samchain/econo-pairs-v1 huggingface dataset:
Persistent low inflation could signal that the equilibrium interest rate – the rate consistent with inflation at target and the economy operating at full capacity – is lower than currently assessed, and therefore the stance of monetary policy is tighter than intended. Here again, trade tensions and wider economic policy uncertainties are relevant as both could reduce the equilibrium interest rate. 11 If so, that monetary policy space could be more limited in some jurisdictions, increasing the desirability that fiscal policy supplement it if a downturn materialises. Chart 10: Market measures of long-term inflation expectations drifting down in US and euro area Per cent 3.0  Per cent 4.0 UK adjusted (lhs)  3.8  UK (lhs)  3.6  2.8 2.6  3.4  2.4  3.2  2.2  3.0 Euro area (rhs)  2.8  US (rhs)  2.0 1.8  2.6  1.6  2.4  1.4  2.2  1.2  2.0 Jul. 16  1.0 Jan. 17  Jul. 17  Jan. 18  Jul. 18  Jan. 19  Sources: Bloomberg Finance L.P., and Bank calculations. Notes: The chart shows 5-year inflation 5 years ahead. The UK series has been adjusted higher to account for the fall in inflation swap rates that took place on 17 January following publication of the House of Lords Economic Affairs Committee Inquiry into the use of RPI. See ‘Real interest rates and risk’, speech by Gertjan Vlieghe at the Society of Business Economists’ Annual conference, 15 September 2017.

In the case of Hong Kong, where the financial industry is so critical to the economy, this obviously carries even more importance. Now, as a survey has found, we are fortunate in Hong Kong to have one of the highest levels of consumer trust in banks and financial services compared to other places.3 But we’ve seen in the financial crisis how fragile trust can be. So we need to guard against complacency, and work towards ensuring that Hong Kong remains a beacon to the rest of the global financial services industry. Whether one is a financial institution, a financial regulator or a consumer, this is in all our interests. So, how do we get there? In short, my argument this morning is that we will do so by recognising the interdependence of these three groups. Each has a role to play, but each also needs the help of the others. And, I would argue, at the heart of this interdependence lies effective consumer protection and education. I would like to discuss briefly each group in turn – first, the role of financial institutions. “The role of financial institutions” As I alluded to just now, financial-services institutions have a direct interest in upholding the reputation of the industry as a whole. I believe success in this regard rests on two pillars. First, nurturing a culture of honesty among practitioners. Second, an absolute commitment to  1  Mr André Laboul, Head of the Financial Affairs Division, OECD and Chairman of the International Network on Financial Education.
* 1998 prices  BIS central bankers’ speeches  Chart 9 – Wealth by type  Chart 10 – Mean versus median wealth* £ bn  Wealth, £  120  500,000  100  400,000  800  300,000  600 400  2008  2010  2012  2014  200,000  200  Median net wealth inc. pensions  0  Mean net wealth inc. pensions  100,000  0 Private Pension Wealth 2012 2014 2008 2010 Physical Wealth* Sources: Wealth and Asset Survey, ONS, Bank calculations. Financial Wealth (net) * Property, physical and financial wealth excluding private pensions. Property Wealth (net) Total Wealth (including Private Pension Wealth  Sources: Wealth and Asset Survey, ONS, Bank calculations. *July 2006 to June 2008 estimates for physical wealth are based on half sample. Chart 11 – Regional GDP per head* North East Yorkshire and The Humber West Midlands London South West Scotland  North West East Midlands East of England South East Wales Northern Ireland  2007 = 100  110 105 100 95 90  2007  2008  2009  2010  2011  2012  2013  2014*  85 2015**  Sources: ONS, Bank calculations. * Regional GVA (income approach) deflated using the GDP deflator. 2014 is provisional ONS estimate. 2015 figure is indicative, estimated using the average annual growth rate from the preceding two years.

Given my outlook and risk assessment, I judge that a cautious and gradual approach to policy normalization is appropriate. Moreover, caution is also called for because of our limited ability to reduce the policy rate to respond to adverse developments, recognizing that we could also use forward guidance and balance sheet policies to provide additional accommodation if that proved warranted. Of course, the trajectory of short-term interest rates and the timing of future monetary policy adjustments will continue to be informed by the incoming data – both economic and financial – and how that data influences the outlook. The problem of long-term unemployment Before turning to the outlook for the local economy, I would like to spend a few minutes talking about the problem of long-term unemployment. The Great Recession was very severe, resulting in a large decline in output and damage to the labor market. From peak to trough, non-farm payroll employment declined by 8.7 million. The unemployment rate peaked at 10 percent. At the same time, the average duration of unemployment increased significantly. The number of individuals classified as long-term unemployed – that is, those who were unemployed for at least 27 weeks – peaked in December 2010 at 6.4 million, an increase of 5.3 million from the cyclical low in May 2007. Long-term unemployment as a fraction of total unemployment increased from 16.7 percent to 44.8 percent. The hardships of prolonged unemployment touched many families around the country and this is tragic.
It must also be accepted that the public sector cannot continue indefinitely to carry the cost of employees who are effectively redundant. A time limit must be set beyond which this burden will no longer be carried, and training and redeployment schemes should be strengthened in the meantime to facilitate the transition. Another third of government expenditures is absorbed by social security benefits, a category whose growth over time is conditioned by increases in wages and prices, demographic pressures and the need to preserve the social fabric. Along the way, however, the original priorities seem to have been lost sight of. As a result, Malta has a welfare system which is certainly generous, but which is not socially just in the sense that it does not allocate the relatively larger share of resources to those who are most in need. The time has clearly come for a radical welfare reform which reconciles the objectives of social cohesion and intergenerational equity with financial sustainability. Non-essential transfer payments, especially those which are of a universal nature and which do not represent a response to a proven need, should be cut. Means-testing in the provision of social benefits should not be ruled out on the  BIS Review 67/2004  3  grounds of possible abuse - rather, the information technology available today should be used to ensure effective implementation. Consideration should also be given to indexing all benefits to inflation, including those currently linked to wages.

Christian Noyer: The role of central bankers in today’s global capital markets Speech by Mr Christian Noyer, Governor of the Bank of France and Chairman of the Board of Directors of the Bank for International Settlements, at the 50th General Assembly and Annual Meeting of the World Federation of Exchanges, Paris, 12 October 2010. *  *  *  In May 2009, the ECB initiated a covered bond purchase programme and, in May 2010, it embarked on rounds of interventions in the public and private debt securities markets, actually the sovereign debt market, with a view to, and I quote, “ensure depth and liquidity in those market segments which are dysfunctional”. In fact, since 2008, the active presence of almost all central banks on a wide range of market segments could suggest that direct market intervention has become the general modus operandi of central banks. This is far from being the case and I would like to focus my talk today on the following two ideas:   Central banks require efficient markets to fulfil their mandates.   This can lead to massive direct interventions in markets but these interventions must remain exceptional. In order to examine the role of central banks in markets, we should start off by considering their mandate, which not only covers the tasks themselves but the way in which they are performed, i.e. in keeping with the principle of independence that governs them.
Directors must devote their time to the bank, cannot be a director of more than three other profit-seeking companies, as well as disallowing of borrowing where cross ownership is more than one percent of the paid up capital of the borrower. Of the 92 people involved, 53 have now complied, and arrangements have been made for most of the others to comply, with the possible exception of the representatives of the Ministry of Finance who may find that their representatives are not the sort of people who can devote that much time to the bank because they are not part of the ownership or operation of the bank, but are just government representatives. We are looking into this and will discuss with the Ministry when the time is right. The problem in fact is not as innocuous as it looks as state bank remunerations are affected by considerations other than just how should directors be rewarded so that shareholders’ value can be maximised. But all this is being done through sanctions and coercion, and in the New Commercial Bank Act the authority will be explicit. My last words on commercial banks, the intervened banks might not yet be completely taken care of, but at least the cost of rescue can now be well estimated. The proper financing of the debt burden is probably one of the first jobs of the new government.

I shall keep my comments mainly therefore to what the new government should do, be it really a new government or just the old one in a new bottle, and I shall refer only to the present or historical developments only in so far as it is necessary to understand future recommendations. As this is an after lunch speech, I shall also keep it short and not try to be comprehensive, but only comment on things that interest me or I think might be useful to the audience. Let’s start with a simple concept, the Credit Bureau. One of the reasons the NPL could become so high, and banks with high NPLs could remain supported by the public, is because in the present law the concept is that financial transactions are secret and banks are secret places, looked after and owned and supervised by responsible people. It would be nice if it were true, but the banking industry is leveraged by a ratio of 12:1 and the temptation is rather great for the owner to take advantage of other people’s money, people who have no right to know what is going on with their money even once a year because they are not shareholders but just depositors. The temptation of the supervisors to evade their responsibilities by not taking the correct action is also great, as rich people are powerful, and bad political systems over a long time do not help to make you brave. This philosophy must be changed.
In the current exceptional circumstances, the imposition of a minimum exchange rate is a measure that has received strong support from economic and political actors in Switzerland and abroad. Both the IMF and the OECD recently confirmed that this was an appropriate response 3 to the risk of economic contraction and deflation in our country. 4 Given the perfect  3  OECD (2012). 4  IMF (2012). 4  BIS central bankers’ speeches  alignment of this exceptional monetary policy measure with the pursuit of the SNB’s price stability mandate, one would imagine that, in the future, the National Bank’s independent status will remain as strongly anchored as in the past. Finally, it is important to consider the risks associated with the SNB’s inflated balance sheet. Our balance sheet has become more volatile, principally because it has grown in size − it is four to five times larger than it was in 2007 – but also because of the volatility of the overall environment. In the course of the last two years, risks have manifested themselves both positively and negatively. In 2010, for example, the SNB experienced its biggest ever loss, but in 2011, it also experienced one of its largest gains. The much increased size of our balance sheet, the unavoidable exchange rate risks associated with our foreign exchange reserves and a dependence on developments in the gold and capital markets, mean that the high volatility of the SNB’s annual results will be a standard feature of the near future.

Specifically, asset purchases are sometimes seen as “quasi fiscal policies” both on the asset side (due to the potential risks attached) and the liability side (when they contribute significantly to meeting the funding needs of the sovereigns). BIS central bankers’ speeches  1  At the time they were decided, those exceptional interventions were absolutely necessary. Although it had been forgotten, central banks were initially created to protect the economy from excessive financial disturbances. This was, historically, their “raison d’être”. As ultimate and unique providers of liquidity, they cannot escape this responsibility and let the financial system and the economy collapse. At the same time, by doing so, central banks have exposed themselves to a number of risks First, there are risks linked to balance sheet expansion. They cannot be ignored, although all central banks have been extremely careful in valuing the assets purchased or taken as collateral. Second, they run the risk of blurring the lines between fiscal and monetary responsibilities. A dynamic use of their balance sheets by central banks has effects on the allocation and distribution of resources in the economy. They may favour or penalise some types of collateral or certain borrowers. If central banks take on additional responsibilities in the area of financial stability, they will have to do so in close cooperation with fiscal authorities, thus exposing themselves to possible interferences with monetary policy. The major risk, however, is the risk of confusion. A multiplicity of interventions could be interpreted as a relative dilution of objectives.
4  BIS Review 85/2009  We can have the best laws to combat money laundering, the best system to prosecute the offenders but if we lack the human capacity to implement them, then our efforts will be in vain. Hence, building local capacity must therefore be at the forefront of our efforts. The same concern applies to NPOs. That is, building capacities within the structures of our NPOs to be able to identify suspicious transactions and reporting them to the Money Laundering Prevention Authority (MLPA) is an important feature of Samoa’s anti-money laundering and countering terrorist financing activities regime. I understand that the MCIL may need to incorporate in its existing legislation some requirements for NPOs to comply with anti-money laundering measures and requirements. Some key requirements would include proper customer identification. That is, the NPOs must have a good understanding of who their customers are and their sources of funds as well as the purpose of conducting financial transactions through or with them. Another important requirement relate to the proper keeping of books and records that would assist any investigation that may involve information or records of NPOs. Conclusion In concluding, I should reiterate that it is everyone’s responsibility to do something about protecting Samoa from the offence of money laundering and terrorist financing activities. And, although one of Government’s principal and ongoing task is to increase public awareness, there is still a lack of common knowledge within the public domain of what constitutes a money laundering offence.

For example, we do not have a system where the private sector will share risks across borders, where capital and liquidity are fungible in pan-European financial institutions. A common deposit insurance would help, but it’s important to allow a European bank to be able to operate in the euro area as a single entity. Not all banks would be able to do that, but we need to have a timetable where we say, four or five years from now the banks that qualify in terms of quality and quantity of capital will get a European license. You need to put a very serious, technical, timetable for that, and announce it. That would create a new environment for banking. Is there a challenge to the ECB’s credibility because of the change of stance on the effective lower bound of rates? The story of the lower bound is a very simple one. For all non- standard measures there is not much historical experience, there was very little academic literature until recently. Many central banks thought the zero lower bound is zero, and when we initially decided to go for –0.1, we were not fully sure of the total impact on financial conditions in general and especially on banking. The negative deposit rate, like most non-standard measures – the forward guidance of July 2013, the LTROs starting in 2011, the TLTRO and the APP – delivered more than we expected in terms of their impact on financial conditions.
But the steep rise in implied future yields five years ahead suggests that inflation is expected to be higher in the medium term. That could be associated with expectations of softer macro-economic discipline, perhaps more specifically reflecting market uncertainty about EMU in the light of the ongoing debate about prospective membership and about how far the ECB will in practice be free to pursue its statutory task of maintaining price stability. It may, on the other hand, simply reflect some kind of market imperfection. The same analysis can be applied to Italy and Spain, for example, to try to assess market expectations about their possible membership of EMU as part of the first wave. It shows that notwithstanding the recent falls in short-term interest rates in those countries - which can largely be explained by their improved economic performance - 5 years forward yields remain significantly higher than those in Germany and France suggesting that early EMU membership is not at all certain in the eyes of the markets. BIS Review 22/1997  -4-  What can we conclude from all this, Mr. Chairman? Well, the conclusions that I draw are essentially threefold and hardly very surprising. I conclude, first, that markets at present are reasonably persuaded that the world economy as a whole will remain relatively stable at least by comparison with much of the post war period.

These events, along with the reversal of certain losses previously charged to equity and the effect of these adjustments on the corporate income tax charge, mean that we can anticipate a notable decrease in net worth, which, however, will remain positive. In sum, I have to inform you that the final adjustment figures are not yet available. Nonetheless, I can assure you that they are substantially lower than some of the figures that we have heard in the last few days. Also, the submission of the annual accounts by the provisional central bank nominees has been postponed in application of the powers established in Article 36.2 of Law 26/1988 of 29 July 1988 on the Discipline and Intervention of Credit Institutions, since it has been considered preferable to await the conclusions reached in the inspection now drawing to a close. With regard to liquidity, the turmoil of the last few months put CCM in a difficult position: •  Wholesale financial market tensions and the downgrading of CCM’s credit rating closed the door to institutional funds. This lack of access to funding via wholesale  BIS Review 42/2009  3  markets was particularly painful for it, as it had resorted extensively to this source of funds for its business expansion plans. •  The institution’s gradual deterioration was common knowledge and increasingly the subject of political and media discussion. This adverse publicity gave rise to a drain on deposits.
Furthermore, relative prices change more than they did before, but monetary policy cannot affect them except in the short term. Sometimes it can be difficult to distinguish between such relative price changes and a general rise in the price 3  level, which depends in the long run on monetary policy. In addition to this, it can often be difficult to determine at any given time which changes are temporary and could possibly be mitigated through economic policy and which ones are more permanent and nothing much can be done about, at least through monetary policy. These are exactly the conditions we are experiencing at present. There are clear indications that the equilibrium real exchange rate has risen with improved terms of trade, increased national saving, and a vastly improved external position. In addition, there are indications that equilibrium interest rates have fallen since before the crisis, and they have probably fallen still further as monetary policy has grown more credible and inflation expectations have been anchored more firmly at the target. In both instances, the question of how much remains unanswered. As far as the exchange rate is concerned, conventional measuring methods do not indicate that the real exchange rate is clearly above its equilibrium level. This is supported by the Bank’s analysis, to be published next week in Financial Stability, which shows that 85% of inflows into the foreign exchange market in 2016 were attributable to the current account surplus and transactions between residents.

There are also a significant number of other Taiwanese banks which have expressed the intention to establish representative offices here. We are processing these applications in an orderly fashion on a “first-come first-served” basis. It has long been our policy not to allow in too many banks from the same region or country too quickly. As in the case of the Japanese regional banks and the Korean banks we therefore operate a queuing system. I know that this can sometimes be frustrating to those who are at the back of the queue. But I would like to made it clear that these is no reluctance on our part to admit banks from Taiwan, as the existing presence here clearly demonstrates. I am sure that Dr. Jeffrey Koo will also testify to this. 6. Hong Kong is currently going through tougher times as a financial centre. Some foreign banks have cut back their lending here and a few banks have actually left. This has reflected problems back home rather than discontent with Hong Kong. However, it is true that Hong Kong must reduce the cost of doing business in order to remain competitive, and that is why the current fall in property prices and rents, while painful, is also necessary. I am confident that Hong Kong will emerge from the current crisis with a better-balanced economy and with even stronger fundamentals. Above all, it can continue to rely on its main strategic advantage as a financial centre - namely, its proximity to the Mainland of China.