samchain/econo-pairs-v1 huggingface dataset:
Hence, Exter was successful in realizing two objectives in a single operation: price stability and banking system stability. While the broad objective of price stability remained unchanged over the years, the banking system stability was expanded to cover the entire financial system and, therefore, today, the central bank has been charged with the responsibility for maintaining financial system stability. Exter’s wish was that the new central bank would consolidate, under one umbrella, all financial operations which had been widely scattered at that time. Thus, the central bank was expected to encourage the public to make greater use of banks to keep their deposits and channel funds to the government securities market by building confidence in same. While submitting the draft bill on the central bank, Exter remarked that “good central banking is less good law than good practice”. What he meant by this is that a central bank should not rely solely on the legal powers given to it. The strict application of such legal powers sometimes leads to the destruction of sound market relationships. To make central bank policy more effective, it has to make its presence felt by others. Exter advised that it should be done “through the development of day-to-day relations of confidence and understanding between itself and various banking institutions than through the exercise of all of the powers given it” under the law.

As an institution, we have been blessed to have had pioneers who upheld the highest standards of excellence in our corporate conduct. The late Tun Ismail Ali, the first Malaysian governor from 1962 to 1980 was well known as a person of the highest integrity. I can recall his younger brother relating an episode in this regard. An aspiring architect at that time, he was told by the late Tun Ismail, not to ever set foot in the Bank while he was the Governor. Uncompromising and unyielding, we certainly should strive to assimilate Tun’s values and standards. Indeed, we are fortunate that his successors have continued his trademark standard of integrity, to the extent that it is deeply ingrained in our corporate DNA today. The Bank does not tolerate any wrongdoing which may tarnish its reputation, given that our solid reputation has been diligently built over the decades. We owe it to the public and future generations to preserve the integrity and credibility of the Bank. Thus, we have zero tolerance for unethical behaviour leading to fraud, including corruption. Staff must be mindful that their conduct must not give rise to any perception of corrupt practices. The Bank’s management will take stern action against those who perpetrate, facilitate or are complicit in such acts. We will not protect such wrongdoers and will cooperate with the relevant authorities to ensure that the appropriate punishments are meted out. In the last few years, the Bank has expanded its activities into project management.
10.04.2023  Latest monetary policy developments in the euro area The Brookings Institution The Hutchins Center on Fiscal and Monetary Policy Washington, DC. Pablo Hernández de Cos Governor  Good morning, it is a pleasure to visit the Hutchins Center on Fiscal and Monetary Policy and share with you my reflections on euro area monetary policy at a still very challenging time for central banks globally. I will start by briefly describing the decisions that we adopted at our European Central Bank (ECB) Governing Council meeting in March. Then, I will lay out a number of factors that will determine our future decisions and will require close monitoring going forward. Our March meeting took place in the context of the financial tensions related to the banking sector in the US and in Switzerland. These tensions increased investor risk aversion and financial market volatility and led to a global drop in bank share prices. While the European banking sector is resilient, with strong capital and liquidity positions, the main message from our meeting was that we are closely monitoring these financial tensions and we stand ready to respond as and when necessary to maintain price and financial stability in the euro area.

Monetary policy and exchange rate intervention  Last October, when I was invited to the House of Representatives to analyze the exchange rate, I said there are three major principles in monetary policy conduct. The first is that the Central Bank is not indifferent to exchange rate movements. Compliance with our constitutional mandate demands adopting measures to orient the economy toward full use of its resources and ensuring a balance of payments that is sustainable over time. The international price of our currency is a very important variable in the Chilean economy’s performance, as it affects growth, inflation and the external accounts, and ultimately our monetary policy decisions. For example, in recent months the appreciation of the peso has  3  helped attenuate inflationary pressures stemming from narrowing output gaps. This has been an input in our decisions so, were it not for the strengthened exchange rate, our monetary policy interest rate would probably be higher than it actually is. A second principle is careful assessment of our decisions’ effectiveness, costs and benefits. We make no decision without being technically convinced that it will be effective and convenient for the economy as a whole. Acting otherwise would only erode our reputation and credibility, indispensable elements for achieving our objectives at the lowest social cost possible. Finally, a third principle is that the Central Bank of Chile does not use the exchange rate to target inflation.
A significant step forward came last month when our respective Trade Ministers announced a target for bilateral trade of USD30 billion in the coming years. This is a doubling of USD13.8 billion recorded in 2016. I strongly believe that this target is very much achievable and with the closer banking relationship our trade will further flourish. Reflecting on our journey towards ASEAN integration Our partnership in ASEAN marks another integral part of our long standing and deep relationship. There is always the risk that many may take ASEAN integration for granted. If we reflect closely on our journey and how far we have come, is not by mere coincidence. It is a culmination of the collective vision, commitment and conviction to realise the benefits from deeper integration. Where we stand today is the true embodiment of the spirit of ASEAN of mutual trust and close cooperation. We continue to believe that this is the path forward for our region, and one that requires us to further deepen our strong ties to meet the challenges of the future. This occasion is also a testament to the leadership of Indonesia and Malaysia and the excellent working relationship between the two countries. It gives me great pleasure and satisfaction to see many familiar faces today who have been instrumental in realising this efforts, especially Pak Muliaman and Pak Wimboh. For those who are not aware, we go back a long way.

At the aggregate level, most observers – including the Banque de France – would point to a prolonged period of excessive risk taking in credit markets fueled by liquidity expansion at the world level. This was most apparent in the strong developments of LBOs, mostly financed through leveraged (i.e. with weak covenants) loans. According to this interpretation, we may be witnessing the burst of a credit bubble. But there is also a deeper, more structural, element to the current turmoil. This crisis is the first in a disintermediated credit world. While, previously, loans were originated by banks, kept on their balance-sheet and monitored for the entire life of the loan, the process is to a large extent dissociated today: the loan is originated by a first entity, then bundled together with other loans as a structured product by another entity, then sold to final investors.
Monetary policy has limited short-run effects on household indebtedness and – with low and stable inflation – no long-run effects As I said earlier, a possible explanation for the tight monetary policy is that in practice the aim has been to limit household indebtedness, that is, the household debt ratio. As far as I can see, there is a misunderstanding here about what monetary policy can achieve with regard to household indebtedness. As I pointed out in a speech in November last year (Svensson 2012c) and at the monetary policy meeting in December (Sveriges Riksbank 2012d), according to established theoretical and empirical research, including the Riksbank’s own studies and calculations, for example Riksbank (2011), monetary policy has very little short-run impact on household indebtedness and, with low and stable inflation, no long-run impact. Household debt has risen to approximately 170 per cent of disposable income. The debt is mainly mortgages, so in order to understand the development of debt and whether it is a problem, we must understand developments in housing prices and the value of housing. Households’ real assets (owner-occupied homes, second homes and condominiums), have grown in pace with their debt and there is a stable relationship between them. The loan-tovalue ratio, the ratio of debt to real assets, has been relatively stable and has remained in the interval of 50–60 per cent since the mid-1990s (Figure 4). There has been considerable research into how housing prices are determined.

Interest rates are at an all-time low and the proposals in the Government’s Budget Bill imply a looser fiscal stance. Household consumption will continue to grow steadily in the period ahead, and business investment also appears to be picking up again following a number of years’ weakness. Taken together, this means that GDP growth in 2004 is forecast to be around 3.7 per cent, after which it will be dampened somewhat, standing at about 3 per cent in 2005 and 2006, which is a fairly high level in historical terms. Despite the firm growth Swedish inflation is very low – in January it stood at 0.4 per cent, measured as the annual change in UND1X. The weak inflation is primarily due to surprisingly low import prices. Other causes are the strong productivity growth; the krona’s appreciation in the past half year, above all against the dollar but also against the euro; and low electricity prices. There are many indications that we won't be seeing any significant inflationary pressures in the coming year either. That made it natural for us to decide not to raise interest rates at the end of January. My personal view is that it will probably be a while before a rate hike comes into question. The risk outlook Surrounding this rather bright picture are a large number of risks that our growth and inflation forecasts will not be met in the coming two years. The key risk factor is how the US deficits will be corrected.
The Federal Reserve Act provides the Federal Reserve with the authority to pay interest on reserves (IOR). In Regulation D, the Board of Governors implemented this authority in the form of two rates: interest on required reserves (IORR), and interest on excess reserves (IOER). Since late 2008, these two rates have been set to the same value. 15  5  reserves. 16 These models generally find that as reserve balances decline, the overnight interest rate goes up, but not uniformly. At high levels of reserves, the responsiveness of rates to changes in reserve levels is fairly low, and the demand curve is said to be “flat.” As excess reserve levels decline, the responsiveness of rates increases. At low levels of excess reserves, the overnight rate responds sharply to small adjustments in the level of reserves: the demand curve is “steep.” It seems highly likely that we are on the “flat” part of the curve, the part where rates move little in response to shifts in reserves. But this does not quite answer the question on whether the decline in reserves might be putting perhaps some upward pressure on rates. Even in the “flat” part, the slope of the demand curve, while small, might be nonzero. This could be true if, for example, the balance sheet costs of the marginal borrower in overnight money markets were upward sloping with respect to that bank’s balance sheet size.

3 The effective federal funds rate is calculated as a volume-weighted median of overnight federal funds transactions reported by banks on the FR 2420 Report of Selected Money Market Rates. The New York Fed publishes the EFFR for the prior business day, along with volumes and rate percentiles, on its website daily at approximately 9:00 a.m. Eastern Time. The EFFR is used as a measure of the typical fed funds transaction and is the way the New York Fed’s Open Market Trading Desk (the Desk) measures its success in meeting the directive on interest rate control from the FOMC. 1  confidence in its ability to appropriately control overnight interest rates over the period of normalization. I will then conclude with some comments on recent developments in broader money market rates, in particular U.S.-dollar LIBOR. U.S. term money market rates are of global significance, owing to the heavy use of the dollar outside the United States and the large stock of dollar-LIBOR-linked debt issued abroad. 4 The spread of LIBOR to overnight indexed swaps has fluctuated in recent years, along with similar term unsecured dollar borrowing rates, driven in part by the same factors influencing overnight rates but also by specific past regulatory and legislative changes that have impacted flows in term markets. Evidence, such as from the FX swaps market, suggests that dollar borrowing markets continue to function well. Policy Normalization Continues As Expected I’d like to start by taking stock of where we are with the normalization of monetary policy in the United States.
The rise of the RMB will not entirely solve that, but hopefully, it will lead to a world where the global monetary system is less distorted, with less of the friction that we see now, and a greater sharing of the burden and benefits of serving as the world’s currency. Malaysia and the global RMB Finally, how would the globalisation of RMB affect Malaysia? For Malaysia, there is no downside to the RMB becoming an international currency. China is one of our largest trading partners and anything that facilitates the growth of trade and investment flows between the two economies is good. We understand some of the policy challenges China faces and is likely to face as it internationalises its currency. We understand the need for it to adopt a gradual approach and providing itself the space to address any vulnerability that may emerge as a consequence of internationalizing the RMB. But, we also know that as China develops its financial markets and its policy frameworks, greater openness would by synergetic in promoting the further development of its financial system and its economy, and of course the international role of the RMB. Policymakers in Malaysia are fully committed to strengthening our economic and financial ties with China. As far as using RMB for international trade and investment is concerned, we have worked to put the necessary infrastructure in place and continue to improve on it to make it cheaper and more convenient.

The equilibrium real rate (typically labelled r*) is the rate required to match the desired levels of saving and investment. The combination of slower population growth, rising life expectancy and an ageing population acts through multiple channels to push up desired savings and reduce desired investment. A reduction in desired investment also reflects slower productivity growth and, possibly, shifts in the structure of the aggregate production function. In the wake of the global financial crisis, risk appetite may also have diminished, which provides a disincentive to invest, reinforces the precautionary saving motive and encourages a portfolio shift to less risky assets, such as sovereign bonds. Finally, the scars of the crisis have also affected desired savings and desired investment levels: many banks, firms, governments and households have focused on repairing their balance sheets or have been constrained by legacy effects when making investment decisions. Some of these forces may go into reverse over time, especially if we see a more complete recovery from the crisis and if there were improved public policies to cope with demographic trends and better productivity developments (such as the successful, widespread adoption of artificial intelligence, innovations in automation and enhanced infrastructure investment). However, for now the downward pressure on the equilibrium real rate is a significant environmental constraint on the options available to central banks. The low equilibrium real rate has been compounded by weak nominal developments over the last decade.
Encik Adnan Zaylani Mohamad Zahid: A way forward for the Malaysian Renminbi market Speech by Mr Encik Adnan Zaylani Mohamad Zahid, Assistant Governor of the Central Bank of Malaysia (Bank Negara Malaysia), at the RMB Conference, organized by Bank of China "A Way Forward for the Malaysian Renminbi Market", Kuala Lumpur, 1 November 2016. * * * It is an honour to be here this morning to speak at the Renminbi Conference organised by Bank of China. Over the last seven years since the internationalisation of renminbi took off in earnest, we have seen the progress and evolution of the currency from its primary use in trade settlement to become a currency of choice for investment and financial instruments, reflecting China’s growing presence in global finance as well as various economic initiatives related to its ‘One Belt One Road’ vision. To this effect, it is important for Malaysia, being a key partner for China in the ASEAN region, to strengthen the renminbi connectivity not only to facilitate our bilateral trade but also to become a launch pad for China’s initiatives in this region. Today also marks one month since the inclusion of the renminbi into the Special Drawing Rights (SDR) currency basket, which is undoubtedly a watershed moment for renminbi given its relatively recent internationalisation over the last seven years. I have no doubt that with the inclusion, more central banks will be adding renminbi into its international reserves.

I will turn to the question of three of the new expectations on central banks, that we at the ECB are currently discussing as part of the Strategic Review rightly initiated by Christine Lagarde. I. Inflation remains the principal edifice of the Central Bank's Construct I.A. The past: had inflation disappeared? When it comes to inflation, the last decade left economists and central bankers confronting a number of puzzles. The Great recession of 2008-09 exhibited a “missing deflation”, when the important contraction of output was not associated with a consequent fall of prices. The recent years, on the contrary, were characterised as a period of “missing inflation”. The vanishing level of inflation has been a pervasive and global phenomenon. It can be grasped with a simple comparison of the inflation rates in the first and the second decades of the 21st century. Page 2 sur 9  The inflation rate of the Euro area was 2.1% on average from 1999 − when the euro was created − to 2007 − when the financial crisis started. It dropped to 1.0% over the period 2013−19 following the double dip recession and until the current pandemic. At more than one percentage point, this is a substantial decline between the two periods. Headline inflation in the US experienced a similar decline, having dropped from 2.7% to 1.6% between the two periods. In the early 2000s, the euro area’s inflation rate was in line with the ECB’s price stability mandate, defined as a target of “below but close to 2%”.
In that respect, we have an obligation to understand the risks relating to climate change and the channels through which they might affect the pursuit of our main aims. At the same time we need to make sure that the participants in the financial system are equally aware of those risks. However, in my opinion, central banks are not the ones who are to be expected to take the lead fighting climate change, since their instruments are not as efficient as the ones government can employ to fulfill that task. In addition, if faced with a conflict between maintaining price stability and/or financial stability, and fighting climate change, central banks would and have the obligation, to give priority to price stability and financial stability as their primary mandates. With today’s conference we, at the Croatian National Bank, are appealing to banks and other financial institutions to reflect on how to incorporate climate risks into their business strategies and make their business-making more robust and resilient to hazards connected with climate change. We would also like to encourage banks to seize the opportunities brought about by transition towards low-carbon and nature-neutral economy. Finally, and equally important, we want to note that we do not save nature only by switching to low-energy lightbulbs or choosing a hybrid or electric car but also by investing consciously. Banks could have a noticeable positive influence if they were to finance environmentally friendly projects and make green investments.

Boris Vujčić: Adapting to climate change has no alternative Speech by Mr Boris Vujčić, Governor of the Croatian National Bank, at the online event "The role of banks in greening our economies", 29 April 2021. * * * Ladies and gentlemen, dear colleagues, Let me first welcome all of you who have gathered in front of your screens and decided to devote a couple of hours to join today’s conference. It is yet another event that the Croatian National Bank organizes jointly with EBRD, with whom we have a long lasting and productive relationship. Both our institutions have recognized our responsibility to put the issue of banks’ role in climate transition into the spotlight, and open a discussion on how banks, other financial institutions, and central banks and regulators can properly address the climate emergency that is already transforming our living and working patterns. Until recently, it was uncommon for central bankers and bankers in general to talk about environmental issues. So, how did we get to this point, and why should we study the dynamics of climate change and environmental degradation and incorporate it into our business decisions? For more than fifty years people have known that the technological advancement and development that we enjoy comes at a price – the destruction of the environment and a perilous rise in global temperatures. As worrisome scientific discoveries heated up the activism and triggered a grass-roots ecological movement, global institutions and politicians soon embraced the environmental concerns as well.