samchain/econo-pairs-v1 huggingface dataset:
Evolution of Monetary and Exchange Rate Policy in Sri Lanka and the Way Forward by  Dr. P. Nandalal Weerasinghe1 Senior Deputy Governor Central Bank of Sri Lanka  I am deeply honoured to have been invited to deliver the Olcott Oration 2017 and to join a list of great Anandians who have delivered this Oration before. I cannot think of a greater honour that my school could confer on me. I accepted this invitation with humbleness, with gratitude and respect, and with great pride. Let me also take this opportunity to appreciate the support and guidance I received during my school career at Ananda College. The guidance our teachers gave us laid the foundation for any success later on in our lives. My oration today, is on the rather technical topic of monetary and exchange rate policy. The biggest challenge that I have to face is to present such a topic to an audience with a majority who might not be familiar with the technical jargon involved. However, I will attempt to keep the discussion as simple as possible. Central Banking and Price Stability The prime responsibility of any central bank around the world is to maintain price stability by way of maintaining low and stable inflation on a sustainable basis. At the outset, I would like to discuss why low and stable inflation is important for growth and stability of the economy. Based on experiences of many countries and different time periods, we have seen varying levels of inflation.

As such they are to be welcomed. However, if not fully understood at the micro level and not fully taken into consideration at a macro level, they may imply some unexpected adverse implications in terms of market dynamics. 1.3. Several avenues are being explored to mitigate financial instability  Strengthening the continuing efforts aiming at market transparency is one of the main avenue for future action. Experience shows that uncertainty and incomplete information are determining factors in mimetic behaviour. One of the objectives of transparency is to better differentiate borrower creditworthiness. A key feature of mimetic behaviour is that all borrowers are ‘tarred with the same brush’. So when one firm or one business sector face difficulties, neighbouring businesses or sectors are treated in the same way regardless of their actual economic and financial situation. The same may apply between emerging market economies as we shall see later. A careful examination of financial supervision rules and regulation, accounting standards, codes of good conducts, market practices and financial engineering seems also necessary to better understand their possible impact on market dynamics. There is a major public interest in trying to identify the elements that are pro-cyclical and those which are anti-cyclical. Financial authorities and market participants should commit to mitigate progressively, or possibly suppress, those elements of standards, regulations or financial techniques that are strongly pro-cyclical and, in the meantime, to reinforce the elements that could potentially counter the boom-bust tendencies.
What is really interesting and potentially useful about cryptocurrencies (beyond the mere intellectual stimulus, of course) is distributed ledger technology and the idea of digital money being issued by mainstream central banks themselves. The two are bound together by a common feature: a reduction of the importance of intermediaries. The distributed ledger technology behind bitcoin brings the attractive notion that, in principle, we don’t need any centralised settlement systems, any standardised systems that settle payments. The settlement system can be decentralised, thus potentially saving time. But let’s not forget how the system of payment confirmation works when distributed ledger technology is in play. Bitcoin makes many users confirm that a transaction has taken place. The process is very energy-demanding, akin to actual mining: it resembles all the processes employed in the past when we were dealing with physical money. Using classical commodity money requires physical investment; using bitcoin requires energy investment. So far it seems that distributed ledger technology would consume much more energy than standardised central clearing houses. That’s why we now use non-physical money without any intrinsic value – it is more efficient. Going back to any physical money would be like going back from PCs to typewriters. Maybe this is one of the reasons I haven’t so far heard of any distributed ledger technology being 2/3  BIS central bankers' speeches  used in the mainstream banking systems of Europe. Many institutions have been investigating the possibility, studying it, researching it, but that’s all.

In the digital age, of course, biting won’t help, and standard counterfeiting doesn’t rank among the many problems that bitcoin faces. Two years ago we held a seminar on cryptocurrencies (and especially bitcoin) at our central bank. When we were preparing for the event, people from the libertarian, cryptocurrency-loving community in Prague asked me: aren’t you afraid of us? Aren’t you afraid of bitcoin and other independent, central-bank-free currencies and their power to marginalise traditional money? I said – well, not really. Let’s put aside the fact that all of these alternative currencies are still marginal in terms of size and scope (all the electronic transactions using bitcoin worldwide combine to some 16% of the number of electronic transactions conducted in the Czech koruna, a currency used by a mere 10.5 million people). Bitcoin’s global market cap also constitutes only a fraction of even the Czech money supply. The key problem is bitcoin’s constantly changing purchasing power. So far it has been more volatile than natural gas, the most volatile commodity. Such a feature is really worrying for any innovation that wants to be seen as money: a means for paying and settling transactions, a unit of account and a store of value. Let’s try to imagine the following: today’s five pound note being worth ten pounds tomorrow and then one pound the day after tomorrow. It would be very difficult to exist in such a monetary system, to use the currency in everyday life.
The setting of such a price may be driven by two opposing concerns. On the one hand, bolstering banks' solvency and capital base, which would call for a high price. On the other hand, minimising the cost for public finances, which would call for a low price and the intervention would mainly aim to ease liquidity constraints. •  The consequences for Europe are generally positive. The rapid implementation of the Plan may help to reduce pressure on markets and restore confidence among  BIS Review 129/2008  1  banks. However, it is important to pay close attention to the way in which it is rolled out. Indeed, by contagion, low prices could lead to further write-downs in the balance sheets of European banks. 2. A major shift in the direction of public policy  Liquidity problems remain crucial at this stage of the crisis. Interbank markets remain strained. Central banks have considerable firepower to deal with this. In this respect, a wide range of actions has been taken over the past few days. In addition to increasing allotment amounts and enhancing the provision of longer-term refinancing, recent actions enable the Eurosystem to provide unlimited euro and dollar liquidity through fixed-rate tenders. Furthermore, the expansion of the list of assets eligible as collateral considerably enhances the access of counterparties to Eurosystem liquidity. These exceptional measures aim to restore confidence and the smooth functioning of money markets. Central banks are closely monitoring this situation and remain ready to act.

Paul Tucker: Monetary strategy and prospects Speech by Mr Paul Tucker, Deputy Governor Financial Stability at the Bank of England, Member of the Monetary Policy Committee, Member of the Financial Policy Committee and Member of the Prudential Regulation Authority Board, at the Association for Financial Markets in Europe flagship conference on “Financing growth”, London, 24 September 2013. *  *  *  Around the western world monetary policy is at a critical juncture. As differences in the relative pace of recovery in different economies become apparent, each central bank is having to articulate how it sees the particular conditions it faces. Contrast that with early 2009, when we were all simply priming the monetary pumps to prevent our economies slipping into depression and deflation. Indeed, contrast it with 2011 and 2012 when, again, central banks acted more or less in unison to contain, as best we could, the spillovers from the crisis in the euro area periphery. Today, although normality is hardly restored, we are back to circumstances where differences in local economic conditions matter to domestic monetary prospects and to exchange rates. The big policy trade off In the UK, the core challenge lies in balancing two medium-term risks – to the economy’s productive capacity and to price stability.1 Concretely, the longer the weakness in activity, the greater the erosion of the economy’s capital resources and the damage to the skills and capabilities of our labour force.
This would imply that the taking into account of CSR in management models would result in a certain form of self-regulation, for example with recognised codes of conduct. Different incentives are contributing to this, such as pressure from direct stakeholders and NGOs and regulatory incentives, in particular in terms of reporting. Lastly, I would like to say a few words about the Banque de France. I wish to stress that, as a company, CSR is of great importance. Its current sustainable development strategy combines a two-pronged approach: an Environmental Footprint Reduction Programme and a review of its tasks in the light of sustainable development. In this respect, the Banque de France will, for example, seek to develop the financial culture of the public, spread best practice in the fight against money laundering, encourage economic and financial research in new fields, such as the development of “carbon finance”. I attach great importance to these subjects, and my wish is to see the Banque de France adopt its own sustainable development charter, which formalises its commitments. This should be achieved by the end of this year and will no doubt further enhance the actions of the Banque de France. In the light of this collective awareness of the environmental (finitude and fragility of natural resources), economic and societal implications, central banks perform their task of preserving financial stability while taking into account and anticipating events. This approach, as recent developments have shown, has to be increasingly systemic and co-operative, involving companies, banks, governments and central banks.

Month by month there have been a series of small downside surprises in the inflation rate as oil prices have been relatively stable; the effects of administered and officially regulated prices now seem to be a bit less than previously expected; inflation expectations remain well anchored and the exchange rate has been rising which may help keep a lid on imported costs for a while (but importantly, at the cost of less balanced growth which is a separate problem). Taking the inflationary news together, it would appear that we have a favourable situation in which to explore how much more capacity the economy has, before inflationary pressures begin to build. Another positive factor supporting our probing strategy is the emergence of macro-prudential policy. Monetary policy has a difficult challenge ahead, as I have outlined. It will help enormously if financial policies can help deal with, or at least mitigate the risks from, some of the imbalances that are arising in the economy while the MPC aims to restore medium-term stability in the economy as a whole. The housing market is an example of where monetary and macro-prudential policies can helpfully interact and the November 2013 Financial Stability Report sets out some of the policy measures that are underway or could be called on if necessary. 4  BIS central bankers’ speeches  Funding for Lending Scheme One decision that has been implemented is in relation to the Funding for Lending Scheme (the FLS).
Our approach at the Fed seeks to achieve this outcome for the major institutions for which we are the consolidated supervisor. But the basic argument for applying exacting standards for risk based capital, for liquidity management, and for operational resilience applies to a broader range of supervised and regulated financial institutions whose operations pose significant systemic implications for the financial system. This is particularly compelling in the case of the major GSEs, where the regulatory framework, capital regime and sophistication of the internal risk management framework need to be upgraded to a standard more commensurate with their risk profile and the risks they present to the system. It is as compelling in the case of the institutions - a number of them specialized financial utilities - that make up the core of the payments infrastructure. Here, because of their overall importance to the functioning of our financial system, we are working to encourage improvement in operational resilience, to ensure they meet the recently updated international standards for risk management and internal financial resources, and to strengthen the oversight framework. It is important to note that the SEC has itself outlined a framework that would provide a form of consolidated supervision of the major investment banks with a risk-based capital framework based on Basel II.

Timothy F Geithner: Changes in the structure of the US financial system and implications for systemic risk Remarks by Mr Timothy F Geithner, President and Chief Executive Officer of the Federal Reserve Bank of New York, to the Federal Reserve Bank of Chicago Conference: Systemic Financial Crises Resolving Large Bank Insolvencies, Chicago, 1 October 2004. *  *  *  My compliments to Michael Moskow for putting together this conference and for bringing together this formidable group of talent on systemic banking crises. There are those who regard this type of enterprise - that of strengthening the regime for managing financial failures - as misdirected. Some think focusing on bank resolution is like devoting resources to redesigning the morgue rather than improving the hospital. Some think that by preparing to deal with crises you make them more likely. I think the wiser judgment is the contrary. In this area at least, if you want peace or stability, it’s better to prepare for war or instability. I think this is particularly important for us in the United States. Although we have a rich history of banking crises in our past, and have watched other countries confront such crises more recently, it’s been some time since we’ve experienced the prospect or the reality of a systemically significant bank failure in this country.
It is in the U.S. national interest to make sure that non-U.S. banks that are judged to be sound by their central bank are able to access the U.S. dollar funding they need in order to be able to continue to finance their U.S. dollar assets. If the access to dollar funding were severely impaired, this could necessitate the abrupt, forced sales of dollar assets by these  2  BIS central bankers’ speeches  banks, which could seriously disrupt U.S. markets and adversely affect U.S. businesses, consumers and jobs. One way we can help to support the availability of dollar funding is by engaging in currency swaps with other central banks. This has been used as a policy tool dating back to 1962. Recently, the Federal Open Market Committee decided to re-launch this tool, cooperating with five other central banks. Our intention is to create a credible backstop to – but not supplant – private markets. Banks with surplus dollars are more likely to lend to banks in need of dollars if they know that the borrowing bank will be able to obtain the dollars it needs to repay the loan, if necessary, from its central bank. This action is designed to support financial stability, avoid an unnecessary tightening in financial conditions and support economic activity and jobs in the United States. In particular, by reducing the cost of dollar funding via the swap lines last month, we reduced the pressure on banks in Europe to abruptly liquidate their U.S. dollar assets.

Although the U.S. economy is currently expanding at a moderate pace, we face significant downside risks, mostly relating to the sovereign debt crisis in Europe. Because developments in Europe will have an important bearing on the prospects for growth and jobs here in the U.S., the Federal Reserve is monitoring the situation there closely. This is also why we have taken special steps, in cooperation with other central banks, to support the flow of credit to households and businesses. I welcome the opportunity to testify on these matters today. II. Europe  Within the European Union, seventeen countries share a common currency, the euro. The situation in the euro area is very unsettled, with pressure on sovereign debt markets and local banking systems. The euro area has the capacity, including the fiscal capacity, to overcome its challenges. However, the politics are very difficult, both because the problem has many dimensions, and because many different countries and institutions in the euro area have to coordinate their actions in order to achieve a coherent and effective policy response. Europe’s leadership has affirmed its commitment to the European Union and its single currency monetary union on numerous occasions. And the leadership is working to achieve greater policy coordination in areas such as fiscal policy. Putting all the countries using the euro on a clearly sustainable fiscal path would help restore market confidence. Assuming that Europe ultimately succeeds in managing this situation, a stronger union will emerge that will be viewed as more robust and resilient.
The history of advance in many scientific disciplines has involved a two-way process of learning between theory and empirics, with theory motivating measurement at some times, and measurement motivating 12  theory at others, in a continuous feedback loop. One example of this approach, discussed by Governor Carney at the time the Bank’s own data analytics 13  programme was launched, concerns the dynamics of planetary motion. It was Sir Isaac Newton (a fellow  money-printer, as former Master of the Royal Mint) who developed the physical theory of celestial motion. But this theory was built on the empirical shoulders of another scientific giant, Johannes Kepler. When it comes to planetary motion, empirics first led theory, the inductive led the deductive. The same has been true, at times, when understanding the motion of economies and financial markets. Keynesian and Monetarist theory were both built on empirical experience during the Great Depression. The Phillips curve began life as a Kepler-esque empirical regularity, which was only subsequently given a Newtonian theoretical basis. Many puzzles in finance, which have taxed theorists for decades, began as 14  empirical anomalies in asset markets. In each case, empirics led theory, the inductive led the deductive. My lesson from all of this is clear. If that iterative learning process between empirics and theory is to continue to bear fruit in economics, then deductive and inductive approaches may need to share a broadly equal billing.

The higher is the trust in the institutions, the easier it is done. And institutions themselves build credibility in the times of crisis. The second lesson is adaptability. Although resilience and adaptability are linked, they are different in important ways. Resilience entails enduring a challenge, while adaptability refers to the ability to thrive beyond it. In the EU, progress on this front is evident. We have been moving from reactive policies to strategic decision-making. The recent crises brought about some tectonic institutional enhancements: the early months of the pandemic led to the establishment of the EU recovery fund, which constituted a breakthrough for the financial solidarity of member states. The Next Generation EU package provided an anchor for investment in the  2/4  BIS - Central bankers' speeches  green and digital transitions in a way that will support resilience and adaptability in the long term. Finally, the REPowerEU Plan aims to end dependence on Russian fossil fuels, but also entails measures for energy savings, new energy storage rules, and a strategy to buy energy together. That being said, adaptability is difficult to nurture, as we often tend to stick to existing patterns of behaviour and decision-making, especially when there is no imminent crisis that would push changes and force us to think outside the box. The last lesson that I'd like to mention (though you can derive more) is cooperation.
Lars Nyberg: Developments in the property market Speech by Mr Lars Nyberg, Deputy Governor of Sveriges Riksbank, at the seminar on properties, Malmö, 2 September 2003. *  *  *  I would like to begin by thanking you for the opportunity to come to Malmö and speak about the Riksbank's view of developments in the property market. Of course, these developments are not only of interest to those of us present today. They are important to all people, as movements in property prices have significance both for the real economy and financial developments in Sweden. When property prices rise, we feel more financially secure and increase our consumption, which leads to a rise in employment and growth. We might even borrow a bit more from the bank if we can. Normally, there is no harm in this. But there is a limit, of course, to the burden of debt households can bear without giving rise to worrisome risks. Should the debt of commercial property companies also swell, it could entail risks for the stability of the entire banking system, a point that was illustrated so well during the crisis at the beginning of the 1990s. On account of this, the Riksbank monitors developments in the property market carefully. We usually divide it into two segments, which give rise to different questions and reflections. The first segment is the housing market. Since 1997, housing prices have risen by just over 50 per cent, measured in current prices.

Speculation in construction was also less prevalent during the upswing at the end of the 1990s than during the rise in activity a decade earlier. Production of property has been relatively low, and projects have had pre-contracted tenants to a greater extent. In addition, the property crisis at the beginning of the 1990s was affected significantly by the structural changes that occurred during the period. The deregulation of the credit market together with the changes in economic policy required substantial adjustments in the market. So the present situation is not a cause for concern in the same way as the situation at the beginning of the 1990s. Some thoughts on the future The fact that the situation is not a source of concern does not mean that I am predicting a significant recovery in property prices. An increase in economic activity will of course stimulate demand, which sooner or later will apply upward pressure on prices. But at the same time I can see several factors which could restrain a rise in property prices, especially with regard to office premises. BIS Review 38/2003  3  Firstly, there is a risk that demand for office premises will be weaker than the general level of demand in the economy. From the mid 1990s, there was a gradual improvement in economic activity in Sweden, which resulted in higher employment in general, but particularly within office-intensive businesses such as IT and telecommunications.