financial markets Speech by Dr Zeti Akhtar Aziz, Governor of the Central Bank of Malaysia, at the seminar on Derivatives in Islamic Finance, “Strengthening Linkages in the Islamic Financial Markets”, Kuala Lumpur, 24 June 2005. *  *  *  Distinguished Guests, Ladies and Gentlemen, "Islamic finance in Malaysia today has become increasingly more entrenched and integrated both on the domestic and international fronts. The successful integration has contributed to its rapid growth in assets and created a more robust and resilient Islamic financial system. The challenge now is to further strengthen the linkages in the respective components of the Islamic financial system, in particular, the Islamic financial markets. " It is my pleasure to welcome you to this seminar on Derivatives in Islamic Finance jointly organised by Bank Negara Malaysia and the Financial Market Association of Malaysia. During this recent two days, we have organized the Investors Conference, the seminar on the 10-year Masterplan on Islamic Finance and the dialogue among Shariah scholars which have gathered an extensive participation, from policy makers, investors, industry players and Shariah scholars. Today's event is another important initiative which brings together financial experts to deliberate on a vital aspect in the development of Islamic finance. Ladies and Gentlemen, The successful development of a robust and resilient Islamic financial system depends on the ability to integrate the various components of the Islamic financial system that includes the Islamic banking industry, takaful and the money and capital markets.