samchain/econo-pairs-v1 huggingface dataset:
Looking ahead to the open waters, firms must ensure that they are prepared  Page 8  and well-equipped to face the challenges that lurk therein. Have banks fully considered their changing role in this new world defined by changing macroeconomic conditions, increasing digitalisation and climate change? The better they are able to understand that environment, the better they will be able to adapt. And do not get me wrong, there are some remarkable opportunities for investment banks in that new world. But seizing those will require honest introspection, hard work, and at times completely rethinking their future role in society. I also want to use this opportunity to emphasise that it is the role of the independent boards to kick those tyres and ask those tough (and sometimes existential) questions. How nimble and flexible is the current business model and cost base of the firm? What is the firm’s raison d’être and franchise in the new environment? Is the firm sufficiently prepared to react to different scenarios that might play out? The future won't accept excuses – now is the time to take action. Because although you might feel you have been doing well in the swimming pool, once you are in open waters you’d better truly be a good swimmer. I would like to thank Orfhlaith Sheehy, John Mears, Fatima Abukar, Chris Forster, Simon Stockwell, David Brighton and Kate Jewkes for their assistance in preparing these remarks. 1. Global Banks’ $ Billion Haul Marks Most Profitable Year Ever - Bloomberg 2.

Firms’ management and boards should ensure that in credit assessments equal focus is placed on the liquidity profile of their clients as on their capital strength. Right-way risk is only right-way if a client is still standing when the hedge matures. Investment banks must bear in mind that their positions can play an important role in the functioning of the economy. Whilst it might be good risk management to reduce a client’s exposures when it suffers cash flow stresses from margin calls, was it good risk management for the bank to sleepwalk into that position in the first place? Working with the client to understand and anticipate all possible future outcomes, and access to facilities in order to meet liquidity demands in a stress, should surely be at the cornerstone of a client-centric business. It is important here for banks to think a few steps ahead and have in mind the potential indirect second-round effect of their counterparty management practices – some of which can otherwise  Page 5  come back to hit them. One other common feature of periods of stress has sometimes been the inadequacy of initial margins required by investment banks over the counter. The spike in nickel markets in March 2022 reminded everyone that progress needs to be made here. And while CCPs have lessons to learn, so do banks. When they undercook initial margins in benign times, banks give their clients the illusion that some products – for example hedges – are cheaper than they really should be economically.
This could adversely affect prices and construction activity of high-end housing in such states. If the economy continues to grow at an above-trend pace in 2018, the labor market should tighten further. In fact, I anticipate that the civilian unemployment rate will fall below 4 percent this year and reach the lowest level since at least 2000. If this scenario proves accurate, this should lead to further firming of wage growth. On this point, some wonder whether the relationship between tight labor markets and higher inflation has broken down. I have not lost faith in this relationship. As the labor market has tightened over the past few years, we have seen a discernible firming in the wage inflation trend from 2 percent to around 2½ percent.5 Also, data at the state level indicate that states with lower unemployment rates tend to have firmer wage trends. This supports the case that tighter labor markets tend to be associated with higher wage growth. As the labor market tightens and wage growth firms further, I would expect these conditions to push up price inflation, particularly for services. Research by the New York Fed has found that prices of manufactured goods do not appear to be sensitive to labor market tightness.6 In contrast, tighter labor markets tend to be associated with higher price inflation for services. This difference presumably reflects several factors. First, prices of manufactured goods are determined in global markets, whereas prices for most services are determined locally.

I would now like to lead you through the details of our role in growth and hope that by the end of our talk you will have gained firmer belief that Thailand’s policy makers are committed to the country’s long-term growth. My talk today will cover the two roles that the Bank of Thailand plays in building sustainable growth. Firstly, I would like to describe the ongoing role of economic stabilization, as stability is a prerequisite for sustainable economic growth in the long term. Secondly, I will address growth opportunities available to Thailand and the Bank of Thailand’s role in developing the financial structure that enables the capture of these opportunities. Due to necessity as well as design, several structural changes are now underway in Thailand, and the Bank of Thailand aims to facilitate the transformation of these changes into sustainable long-term growth. Ladies and gentlemen, When businesses go about their daily activity, they not only produce goods for consumption today, but they also innovate and improve their tools of trade in order to produce more and newer goods in the future. When the economy enters a long slump, these improvements are foregone and future growth potential is diminished, a situation known as hysteresis. Therefore a smooth growth path is desirable for sustainable growth. This brings us to the first role of the central bank in this talk, safeguarding stability and balance in the economy. In particular, the Bank of Thailand monitors three facets of stability: growth stability, price stability, and financial stability.
6. Instead of setting a quantitative threshold or target for Green investments, we believe our present approach is a more pragmatic and likely to be a more effective way of promoting Green and ESG investments. We will continue to work with like-minded investors to promote focus on good ESG practices in managing their investments. In the interest of transparency, the HKMA will also consider an appropriate framework for disclosing the Exchange Fund’s Green and ESG investment efforts without arousing market sensitivity in the process. Capacity Building in Green Finance: Centre for Green Finance (CGF) 7. Hong Kong is already one of the major green finance hubs in the world. Last year a total of $ billion of green bonds were issued and arranged in Hong Kong. Earlier this morning, the HKMA, as the implementation agent of the $ billion Government Green Bond Programme, announced that a roadshow will be held for a potential green bond offering. Under the Outline Development Plan for the Guangdong-Hong Kong-Macao Greater Bay 2/3  BIS central bankers' speeches  Area, Hong Kong is the designated green finance centre in the Area. With the launch of the Green and Sustainable Banking initiative and the rapid growth of the Green Bond market, Hong Kong possesses enormous potential to become a leading Green Finance Hub in the world. However, in pursuing our aspirations, there is a pressing need to upgrade our capacity and expertise in green finance in the financial industry. 8.

Over the past three or four years we have had many discussions on this issue with the ECB and the European Commission. We have repeatedly pointed out that setting the inflation criterion in relative terms - against the three best performers in the EU - was an appropriate option 10 years ago. But today we have another firm anchor: the single currency and the definition of price stability applied by the ECB. The purpose is for an applicant to converge with the euro area. So the benchmark should be the price stability benchmark used by the ECB and not the countries that happen to have the lowest inflation, quite often because of one-off shocks. Even more important, the growing number of EU members increases the probability of extremes: by definition the distribution of inflation rates is wider. Therefore the benchmark currently being used is systematically lower than it was during the second half of the 1990s. This means that the favourite argument of equal treatment does not hold: the same rule leads to stricter treatment because there is a different and much larger sample. All these examples illustrate a more general European dilemma. We need a stable legal framework, but all legal systems in history have evolved as the world has changed. Rules such as constitutions are - and should be - difficult to change. Others, however, have to be more flexible. There is little doubt that rules supporting policymakers' decisions belong to the latter group.
Another important question is whether the Riksbank should issue e-krona directly to the general public or go via the banks, as we do now with banknotes and coins. If we were to use the tried and tested model, the banks would buy e-krona from the Riksbank and then give their customers access to them. If we were instead to turn directly to the general public, it would mean in practice that households and companies could open accounts, or something similar to accounts, in the Riksbank. It would in this case be something entirely new for the Riksbank, which would need to take a stance on how this could affect the banks’ operations and how the Riksbank could best manage all of the new customer relations that arise. Should e-krona generate interest? Other examples of strategic questions are whether the Riksbank should issue unlimited amounts of e-krona if there was a high demand on the market, and whether ekrona should generate interest. These two questions concern both monetary policy and the financial stability of the banking sector. From a monetary policy perspective, an unlimited issue could be expected to increase the Riksbank's possibilities to steer the money supply, that is, issuing could in some situation function as a monetary policy tool. Some economists advocate that the central bank should replace cash with a digital currency that can be given a negative interest rate, for instance by reducing the balances on e-krona accounts or not redeeming e-krona at their full value.

The Governors and Heads of Supervision were very clear at the beginning of this year that their focus was on reducing unwarranted variability in risk weights, but there should not be a significant increase in global capital requirements. I am optimistic that these variability problems in risk weights can be mitigated without any such thing as a Basel IV. This discussion in Basel has been and remains controversial, not least because, by definition, the BCBS cannot level the playing field without changing capital requirements for some firms – and for firms that are outliers, these increases could be significant. But one very important part of the package has attracted less attention. I have long been troubled, as I know have members of the Treasury Committee, by the gap in risk-weights for low-LTV mortgages between firms who use models to calculate them and (typically smaller) firms who use a standardised, and therefore relatively crude, weighting provided by regulators. Now of course the leverage ratio is an essential complement to the risk-weighted framework which mitigates the effect of such disparities. Nevertheless they still bother me both in light of our secondary competition objective, given the risk of an un-level playing field, but importantly also in light of our safety and soundness objective because of the economic incentive it provides for standardised firms to concentrate on higher-LTV lending. We have therefore argued in Basel for a significant lowering of the standardised risk-weight for low-LTV mortgages which I hope we will be able to secure.
On this note, I wish you a fruitful discussion on the issues, challenges and opportunities presented by commodities. Thank you. BIS Review 90/2008  3

It has the potential to spur the generation of new economic strengths through the promotion of entrepreneurship and job creation while also promoting greater financial inclusion and thus enhanced prospects for balanced growth. The IAP enables investors to directly finance a broad range of economic activity of their choice, therefore diversifying their investment portfolio with exposures to various types of projects and industries that yield potential returns that are based on the performance of the underlying chosen ventures. For businesses, the IAP provides a new source of funding for activities, with more competitive financing terms in a range of financing structures. Ventures and entities of varying types, size and industries, including SMEs, listed firms and multinational companies can raise funds on this platform. Given its greater visibility, the IAP will also provide access to a broader range of individuals and institutional investors. For Islamic banks, the IAP creates a differentiated product that presents a new source of income and funding profile. There is also the potential for institutions with specific mandates including Government agencies to strategically collaborate with the IAP and Islamic banks to form public-private partnerships to facilitate the efficient channelling of grants or funding and to facilitate financing opportunities for identified strategic ventures. The role of the IAP that is launched today is envisaged to transcend beyond our domestic borders to become an effective channel to further enhance financial interlinkages in the regional and global economy.
More generally we are conscious that everything we do affects the trust and confidence in the Bank and by extension the financial system. Monetary and macroprudential policy The interaction between macroprudential and monetary policy is central to the Bank’s success in achieving its dual objectives of monetary and financial stability. The case for discharging these responsibilities in a coordinated way is very strong. I am delighted that Ben Broadbent has today been appointed as the next Deputy Governor for Monetary Policy. In that role, he will be central to co-ordinating these functions and his experience in academia, financial markets, and as an external Monetary Policy Committee (MPC) member, makes him extremely well qualified to do so. The transmission channels of monetary and prudential policy overlap, particularly in their impact on banks’ balance sheets and credit supply and demand – and hence the wider economy.8 Monetary policy affects the resilience of the financial system, and macroprudential policy tools that affect leverage influence credit growth and the wider economy. In turn, financial stability is a pre-requisite for monetary stability – for example systemic banking crises are likely to be deflationary. In reducing the frequency and severity of financial crises, macroprudential policy therefore helps to preserve the role of money as a store of value.9 While price and financial stability are clearly connected, achieving both can be difficult.

The model used for monetary policy of decisions being made by a committee made up of both Bank of England executives and independent experts has been expanded to financial stability with the creation of both a Financial Policy Committee and a Board of Prudential Regulation. As I have argued, those policy committees will be more effective if they have access to the broadest range of the Bank’s analysis and information and are as well informed as possible about each other’s reaction function. The now very wide range of the Bank’s responsibilities also creates a need to strengthen the oversight arrangements for the Bank as a whole. For delivery of our statutory objectives, the Bank is accountable to the public, through Parliament’s Treasury Committee. That accountability is being reinforced. Parliament has created an Oversight Committee of 8 non-executives who are in the Bank but not of the Bank. The Government has today announced the appointment of Anthony Habgood to lead the Bank’s Court of Directors and the Oversight Committee. I welcome the appointment of someone of his depth and breadth of corporate experience. Independent oversight by the committee he will chair can strengthen the Bank’s legitimacy and effectiveness. The Oversight Committee has access to internal papers, is able to observe meetings of policy committees, and is responsible for reviewing all aspects of the conduct of the Executive of the Bank, including the delivery of policy, the design of and adherence to rigorous processes and procedures, and the monitoring of our transparency and openness.
Persistent inflation is the result of lax monetary stance There are good reasons for assigning central banks a single main objective, namely to promote price stability. Inflation is primarily a monetary phenomenon. Short-lived inflation can have many causes, but persistent inflation is the consequence of a lax monetary stance. In the long run, monetary policy therefore primarily has an effect on prices. Under normal conditions it only has a temporary impact on economic growth and employment. Since central banks broadly speaking have only one instrument, i.e. interest rates, and can therefore only achieve a single long-term macroeconomic goal, it is natural to set price stability as the ultimate monetary goal. This is not to say that price stability is a more important goal than, say, full employment, but simply that monetary policy instruments are inherently better suited to impacting prices. It is pointless to set objectives for monetary policy which it cannot achieve. Through price stability, a forward-orientated monetary policy can contribute towards creating a stable economic environment on which the long-term growth potential of the economy, namely growth and prosperity, is based. The reason that central banks can have a widespread effect on interest rate formation in the markets through their interest rate decisions is that they have the exclusive right to issue money in the economy, i.e. base money. By controlling the price of base money, i.e.

The indicator, expressed as a ratio to the EU28 average (the UK still included), currently stands at close to 57 percent (after around 41 percent in 2007 and just over 25 percent in 2000). There is still very much room for progress. I say this having in mind the GDP per capita gap that is still substantial (and larger than those of most regional peers). In a scenario where Romania experiences constant 5 percent growth each year, while the EU grows on average only by 2 percent, it will take us 20 years to achieve full convergence. Under more pessimistic scenarios, I guess you don’t want to hear how long it would take to catch up. At this point, some of you may wonder why would anyone be pessimistic if local output currently grows at over 5 percent, at 6 percent in fact, in the second quarter of 2016, the highest rate in the EU? Well, as the effects of the recent fiscal stimulus wear off, GDP dynamics will come down, while additional stimulus, if implemented, will put even more at risk the already weaker fiscal position. Above all, growth needs to be achieved in a sustainable fashion, backed by productivity and while keeping fiscal and external deficits in check. The lessons taught by the most severe teacher of all, the economic crisis, should not be wasted… When I am talking about much room for progress, I am also referring to developments sometimes overlooked, especially if one has in mind only the aggregate figures.
At the present time there is no conflict between our employment objective and our inflation objective, as I expect inflation to be at or below our 2 percent longer-run objective over the coming years. But shouldn’t we also consider the costs associated with a more aggressive monetary policy of the kind adopted at the last FOMC meeting, especially when we are using non-traditional monetary policy tools? Absolutely. We have carefully evaluated three potential sets of costs and will continue to review them. The first set of costs stems from the risk that the current monetary policy regime could distort asset allocations and lead to renewed financial asset bubbles. We look at this issue on an ongoing basis. To date, there is little evidence of problems or excesses, but this could change as the recovery proceeds. If these costs were to rise, we would need to examine what steps could be taken on the macro-prudential front in response. Also, such developments would need to be incorporated into the monetary policy decision-making process. The second set of costs stems from the risk that exit from this regime could prove difficult. In particular, some observers worry that the expansion of the Federal Reserve’s balance sheet could ultimately prove inflationary. If that were the case, then I would regard the costs as exceptionally high. Fortunately, I am confident that such fears are misplaced. That is because we now have the ability to pay interest on excess reserves (IOER).

However, in the end, the IMF decided to cooperate with  BIS Review 164/2009  1  Ecuador in its move towards dollarization of the economy, the latter becoming a success as economic performance in Ecuador has been fairly stable since dollarization was introduced. The Ecuadorian case proves that it is difficult to assess the merits and the costs of dollarization. In fact, a successfully executed dollarization is not enough to realize a stable economic environment: this process needs to be followed by sound economic and fiscal policies, otherwise the situation will go from bad to worse. In other words: dollarization is not a magic wand! 3. Effects of dollarization  The case of Ecuador illustrates well how hard it is to formulate general conditions for a successful dollarization. It is not only difficult to assess the pros and cons of dollarization, it is also necessary to analyze the country’s starting position, assess the political and social willingness to abandon the local currency, and to execute a sound economic policy after dollarization, in order to be able to conclude what the effects of dollarization were or are. In the last ten years there has been a steady discussion on the pros and cons of dollarization. Very distinguished economists like Stanley Fischer (who is currently governor of the Bank of Israel), Sebastian Edwards, Rudiger Dornbusch, Jeffrey Sachs and Paul Krugman all made valuable contributions, reaching however different conclusions on the merits of dollarization.