samchain/econo-pairs-v1 huggingface dataset:
This is the first time that a zero coupon bond product is offered to the retail public in Hong Kong. It is also the first time we are issuing retail bond with a ten-year tenor. "Zero coupon" bonds are intended for investors who wish to save up funds for longer-term use. They do not need the cash flow from the interest payments on conventional bonds, but they would wish to save up the principal and interest for future retirement or children’s education. By investing around $ in this zero coupon bond, the investor will receive $ after ten years. If investors should find a need to sell the bonds prior to maturity, they are free to do so. We have a market making arrangement with our placing banks to provide quotes to buy such bonds to ensure secondary market liquidity. Apart from the zero coupon bond, the HKMC is also issuing two-year US Dollar retail bond, following our successful, inaugural issue of retail US Dollar bond last year. We are now offering two-year retail bond denominated in US Dollar as well as in Hong Kong dollar to provide more investor choice. Out of the total deposit base of over $ trillion in our banking sector, about one-third are in US Dollars. We believe there should be good demand for these two-year notes, especially given the recent pause in interest rate hike by the US Federal Reserve. To sum up, the retail bonds offered today will provide the general public with an additional, relatively safe investment vehicle.

Across all these areas, these judgments have to be translated into appropriate limits, an appropriate capital cushion above the regulatory minimum and a robust liquidity management strategy. These thresholds need to be calibrated to withstand more adverse conditions than we’ve seen in the recent past. The major institutions seem in general to be managed so that they are in a stronger position to withstand the shocks of the nature and magnitude of the last few decades of experience. The apparent increase in the strength and resilience of the U.S. financial system has contributed significantly to the improvement in the overall performance of the U.S. economy of the past 20 years. As the challenges of risk management become more demanding, it is important that supervisors and those charged with managing the major financial institutions make the investments necessary to stay abreast of the changing frontier of risk management challenges and a potentially more uncertain future. Thank you. 3/3
In Sweden the inflation target has contributed to stability in wage formation since the end of the 1990s, which could be compared with the 1970s and 80s when inflation was high and volatile and wage formation created major imbalances. The monetary policy anchor thus helps coordinate expectations in the economy, and this is particularly the case when the target is well-defined, clearly communicated and generally accessible. For this reason, most central banks with inflation targets have formulated the target in terms of a broad and well-known price index, and as a specific level of inflation. A tolerance band is also often specified to show that the central bank neither can nor wants to  1  I also discuss this in Flodén (2015). BIS central bankers’ speeches  1  meet the inflation target perfectly all the time. However, even when there is a tolerance band, the objective is for inflation to end up at the target level, or in other words in the middle of the tolerance band. If the target succeeds in coordinating inflation expectations, it can also become selfreinforcing. If expectations are in line with the inflation target, and if price and wage formation adapt to these expectations, actual prices will become consistent with the inflation target. When confidence in the inflation target is strong, it consequently becomes easier to meet the target. The flipside of this reasoning, however, is that the central bank has to fight even harder to succeed if expectations begin to deviate from the inflation target.

However, international real interest rates are currently very low, and various factors indicate that they will remain unusually low, at least in the medium term (see Armelius et al, 2014). BIS central bankers’ speeches  interest rate would not be restricted by its lower bound too often. During the financial crisis, however, several central banks lowered their policy rate over a short period to nearly zero, which they judged at that point to be the policy rate’s lower bound. And now, seven years later, the policy rates are still at the same low levels in many countries. Based on these experiences, many analysts think that it would be desirable to have an inflation target higher than 2 per cent. 9 This question is perhaps mainly discussed within the research community, though it has also been highlighted by the IMF and some central banks, among others. In the review of the monetary policy framework which the Bank of Canada conducts every five years, for example, an increase in the target is one of the areas to be examined. 10 Unlike the debate in Sweden, the international discussion therefore focuses on the central banks’ inflation targets needing to be raised rather than lowered. Some inflation is desirable for another reason, namely that wage formation can deteriorate when average inflation is too low. The reason is that in practice it has proved difficult to lower nominal wages.
At over 400 USD/ounce, the gold price was at a seven-year high at the beginning of December. Because of the weak dollar, the gold price increase in francs was more modest. However, its peak of approximately 17,000 CHF/kg was still the highest for several years. The main reason for this rise was persistently modest hedging activity by gold producers. 2  BIS Review 58/2003  Equity markets International equity markets exhibited a positive course overall, steadily making up lost ground after their mid-March low (see graph 3). As the equity environment began to present a perceptibly brighter picture, turnover also picked up. This, together with the more confident investor sentiment, reduced volatility. The ambitious profit expectations now reflected in share prices suggest that market players are optimistic about the economic situation and the corporate environment. To sum up, the financial markets are currently influenced by a complex interplay of factors: a globally synchronised economic recovery is taking place against a backdrop of external imbalances. An autonomous economic recovery outside of the US - underpinned, not least of all, by supply-side reforms - would help substantially to redress these imbalances. Key features of the SNB’s future investment and risk control process The SNB’s investment activity is subordinated to monetary policy and is determined by the criteria of liquidity, risk and returns. The new National Bank Law will extend the SNB’s investment opportunities. The current National Bank Law (NBL) limits eligible investments to gold and fixed-interest securities, and eligible borrowers to states, international organisations and banks.

Depuis ce jour, l’Eurosystème (c’est-à-dire la BCE et les onze banques centrales nationales des États membres de la zone euro) assume la responsabilité de la conduite de la politique monétaire dans la zone euro en ayant comme objectif principal le maintien de la stabilité des prix. Nous pouvons aujourd’hui exprimer notre satisfaction devant la manière dont s’est réalisée la transition vers un marché monétaire intégré de la zone euro qui s’est mis en place dès les tout premiers jours. S’agissant de l’évaluation fondée sur une large gamme d’indicateurs des perspectives d’évolution des prix, le Conseil des gouverneurs de la BCE a considéré, lors de sa réunion du 7 janvier, que les évolutions sur les marchés de capitaux témoignaient d’un accueil favorable des récentes décisions de politique monétaire de l’Eurosystème, indiquant ainsi que les opérateurs de marché anticipaient le maintien de l’environnement de stabilité des prix. BIS Review 22/1999  4  Pour faciliter l’intégration des marchés de capitaux nationaux, un accord portant sur le calcul et la publication d’un indice de taux d’intérêt des opérations interbancaires a été conclu ; cet indice, l’Euribor, se substitue aux anciens indices nationaux et couvre la gamme des échéances allant de 1 à 12 mois. L’Euribor est rapidement devenu la principale référence de court terme pour les opérations en euro.
Such equilibrium is stable by virtue of the mutual benefits it brings to both groups. Moreover, the more it lasts, the more it is impossible to change since both group become mutually dependant through the stock of claims and debts they have reciprocally accumulated. Any significant break, for instance, in the allocation of reserves by surplus countries, would both trigger major exchange and interest rate volatility in deficit countries and lead to significant valuation losses in surplus countries. This “financial balance of terror” is supposed to keep the system in place for a long period of time. Implicit behind this doctrine, however, is the assumption that the creditor country can live with the risk of losses on its reserves and accept that possibility as a price to pay for the success of its growth strategy. A more recent explanation is provided by the “asset shortage” theory (Caballero, 2006), which helps and explains why asymmetries in financial developments generate both payment imbalances and asset bubbles. According to the theory, the world has a shortage of liquid  4  BIS Review 76/2010  and riskless assets. Moreover, the supply of those assets is asymmetrically distributed between regions, with the US providing a large chunk of the total. Hence, there is a structural excess demand for dollar denominated securities, which sustains permanent capital inflows in the US.

It would ensure regular supply of international liquidity, but could only provide partial protection against exchange rate volatility and valuation losses. There is an important trade off, there , which is the essence of a new “Triffin dilemma” and which cannot be avoided when looking at the public supply of international liquidity, whether by one nation or within a multilateral framework.   More fundamentally, a new currency which would provide a reliable store of value would, in fact, grant its holders a collective guarantee against exchange risk. That guarantee would benefit surplus countries and would be given by deficit countries. This issue was intensely debated when the substitution account was discussed and negotiated within the IMF, more than 25 years ago. It became clear, at the time that it would not be accepted by many countries unless some explicit, binding and symmetric rules on balance of payment adjustments were agreed upon simultaneously. Most likely, those questions would be raised again today and the creation of a new reserve currency would have to be part of a broader framework. Conclusion and provisional policy lessons Looking at the next decade, one can project two alternative – and polar – scenarios for the evolution of the international financial system. First, a scenario of progressive and partial fragmentation: no significant capital account opening would occur in many parts of the world.
In particular, in many cases the expected share price would be higher without dilution even admitting the possibility of a “bad state of the world” scenario. The problem with this approach was that each individual bank’s decision not to raise capital to protect against the “bad state of the world” scenario increased the likelihood of the “bad state of the world” scenario. There was an important externality. If a bank raises additional capital, it doesn’t just make its own bank stronger, it also makes the entire banking system more stable. Yet it reaps only a portion of these benefits. This was the collective action problem that the SCAP was designed to remedy. Perhaps, I can best illustrate the problem via two figures. In Figure 1, banks have sufficient capital. The mean value of capital is well above zero, the distribution is narrow, and none of the distribution falls below zero – everyone believes the bank is solvent. In Figure 2, losses push the distribution of capital to the left and uncertainty about the value of the assets widens the distribution. Thus, unlike the case in Figure 1, a portion of the distribution falls below zero. The bank may be insolvent. Thus, the bank is likely to encounter funding difficulties. The point of the SCAP was to push the probability distribution back to the right by adding capital – and to narrow it by creating more certainty about how much capital the banks need.

This is especially the case if the collateral is lower quality and markets are already illiquid. Moreover, if creditors are left with the collateral instead of being repaid, fear of widespread collateral liquidation might further erode collateral values. If investors respond by seeking more collateral to ensure they will be secured – that is, that they will be made whole in a liquidation scenario – the firm may run out of high-quality collateral that the firm can borrow against. This is a significant risk when a financial firm is highly leveraged and equity is only a very small proportion of total assets.5 The risks of liquidity crises are also exacerbated by some structural sources of instability in the financial system. Some of these sources are endemic to the nature of the financial intermediation process and banking. Others are more specific to the idiosyncratic features of our particular system. Both types deserve attention because they tend to amplify the pressures that lead to liquidity runs. Turning first to the more inherent sources of instability, there are at least two that are worthy of mention. The first instability stems from the fact that most financial firms engage in maturity transformation – the maturity of their assets is longer than the maturity of their liabilities.
Given that the non-bank private sector is likely to have been the source for much of this funding, this is likely to have squeezed broad money growth. But the counterpart to this fall in private sector deposits is a strengthening in banks balance sheets which should in turn aid the recovery by improving the availability of bank lending. So the monetary impulse still operates. One approach to help mitigate the counterfactual problem is to use event studies which consider the impact of QE announcements on asset prices over relatively short windows. 7 Gilt yields may respond to such policy announcements both because of the impact gilt purchases have on the yields at which investors are willing to hold the reduced supply of gilts – the portfolio balance effect – and because of the information the announcement may be perceived to contain about the future stance of monetary policy – one element of the expectations channel. It is possible to get some indication of the size of the portfolio effect by considering movements in the spread of gilt yields to Overnight Indexed Swap (OIS) rates, which should not be affected by changes in the relative supply of gilts. Although precise estimates vary according to the maturity of the gilts and the size of the window, summing movements in giltOIS spreads following our announcements suggests that the portfolio balance effect may have reduced gilt yields by around 100 basis points. Again, a pretty sizeable effect. 6  This excludes the money holdings of intermediate OFCs.

The attraction of this class of models, as typified for example by Woodford (2003) and Walsh (2003), is that its relative simplicity and tractability means that it can be used to derive clear and precise policy prescriptions. And indeed that is the case when used to analyse monetary policy at the zero bound. The only way policy can gain traction at the lower bound in such a model is through influencing expectations – the most well known reference here being Eggertsson and Woodford (2003). This result stems from the fact that the economy behaves as if, in effect, there are only two assets in existence, typically modelled as money and bonds. Agents hold more money up to the point at which the marginal benefit from the liquidity services it confers equals the marginal cost: the nominal interest rate. At the zero bound, both the marginal benefit and marginal cost are effectively zero, and money and bonds become perfect substitutes. It follows that exchanging money for bonds at this point has no impact on activity or inflation. The economy is assumed – by construction – to be in a liquidity trap. As is well known, the optimal policy within this class of models is for the central bank to commit to low interest rates for an extended period and to a temporary overshoot of the inflation target. Exchange rate depreciations (Svensson 2001) and interest rate commitments (Krugman 1998, Woodford 2003) are examples of policy recommendations stemming from this result.
However, at present, private sector spending has been affected by the decline of consumer and investor confidence, leading to a situation where those with purchasing power are cautious in their spending. This confidence has to be restored. Those who are able to invest have to begin investing. But a good starting point to restore confidence is to have a clear economic policy framework which can be realised only by having people electing good citizens to run the government. If the people are confident in their government and in the policies of that government, then confidence in the economy will be restored speedily. The third issue: Fiscal policies for economic growth Fiscal policies will play an important role in the process of economic recovery next year. At present, government spending amounts to a fifth of GDP, which is not considered as a high level. But for other countries, people are used to the system which the government plays a major role. Government deficit at a level which is conducive to economic recovery should therefore be readily understood and accepted. 6  BIS Review 6/2001  Therefore, fiscal policies must play a more important role in stimulating the economy, but should maintain a balance between economic stimulation and long-term fiscal discipline. The fourth issue: Monetary policy On monetary policy implementation, the Bank of Thailand’s view is that the Thai economy at present and in the near future continues to need low level of interest rate rather than a high level.

Structural reforms were also needed to correct earlier structural mistakes and restore our economic vitality. Whether the measures that have been taken up to the present are sufficient is a debatable issue; but the point I want to make is that a change of direction and some political action had already been initiated in the 1980s. The work has continued since then and been undertaken by governments of diverse political hues and personalities. In other words, something happened to Swedish economic policy in a wide sense in the late 1980s. When the immediate crisis had been managed in the early 1990s it was clear that the weak government finances would have to be tackled. Moreover, the independent status of our central bank has been formally confirmed, accompanied by a clear mandate. The floating exchange rate regime and the explicit target for price stability have worked well. Several segments of the Swedish economy have been deregulated, though less has been done in this way in the labour market than in markets for goods and services. But the labour market organisations have been working on their own account to improve the system for wage formation. As a result of all this, the Swedish economy is doing better than we have seen for a long time. The economic upswing has now continued for more than six years, during which annual GDP growth has averaged around 3%. And notwithstanding the strong growth of demand, inflation has been lower than one would expect from earlier relationships.
In July this year, inflation reached 3.1%, a level not seen for 15 years. This was a matter for concern, as there was a risk that such a level would alter households’ inflation expectations, potentially leading to a sharp rise in nominal wages at year-end and resulting in a certain stickiness of inflation. However, these two elements behind the recent rise in inflation have since reversed. First, oil prices collapsed, falling below the USD 50 mark in mid-November after peaking at USD 145 in early July. The plummeting oil price can be explained both by a drop in global demand as a result of the economic slowdown we have just described, and by the unwinding of speculative positions. Second, the Swiss economy will soon be operating below potential, and we will see a renewed rise in unemployment. This situation will have a moderating effect on both price and wage-setting behaviour. BIS Review 157/2008  3  Thus, we are now forecasting – as the graph presentation will show in just a moment – that inflation will decline almost continuously throughout 2009. Despite the interest rate cuts made since October and the cut announced today, inflation will remain low in 2010 and 2011. As of now, and for the current forecast horizon, upside and downside inflation risks have become symmetrical. Monetary policy decision We have just explained the rationale behind our recent monetary policy: first, the global economic situation has worsened, which will hit the Swiss economy as from this quarter, and in particular next year.

By contrast, the inflation outlook has improved appreciably. This has increased the SNB’s room for manoeuvre. Finally, there is a risk that the financial crisis will cause a deterioration in financing conditions for the economy as a whole. These are the considerations that have prompted today’s decision to cut the three-month Libor target range by another 50 basis points. Given the expected deterioration in the Swiss economy and the imponderables linked to the long and variable monetary policy transmission lags, a further rate cut appears appropriate. With this action we are reducing, to the extent possible, the risk of an even more pronounced economic downturn. Inflation forecast chart How has our inflation forecast been revised? The dashed red curve on the chart represents the new forecast. It covers the period from the fourth quarter of 2008 to the third quarter of 2011, and maps the future development of inflation on the assumption that the three-month Libor remains unchanged at 0.5% over the forecasting period. For purposes of comparison, the dash-dotted green curve shows the inflation forecast of the September monetary assessment, based on a three-month Libor of 2.75%. The new forecast shows a rapid fall in inflation over the next few quarters. It drops back below the 2% mark as from the fourth quarter of this year.