samchain/econo-pairs-v1 huggingface dataset:
Timothy F Geithner: Challenges facing the global payments system Remarks by Mr Timothy F Geithner, President and Chief Executive Officer of the Federal Reserve Bank of New York, at the SIBOS 2004 Atlanta Conference, Atlanta, 14 October 2004. *  *  *  I am pleased to have the chance to address SIBOS 2004. This is an important forum for us because a strong and efficient payments infrastructure is a vital strategic asset for the U.S. and the global financial system. I want to take this opportunity to talk about some of the forces shaping the evolution in this strategic infrastructure, the challenges they present, and the implications for participants, system operators, and the central banks who oversee them. In this context, I will try to identify some of the major priorities we see over the medium term in strengthening the safety and soundness and the operational resilience of the global payments and settlement system. Over the past 15 years, we have brought about a major global effort to reduce the potential for systemic risk emanating from the key elements of the payment infrastructure - the large value payments systems and the securities and foreign exchange settlement systems. Particularly notable are the 1989 G-30 standards on clearance and settlement systems, the Lamfalussy Report, the launch of CLS bank, and the paper on Sound Practices to Strengthen the Resilience of the U.S. Financial System.

Typically, what we would like to have is a balance between the two so that the system will have its own stabilizing mechanism when the shocks hit. But in this crisis, apparently the positive feedbacks had been overwhelming. Let me cite a few examples of the positive feedback loops that were in play. BIS Review 130/2009  1  The first, example A, is the originate-to-distribute model, which was prominent at the formative period of the crisis. Here, we see that with the housing sector booming, investment funds were eager to seek entries into the credit business, despite the fact that they had no expertise in evaluating credit risks of mortgage loans, or the complex risk exposures when mortgage loans were packaged, first into CDO, then into commercial papers backed by CDO, and so on. So, with a ready market for securitsation or structured products, banks, who were assured that credit risks would be transferred off their balance sheets, enlarged their lending activities. This is a classic moral hazard problem that helped fuel the already booming housing market. Example B is a positive feedback loop linked to the stress on the SIV. Once subprime mortgages began to default, investors in the junior tranches of cash CDO started losing money. What happened was that not only the ex post rate of defaults increased, but the senior tranches were also hit by a rise in ex ante default correlation, causing losses in the senior cash CDO tranches.
This is reflected in a stronger króna than otherwise, which other things being equal delays the adjustment of the current account deficit. Nonetheless, it is impossible to demonstrate that monetary policy is impotent. Anecdotal evidence about households and businesses being squeezed by high interest rates confirms that the opposite is true. Monetary policy does work, and will eventually impact demand and thereby the current account deficit. Inflation soared in the recent term to peak at 8½% just after mid-2006, as I mentioned before. The Central Bank made a particularly sharp response to the deteriorating inflation outlook last year with a large hike in the policy rate on the back of sizeable earlier increases. There is no question that the tight monetary stance entailed by these measures reversed the development and drove inflation down, as subsequent data have shown. In its Monetary Bulletin published in July this year, the Central Bank forecast that inflation would be close to target in 2008 and it would be attained in full in 2009. Of course events are unfolding in this way as a result of the tight monetary stance and it is absurd to claim otherwise. It can even be argued that the Bank should be criticised instead for not raising rates enough and quickly  BIS Review 111/2007  3  enough. I am referring here to the shortcomings I mentioned in the transmission of policy rate hikes and insufficient restraint in other areas of the economy. A tighter Central Bank monetary stance makes borrowing more expensive.

Failing to support monetary policy in efforts to achieve the intended results would be an act of surrender and have dire consequences. 6  BIS Review 111/2007
Other countries with a flexible exchange rate and an inflation target have had similar experiences, for example Australia, Canada and New Zealand. It not only complicates assessments of the future path but also probably entails costs in the form of a poorer real economic trend. Conclusion Monetary policy in Sweden has been conducted with an inflation target and a flexible exchange rate since January 1993. The results have been good in many respects. Since the upturn in the summer of 1993, growth has been good compared with, for example, the years of high activity in the late 1980s. In contrast with that period, moreover, inflation has been low. Another point worth noting is the good real wage trend. With the low price rise, the annual real wage increases have averaged 2.5 per cent since 1994, which is more than in the 1980s, for example, when nominal wages rose rapidly but what households actually gained in real terms was very modest. BIS Review 81/1998  -7Monetary policy also seems to be better understood. Presumably this is mainly because, in spite of everything, economic development in recent years has been relatively good. The change in attitudes is evident in surveys of how people perceive the Riksbank and monetary policy. A similar picture is obtained from the treatment of the Bank and monetary policy in the Swedish press. Our basic line of thought has been broadly accepted, though from time to time there has naturally (and sometimes perhaps even rightly) been criticism of what we do.

Subdued inflation expectations and restrained wage demands pointed in the same direction. In view of a weak development of international activity, it was foreseen that full capacity utilisation in the Swedish economy would not be reached until the end of the forecast period, when inflation was assumed to be marginally above the target. This called for a readiness to undertake some cautious tightening of the monetary stance later in the year. At the same time, the spectrum of risks had shifted, with less risk of inflation exceeding its expected path but a continued risk of development being weaker than in the main scenario. In view of the uncertainty, the Riksbank chose to await future developments. •  BIS Review 81/1998  At the beginning of the summer we observed that inflation was following a lower path than we had assumed in the main scenario in March. Weaker import prices were contributing to this but so were other factors. Transitory effects - lower interest rates and changes in indirect taxes and subsidies - were particularly prominent. Moreover, on account of lower wage increases and stronger productivity growth than expected earlier, it seemed that inflation in the longer run would be somewhat lower than the Riksbank had predicted. With the outlook for productivity, it was likely that some surplus capacity would continue to exist during the whole period. -3All in all, inflation prospects one to two years ahead were accordingly more subdued than before and predicted inflation was below the target throughout the forecast period.
Muhammad bin Ibrahim: The way forward for development financial institutions Opening address by Mr Muhammad bin Ibrahim, Governor of the Central Bank of Malaysia (Bank Negara Malaysia), at the Global Symposium on Development Financial Institutions “The Way Forward for Development Financial Institutions”, Kuala Lumpur, 19 September 2017. * * * Selamat datang” and a very warm welcome. Thank you for the opportunity to speak today at this important gathering to discuss the way forward for development financial institutions. In 2012, the music video “Gangnam Style” by Korean pop artist PSY took the world by storm. Being the first video to record more than 1 billion YouTube views, its infectious dance moves have become universally recognised, transcending borders and social status. The video marked the beginning of the rise of the Korean cultural phenomenon known as Korean Wave or “Hallyu”, a new growth area for its economy. Today, the export of Korean culture content, including films and music, is estimated at USD83.2 billion. In under a decade, the sector grew to contribute 0.7% to South Korea’s GDP in 2011, supported over 67,000 jobs and generated USD3.3 billion in tax revenues. This extraordinary rise of the Korean Wave can be attributed to the growth of investment in the creative industry. The industry was boosted by the government’s strategy to prioritise the sector as an engine of growth after the Asian Financial Crisis. The Korean government had earmarked 1% of the national budget for development financial institutions to kickstart the sector.

Mohd Razif bin Abd Kadir: Islamic financial services industry – developments in Malaysia Speech by Mr Mohd Razif bin Abd Kadir, Deputy Governor of the Central Bank of Malaysia, at the Signing Ceremony of Memorandum of Participation for Commodity Murabahah House, Kuala Lumpur, 28 July 2009. *  *  *  It is my great pleasure to be here today at the Signing Ceremony of Memorandum of Participation for Commodity Murabahah House (CMH). This event, jointly hosted by Bank Negara Malaysia and Bursa Malaysia, marks another milestone in the development of the Islamic financial services industry. This pioneering effort, mooted about two years ago, is a collaborative initiative of Bank Negara Malaysia, Securities Commission of Malaysia (SC), Bursa Malaysia and the market players under the MIFC initiative. CMH, which is scheduled to be launched in mid-August, is a purposefully designed exchanged-traded platform to facilitate commodity murabahah transactions. It is the first internet based platform in the world with crude palm oil (CPO) as its underlying base commodity. I am also pleased to note here that CMH has received the endorsement of the Ministry of Plantation Industries and Commodities and is supported by the Malaysian Palm Oil Board (MPOB), Malaysian Palm Oil Association (MPOA) and Malaysian Palm Oil Council (MPOC) as well as the CPO industry players. CMH will provide another dimension to the already robust liquidity management infrastructure of the Islamic banking industry in Malaysia; thus providing market players with greater tools to manage their assets and liabilities.
In my view, this absence of academic debate and challenge contributed, in no small measure, to international prudential standards being set at levels which were, with the benefit of 20/20 hindsight, not just too low but ridiculously too low. We must not repeat that same mistake. 29  Results from a poll conducted by Populus for the Bank of England in March 2016 of around 2,000 adults. 30  Douglas (1945). 31  For example see Bailey (2015) on prudential regulation, Cunliffe (2015) on macroprudential policy, Carney (2015) on markets and Bank of England (2016) on buy-to-let underwriting standards. 32  Bank of England Systemic Risk Survey 2015 H2, available at: http://www.bankofengland.co.uk/publications/ Pages/other/srs/srs2015h2.aspx. 33  Armstrong and Davis (2016). BIS central bankers’ speeches  7  So academic challenge, challenge which causes policymakers to think, and possibly rethink, their calibration of prudential standards, is an essential ingredient of a healthy financial and regulatory system. The academic debate about prudential standards for banks is not closed; it has only just opened. And one of the Bank’s public policy responsibilities is to help nurture that policy challenge. Indeed, this was one of the prime motivations behind the Bank’s new research agenda, launched last year. Third, there is a clear and obvious complementarity between improved prudential standards for banks and protecting bank customers. Since January 2011, UK banks have paid out more than £ billion to customers in redress for mis-sold Payments Protection Insurance (PPI) alone. 34 These are astonishingly large sums.

Regulators around the globe are very mindful of this trend and are willing to take calculated risks on innovative ventures, going beyond the banking system for solutions. There is thus, a more level-playing field and more business opportunities for non- traditional companies that are responsive and effective in meeting the financial services needs of consumers. For example, new robo-advisory businesses are now providing high quality investment advice at low cost, while payment technology companies are making cross-border payments cheaper, 1/5  BIS central bankers' speeches  quicker and more efficient. TransferWise, a cross-border payment company is now moving to offer ‘borderless’ bank accounts for businesses that operate across border. This is a challenge for many incumbents. The second observation is that data could be the ‘king-maker’ of finance. Companies that are able to control and leverage on data to deliver superior customer experience will possess the greatest advantage. Successful startups over the past decade such as AirBnb, Grab, Snapchat and Uber have all utilised technology and data to improve business models and customer interactions. For the financial sector, this could potentially mark a highly interesting shift of mantra in the future from “cash is king” to “data is king”. The arms race of the 21st century is really big data. Firms on Wall Street and the City of London are now employing data scientists en masse. They are the new breed of ‘bankers’. The bankers of the future.
The Federal Reserve stated after its last meeting that the upside and downside risks to the attainment of sustainable growth for the next few quarters were roughly equal. The risk of inflation becoming undesirably low was therefore deemed to be greater than the risk that inflation would move up from its already low level. This is the predominant concern of monetary policy in the period ahead. Monetary policy in the US may therefore remain expansionary for a fairly long period ahead. BIS Review 46/2003  7  In Japan, expectations of a continued fall in prices have held up the real interest rate in spite of low nominal interest rates. In Japan, the key rate has been close to zero since the end of 2001. This limits the central bank’s scope for stimulating demand. In recent years, “untraditional” monetary policy instruments have also been discussed, such as supplying considerable liquidity through purchases of various types of securities, including long-term paper. The Bank of Japan has to a large extent purchased long-term government bonds and, since last summer, asset-backed securities as well. How to respond to financial bubbles Another subject that is being discussed globally is how monetary policy should respond to financial bubbles. Should we try to prevent the bubble from developing or be content with responding afterwards once the bubble has burst and then make the best out of the situation? And what is actually feasible? Financial stability is often defined as the absence of financial instability.

In fact, 32% of our survey respondents said that they have fully implemented at least one Regtech solution in their bank. Having said that, we do believe that Regtech adoption can be and should be much wider than it currently is. And to make that happen, some barriers must be addressed. 24. At this point, I would venture a guess that at least some of you are thinking that, when it comes to barriers to Regtech adoption, the HKMA must be one of the biggest barriers. It is true that in our study, Regtech firms ranked regulators as the fifth highest barrier to Regtech adoption. But interestingly, banks thought the opposite. They actually ranked regulators as the third lowest barrier. Well, of course, this may just be an indication that banks are exceptionally tactful in responding to our survey! 25. But joking aside, I am sure you want to know what are the most common Regtech adoption barriers identified in our study? Those include: First, concerns over budget issues There are also concerns about solutions lacking maturity And then respondents talked about a shortage of appropriate talent There are also concerns about the risks involved in applying Regtech solutions; and Finally, there is a lack of awareness of the potential value of Regtech 26. Quite understandably so, budget constraints were consistently named as the top barrier by both financial institutions and Regtech providers. Especially in the current environment, cost management is a key focus for most banks.
The high-inflation economy with recurring cost crises and high interest rates is a thing of the past. Inflation has instead been low and stable. GDP growth has on average been higher and also more stable than in the 1970s and 1980s. Real wage growth has also been considerably more favourable. Productivity growth has been surprisingly strong – stronger than in almost all of the other EU countries. Most people seem to be in agreement now that the potential growth in the economy has been increased. Employment has not developed as well, but the situation today is much better than it was in the mid1990s. It is also interesting to study inflation expectations. Although inflation has on average remained fairly close to 2 per cent, there have been both shorter and longer periods when inflation has deviated significantly from the target. The past few years are such an example. Inflation has been below target, which is largely due to productivity having developed much more strongly than we had expected. How has confidence in monetary policy been affected by the deviations we have experienced? Even though inflation expectations can be measured in different ways, I think that the overall picture is clear. From around 1996-97 expectations have been in line with the target a couple of years ahead. This is of course pleasing, and a much better development than many people expected when the new monetary policy regime was introduced in the early 1990s. However, the stabilization policy change in regime was not only about monetary policy.

4  BIS Review 8/2007  This rule was easy to understand and in that respect it was a good educational tool. However, there were also disadvantages. In normal cases it is not, for instance, particularly realistic that the policy rate would remain unchanged a couple of years ahead. The assumption made it difficult to assess our forecasts and to compare them with those of other forecasters. The latter usually base their assessments on the policy rate being changed. It was also difficult to apply the assumption in a consistent manner in the forecasting process. These problems would have become worse when we extended our forecast horizon. Moreover, it gradually became clear that this rule could sometimes be an obstacle in our communication. It created an exaggerated focus on the current interest rate decision and on the inflation forecast exactly two years ahead. The gradual shift towards more flexible monetary policy led to a greater need to illustrate the fact that it is the entire expected sequence of events for inflation and the real economy a few years ahead that is important in monetary policy decisions, and not only the levels we foresee two years ahead. And the focus should not only be on current interest rates, but also on expectations of future interest rate changes. 5 We left most of these problems behind us when we changed over in October 2005 to making forecasts based on market expectations of the future development of the policy rate.
Mr. Yam focuses on how Hong Kong is coping with financial turmoil Text of the “Inside Asia Lecture 1998” by the Chief Executive of the Hong Kong Monetary Authority, Mr. Joseph Yam, JP, organised by The Australian, Sydney on 23/11/98. Introduction  It is a great pleasure to be in your beautiful city once again, and an honour to have the opportunity to speak to such a distinguished audience. Sydney and Hong Kong - both vibrant international cities with spectacular ports - have much in common. We enjoy growing cultural and economic links and, although some 4,500 miles distant, we are both part of the same region. Less happily, our economies have both taken a hammering from the financial crisis that has recently rocked the region. My focus in this talk will be on how the regional crisis has affected Hong Kong, and, equally important, on the ways in which it has not affected Hong Kong. The Asian Financial Crisis  The complex causes that so suddenly turned the Asian miracle into an Asian mess will no doubt be debated for many years to come. The devastating effects of the massive exodus of capital from the region have been clear enough. In the worst hit economies currencies have devalued by as much as 70%. Stock markets have declined to the levels of ten years ago. Asset prices have sharply deflated, economies have contracted, and unemployment has risen. The region is going through its worst financial crisis since the Second World War.

As for the monetary policy, the Monetary Policy Committee has already cut the policy interest rate twice by a total of 1.75 percent from 3.75 to 2 percent. These were significant reductions by the history of Thai monetary policy. The cuts aim to shore up confidence by sending a strong message that monetary policy can now focus on supporting growth now that inflation is not a threat. They also help shore up domestic demand. Nevertheless, we are mindful that, at this juncture, monetary policy easing may transmit slowly to support economic growth. Second, the Thai private sector has strong underlying strengths to withstand economic and financial volatility. Both business and household debts are low. Our production and service sectors, now adversely affected by the global slowdown, were able to build up profits earlier as a cushion. The agricultural sector continues to show signs of growth. Although agricultural prices have adjusted downward, agricultural production cost such as fuel and fertilizer have also declined, which helps reduce the burden of farmers. Third, the banking system is liquid and resilient. Banks have ample liquidity because they do not rely on inter-bank funding but rather predominantly on domestic deposits. But the Bank of Thailand remains vigilant. We maintain close dialogue with the top management of banks concerning important external developments and stand ready to provide liquidity should such a need arise.