samchain/econo-pairs-v1 huggingface dataset:
Huw Pill: Monetary policy - an anchor in challenging times Speech by Mr Huw Pill, Chief Economist and Executive Director for Monetary Analysis of the Bank of England, at the Scottish Council for Development and Industry, Glasgow, 12 October 2022. *** Good afternoon everyone. It is a great pleasure to be with you in Glasgow today. My thanks to the Scottish Council for Development and Industry for their invitation to speak, to the University of Strathclyde for hosting us, and of course to all of you for taking the time to attend. I am looking forward to our discussion. I have spent the past couple of days here in Scotland talking with firms, speaking to business leaders and engaging with our Citizens Panel. As you can imagine, some of those discussions have been challenging. We are living through challenging times. The invasion of Ukraine has led to a dramatic rise in European wholesale gas prices. Household incomes are being squeezed by higher energy bills. Company profits are being squeezed by higher energy costs. And headline inflation has risen to unacceptably high levels. For a net importer of energy like the UK, the rise in global energy prices weighs on national income: the cost of what we are buying from the rest of the world has risen dramatically relative to the price of what we are selling. You don't need to be an economist to understand the implications of this for domestic demand. Higher energy prices dampen household spending, and weigh on economic activity.

I would particularly like to thank Saba Alam and Will Dowson for their help in preparing this speech. I have received helpful comments from Andrew Bailey, Fabrizio Cadamagnani, Alan Castle, Swati Dhingra, Jonathan Haskel, Neil Kisserli, Catherine Mann, Martin Seneca and Fergal Shortall, for which I am most grateful. 8/8  BIS - Central bankers' speeches
That we live in an increasingly connected world is well known and understood. I will not bore you with statistics on the growing linkages in trade and finance that bind our countries together. Economic and financial integration in Asia has produced significant benefits for our economies. But increased connectedness also means greater potential for contagion – for the transmission of economic and financial shocks across countries within the region. 9. This does not mean we should roll back the tide and become more insular. But it does mean that we have to watch closely developments in one another’s economies, assess potential spillover effects, exchange views on policy responses, and, at times of stress, pool our resources to restore confidence in our markets. 10. In an environment of increased uncertainty and volatility, it is incumbent on each of our economies to build strong buffers. This includes financial buffers in the form of a healthy foreign reserve position and a well-capitalised banking sector. It also includes policy buffers in the form of prudent monetary and fiscal stance in good times that gives scope for a more accommodative posture during times of slack or crisis. 11. But sometimes we cannot do it alone, despite having good fundamentals. At times of crisis, markets may be slow in discerning progress made in national policies. This is where external validation and resources can help build credibility and restore confidence. While the role of the IMF and multilateral organisations remains critical in this regard, regional arrangements can be a useful complement. 12.

Ravi Menon: Regional safety nets to complement global safety nets Welcome remarks by Mr Ravi Menon, Managing Director of the Monetary Authority of Singapore, at the opening ceremony of the ASEAN+3 Macroeconomic Research Office (AMRO), Monetary Authority of Singapore, Singapore, 31 January 2012. *  *  *  Director, AMRO, Wei Benhua, Counselor, AMRO, Yoichi Nemoto, Head, Civil Service and Permanent Secretary (Finance) Peter Ong, Distinguished guests, ladies and gentlemen. Good morning. Genesis of the Chiang Mai Initiative 1. Twelve years ago, we took the first steps in a momentous journey that has led us here today. 2. It was the aftermath of the Asian Financial Crisis. The Crisis had ravaged several economies in the region and was a wake-up call to all of us. Rapid economic growth was not enough. To sustain growth and foster stability, sound macroeconomics and strong financial supervision mattered. Asian economies had to get their domestic acts together. And they did, with painstaking reforms over the last 15 years. So, when the Global Financial Crisis hit Asia in 2008/2009, Asian economies were shaken, but did not keel over. 3. The Crisis taught us another lesson: had the region better harnessed the resources it had available, it might have been in a stronger position to deal with the crisis. It was this conviction that provided the impetus for the first proposals for a regional financing arrangement. 4.
Passporting rights have been well availed of in this sector, too, and the total number of Notifications for European Insurance Undertakings to carry on business in Malta under the Freedom to Provide Services directive now stands at 204. The other reflection I would like to share with you is inspired by an interview given recently by the CEO of Mediterranean Bank to a local economic magazine, in which Malta was referred to as ‘a secure EU jurisdiction’. In this same context it was stated that ‘Malta’s stability is an important part of its appeal as a banking location’. While such accolades are indeed welcome, they do not come entirely as a surprise. For when Malta’s financial legislation was overhauled in 1994, and when EU legislation was later transposed in anticipation of EU membership, an intended by-product was indeed the incorporation of the highest international standards and best practices into Maltese financial laws and regulations. This was accompanied by a strengthening of the institutional framework for the regulation and oversight of the financial system. In 2002 the Malta Financial Services Authority (MFSA) became the single regulator for financial services when it took over the responsibility for the banking sector from  BIS Review 92/2006  1  the Central Bank of Malta (CBM). The Bank then assumed responsibility for ensuring the stability of the entire financial system. A year later Malta volunteered to undergo a Financial Sector Assessment Programme (FSAP) by the IMF and the World Bank.

After a thorough examination by a team of international experts, our financial system was certified as being healthy, well supervised in the context of a comprehensive legal framework, and strongly compliant with most of the relevant international standards and codes. We cannot, of course, afford to be complacent. A good reputation takes time and considerable effort to earn, but can easily be lost. It is the joint responsibility of the CBM and the MFSA, the credit institutions and the other financial service providers, and of all market participants, including the financial lawyers and accountants, to ensure that Malta’s financial centre remains synonymous with integrity, efficiency and reasonable costs. I emphasize this point because the recent rapid growth in the depth and breadth of the financial sector, and the expectation of further expansion, has sometimes given rise to behaviour - such as the use of aggressive methods to induce prospective customers to buy financial products and services and the resort to misleading advertising - which stretches the interpretation of our laws and regulations close to their limit. There should be no doubt in anybody’s mind that the CBM and the MFSA, acting in the common interest, will continue to exercise their respective responsibilities with diligence and rigour to ensure the integrity and stability of the financial system. In conclusion, I would like to wish Mediterranean Bank success in their Malta venture and to express the hope that their presence here will also serve to enhance the reputation of our financial centre. 2  BIS Review 92/2006
Inflation targeting, as practised in the UK, represents the most comprehensive adoption of these insights. By delegating monetary policy to an operationally independent central bank, inflation control becomes a more 6  technical, ‘engineering’ problem, as described in Professor Sen’s work on ethics and economics. The committee responsible is given a clear remit – with a lexicographic preference for inflation control – and is charged to do what is necessary to achieve the inflation target over the policy horizon. For example, the Monetary Policy Committee (MPC) of the Bank of England must deliver price stability over the medium term, as defined by 2% CPI inflation. The inflation target is symmetric (meaning we care as much about returning inflation to target from below as from above), and it applies at all times. To be clear, although the method by which the Bank of England achieves the inflation target may be a technical exercise, the UK’s monetary policy framework is grounded in society’s choice of the desired end. These ethical determinations are encoded in the monetary policy remit, from which the MPC takes its orders and against which it is accountable. Society chooses the ends, and, within pre-set boundaries, the MPC determines the means to achieve them. Yet even in this framework monetary policymaking will at times involve striking short-term trade-offs between stabilising inflation and supporting growth and employment. In other words, the monetary policy problem cannot be fully contracted ex ante.

Because monetary policy can also influence demand it can lean against such shocks. If successful, it can stabilise inflation. In this case, no output-inflation trade-off arises. This is the so-called “divine coincidence”. 10  In Figure 2, negative demand shocks would create a tendency for inflation and the output gap to move into the south-west quadrant. Similarly, for positive demand shocks, inflation and output gap would move to the north-east. Because in these cases, there is no trade-off between stabilising inflation and the output gap, it is relatively straightforward for monetary policy to keep inflation and the output gap close to the origin. Chart 1: For much of the great moderation period, data were consistent with predominance of demand shocks… Great moderation  3.5  In practice, data in these quadrants reflect lags in the transmission of monetary policy and other uncertainties: it takes time for monetary policy to  Inflation (%)  affect output, and for output in turn to affect inflation. But if monetary policy has been effective, these  3  deviations would not be expected to be either large or 2.5 Output gap (%)  persistent. This state of affairs characterised much of the “Great Moderation” in the United Kingdom, from  2  -1  0  1  1993 to 2007 (Chart 1), which was effectively a 11  1.5  1  period of demand management. Things are different when shocks drive inflation up or down independently of demand.
Second, since the common fund would take some time in reaching the required size, it is essential to set in place a specific regime to cover, during this transition period, the needs arising from resolution processes. Compared with the alternative suggested by some countries of using national funds, it seems preferable to allow the ESM to finance the common fund while it is being brought up to the required size by contributions from the industry. Otherwise, national resolution schemes would remain in place for a relatively long period and this would delay the setting up of a genuine banking union and thus the remediation of the fragmentation problems besetting us at present. Third, the distribution of powers between the supervisor, the resolution agency and the resolution authority envisaged in the proposal could be refined. In particular, it should perhaps be made slightly clearer – in line with Spanish law – that the supervisor must carry out the actions prior to determining the resolution of an institution and be responsible for commencing the process, all this aside from it maintaining the necessary coordination and exchange of information with the resolution authority. At the same time, the preparation and approval of the resolution plan should require the joint approval of the supervisor and the resolution authority. Lastly, the implementation of the plan and the monitoring of its fulfilment should – as set out by the European Commission’s proposal and provided for in Spanish legislation – be the responsibility of the resolution authority.

Gent Sejko: Ninth and tenth review of the arrangement with the IMF concluded Speech by Mr Gent Sejko, Governor of the Bank of Albania, at the joint press conference with the IMF mission and the Minister of Finance, Tirana, 24 January 2017. * * *  On the completion of the ninth and tenth review of the Arrangement with the IMF The beginning of 2017 coincides with the conclusion of Albania’s arrangement with the IMF. This Arrangement has guided our development policies over the past three years, and has been a roadmap for our structural reforms agenda in the long term. Against this backdrop, the last review of the Arrangement not only provides for a comprehensive assessment on the achievement of its objectives, but also helps in identifying challenges to the country’s development and contributes to discussions on the policies that need to be designed and implemented for supporting the development. Let me now outline the opinion of the Bank of Albania on this review. The Arrangement with the IMF was signed amid an external economic and financial environment surrounded by uncertainties, and in response to deepening internal development challenges. Economic growth was on the downtrend, public debt and nonperforming loans were set on the uptrend, and uncertainties in the Albanian economy and financial markets were relatively high.
Sunil Mendis: Creating a challenging and stimulating work environment New Year Message 2005 by Mr Sunil Mendis, Governor of the Central Bank of Sri Lanka, to all employees of the Central Bank of Sri Lanka, Colombo, 1 January 2005. *  *  *  I issue this traditional New Year message at a time when the whole of Sri Lanka has been engulfed by a national tragedy caused by “tsunamis” that hit the country on 26th December, 2004. I take this opportunity to express our deepest condolence to the members of the families of bank employees who have lost their lives and to our employees and their loved ones who have suffered by this calamity. At the same time, I wish to share the sorrows of those employees who have lost their property. Words are insufficient but hope that they would move forward from this tragedy. With the magnitude of the disaster, there is no question that our nation needs to be rebuilt. Hence, as employees of a state organization which is at the apex of the country’s financial system, we have an invaluable task to perform. In this context, I place my message before you with the plea that we take part in the nation-building task by offering our maximum efforts. I have been greatly encouraged by the positive response which all the employees have demonstrated towards the provision of relief to victims and rebuilding of the nation.

With the change in the MLA, the organizational structure of the Central Bank has undergone a major transformation on a function-oriented basis to support its objectives and functions. The Departments of the Bank were grouped into four major categories under the headings of price stability, financial system stability, agency services, and corporate and support services. The two Deputy Governors have been entrusted with the responsibility of overseeing the achievement of the two core functions. The vacancies to the posts of Assistant Governors (AGs) have been filled and they have been entrusted with line responsibilities with a view to building the 3rd and 4th layers of succession in the Bank’s managerial hierarchy. BIS Review 1/2005  1  Price Stability means maintaining a low inflation rate. Central banks are mandated to maintain price stability as their main objective in order to create a conducive environment for long-term sustainable economic growth by eliminating uncertainties, protecting the value of financial assets, enabling all economic agents to take a long-term view of the economy and ensuring the well being of the general public. Maintaining price stability during the course of 2005 will prove to be a very challenging task given the surging oil prices, which may continue for some time during the year, and the enhancement of demand pressure on the price level on account of wage increases in the government sector.
These consortia, such as USC, propose to issue digital tokens that are fully backed by central bank money, allowing instant settlement. This could also plug into ‘tokenised assets’ – conventional securities also represented on blockchain—and smart contracts. This can drive efficiency and resilience in operational processes and reduce counterparty risks in the system, unlocking billions of pounds in capital and liquidity that can be put to more productive uses.14 The potential transformation in retail payments is even more fundamental. Earlier this week, a cooperative of technology companies proposed a new payments infrastructure based on an international stablecoin – Libra. Libra would be backed by reserve assets in a basket of currencies including sterling. It could be exchanged between users on messaging platforms and with participating  12  Currently, the criteria for access to our balance sheet, defined at the time of the Winters Review, are three-fold: firms should be inherently exposed to overnight liquidity risk, they should be systemically important, and they should be regulated to the same standard as UK banks. In practice, that means banks, CCPs and broker-dealers are eligible for access, but other firms are not. The Bank will reach out to firms and to users of payments services to understand the needs of participants in this market and the barriers that still exist to competition and innovation. This dialogue will allow us to consult on the appropriate level of access to the Bank’s infrastructure.

While regulation must not front-run innovation, regulators must run alongside innovation •  We must know what’s going on and be ready: either to promote or to restrain. There are three ways in which MAS does this. One, we actively engage FinTech firms to better understand emerging innovations and help them design their solutions for financial services. Take for example cloud computing. •  •  Our traditional approach was to deal only with regulated FIs, not their service providers –  But with cloud solutions proliferating, we changed tack  –  Many of these solutions offered strong efficiencies and cost savings but not all models met our regulatory requirements for data integrity and protection. So we engaged in dialogue directly with cloud service providers to explain our concerns and at the same time understand the technology –  The service providers then came up with solutions that met our concerns  –  And we modified our requirements to take account of new business models and technological capabilities. Two, we allow our FIs to experiment with new technologies in a safe environment. FIs do not have to seek MAS’ permission to try new things. •  Responsibility lies with boards and management to assess the risks and put in place adequate safeguards  •  But with many innovations, it is not always possible to anticipate every vulnerability or whether there is a risk of breaching regulation. •  Sometimes, as Nike puts it, you have to “just do it”.
Svein Gjedrem: Monetary policy in Norway Lecture by Svein Gjedrem, Governor of Norges Bank (Central Bank of Norway), at the Norwegian School of Economics and Business Administration, Bergen, 17 October 2002. The text below may differ slightly from the actual presentation. The references for the speech can be found on the Norges Bank’s website. *  *  *  A year and a half ago, the Government and the Storting adopted new guidelines for economic policy in Norway. The guidelines outline a medium-term strategy for the use of petroleum revenues over the government budget. Government petroleum revenues are transferred to the Government Petroleum Fund. The guidelines provide for the use of the expected real return on the Fund, i.e. 4 per cent of the Fund’s market value each year. As the Fund’s market value grows, so does its return. A gradual increase in the use of petroleum revenues ensures greater stability than a rapid withdrawal. The Government laid down a new operational mandate for monetary policy at the same time. Norges Bank shall set the key interest rate with a view to maintaining low and stable inflation. The inflation target is set at 2½ per cent. The responsibility for implementing monetary policy is delegated to Norges Bank pursuant to the Norges Bank Act and appurtenant regulation. Norges Bank sets the interest rate on the basis of our understanding of the regulation.

See V. Ramey (2019), «Ten Years After the Financial Crisis: What Have We Learned from the Renaissance in Fiscal Research?», Journal of Economic Perspectives, vol. 33(2), pp. 89-114, for a review of the existing evidence. Nevertheless, the estimates are subject to a particularly high degree of uncertainty. Thus, for instance, A. Abiad et al. (2016), The macroeconomic effects of public investment: Evidence from advanced economies, Journal of Macroeconomics 50: 224240, estimates a public investment multiplier of 1.4 after four years for a group of advanced economies. Further, the estimated value could nearly double if the investment is made in highly efficient projects or during periods of low economic growth. Conversely, other studies find that the public investment multiplier cannot, in the short term, exceed a value of 0.6, especially in cases of short-run fiscal stimuli (see M. Alloza and C. Sanz (2020), Jobs Multipliers: Evidence from a Large Fiscal Stimulus in Spain, forthcoming in the Scandinavian Journal of Economics). 9 This multiplier effect largely depends on the degree of complementarity between public and private investment. See Box 5.2 of the Annual Report 2019 of the Banco de España for a detailed analysis of the channels through which public investment supports medium and long-term growth. One of the channels accounting for the high public investment multiplier, even in the short term, rests on the idea that, as it is more powerful in the medium and long term, rational agents consider it in their decisions.