samchain/econo-pairs-v1 huggingface dataset:
As regards fiscal policy, the discussion in the G7 should not just be about increasing spending, it should also be about improving the quality of the budget. The ECB agrees with the idea that “countries that have fiscal space should use it”, but many countries do not have this fiscal space. Reducing unproductive expenditures and cutting taxes or increasing  BIS central bankers’ speeches  1  investment in productive infrastructure, such as education and research, can lead to growth without increasing the deficit. What about foreign exchange policy? The UK pound and Japanese yen have been increasing and volatility is very high. What will the G7 do to reduce volatility? The G20 countries have committed not to use the exchange rate for competitive purposes, as confirmed in recent meetings in Shanghai and Washington. All of us should act in a way consistent with this commitment and which does not add to global uncertainty. Emerging markets are slowing down and advanced countries have very low growth rates. What should the G7 and advanced countries do for the world economy? In a low-growth environment globally, there might be a temptation for some countries to grow at the expense of other partner countries. So it is precisely the role of the G7 or the G20 to resist such temptation. There is no “magic bullet” for increasing growth. For the G7, it is crucial to send the message to support domestic demand and focus on those structural policies that will be most conducive to growth.

Such collaborative industry effort in infrastructure sharing would allow the industry to compete directly on product offerings and the quality of services provided, thus providing better value to both consumers and merchants. In this regard, the recent industry-wide initiatives to enhance the payment card infrastructure and to modernise the online bill payments market via JomPAY are commendable and should be sustained. In this respect, I would also like to call upon MyClear and MEPS to jointly embark on payment infrastructure projects and initiatives that would benefit both the industry and the country. Role of MyClear and the industry moving forward Achieving the critical mass in terms of usage and acceptance remains a key priority. In this regard, banks in collaboration with MyClear should take concerted efforts to expand the number of businesses accepting JomPAY, especially among the underpenetrated sectors of SMEs and the federal and state government agencies. This can be done through coordinated media campaigns, workshops, roadshows and other outreach programs. MyClear and the participating banks should target to register 5,000 merchants onto JomPAY by 2020. To educate the public, especially those who are not IT savvy to use JomPAY, MyClear and the banks should also come up with instructional videos and pamphlets to provide the  BIS central bankers’ speeches  3  necessary guidance and assistance.
With the benefit of hindsight, at least in our own analysis at the Bank, the complexity of global value chains was not well enough understood and, as a result, the duration and intensity of disruption was probably underestimated. Fortunately, supply disruptions appear to have eased in recent months and there have been some, albeit still tentative, signs of a normalisation in the patterns of US consumer demand. Global goods price inflation has weakened somewhat, and that has passed through into UK core goods inflation. Against that, the end of the zero-Covid policy in China may have again increased the uncertainty surrounding supply bottlenecks. On the one hand, less strict restrictions in China should ease supply constraints if lockdowns are fewer in number. But, on the other hand, the current surge in infection rates may create its own disruption to production and distribution. Ultimately what matters for an inflation targeting central bank like the Bank of England is the implications of these developments for world export prices and thus imported inflation. This is something we will have to  Page 6  continue to monitor closely. Tight labour markets In both the UK and the US, the labour market has remained tight. The UK unemployment rate recently reached its lowest level since the mid-1970s. Recruitment difficulties in a tight labour market have supported stronger underlying wage growth. The relative contributions of demand and supply to labour market tightness are a topic of intense debate.

It is one thing to note that such revisions have affected the historical development of the krona. It is quite another to forecast such revisions and to allow this to influence the forecast for the krona. In my view, the assessment of interest rates abroad on which the analysis in the latest Monetary Policy Update was based was largely in line with market expectations. This means that my view of the future development of the krona in December was based on the assumption that the market would not significantly revise its view of interest rates abroad. Housing prices and household indebtedness may lead to financial imbalances Another important but difficult-to-assess factor that we as monetary policy decision-makers have to take a stance on is the rapid increase in housing prices and household indebtedness that we have observed for some time now. I am among those who are somewhat concerned about this situation. The debate on the role of housing prices in monetary policy has been slightly unclear. As I see it, it is not a question of steering housing prices or other asset prices towards a set target. Nor is it a question of trying to puncture a price bubble by means of drastic repo rate increases. Nor do we assess that financial stability is threatened by the build-up of household debt. This can be seen, for example, if you read our latest Financial Stability Report, which was published in December.
5 A number of analysts have also speculated that the Riksbank sees the zero level as so important in itself that it would be wary of lowering the repo rate over the coming years even if the economic outlook and inflation prospects were to deteriorate. My view is that, as a result of this, there may be a risk of several people starting to make the interpretation that we have indeed taken our eye off the ball to a certain extent, or at least don’t have it as sharply in focus as we usually have. Too low average inflation creates problems Let me elaborate a bit on this. If the repo rate were to be raised as soon as around the turn of the year, the serious aspect is not in itself that the interest rate would then be 0.25 percentage points higher, although for someone who prefers an unchanged rate, there is of course no advantage in this either. The problem is instead that it might be perceived as the Riksbank deviating from what it normally Gordon, Skolimowski and Stirling (2019), and Milne (2019). An alternative view is that the Riksbank has simply become difficult to interpret, see, for example, Boije (2019). 5  3 [17]  does: designing monetary policy so that it is always very clear that the inflation target is the point of departure. This is of course particularly important in situations where there is a risk of confidence in the inflation target starting to evaporate.

So there are sound economic arguments for an inflation target that is not lower than 2 per cent. To sum up, it is these considerations I have in my mind when I talk about the importance of keeping our eye on the ball. Basically, it is a question of constantly being very clear about the guiding role of the inflation target in the design of monetary policy. The lower bound of the repo rate is less than zero Regarding negative interest rates, I presented my own view on the matter in a speech around this time last year. 6 I think that the difficulties with negative rates are not so much a question of purely economic aspects, but rather of what is feasible according to social conventions and possible to create understanding for. For example, the biggest problem is probably not the one that is commonly highlighted, namely that the general public would choose to empty their bank accounts and only hold cash, as soon as the interest rate is negative. Holding savings in cash is, when it comes down to it, both troublesome and costly and given that most people in Sweden have started to abandon cash, it is not something that would seem particularly natural. The pain threshold here is probably relatively high, from a purely economic perspective.
This is associated with oil price trends and external demand. The financial account balance of the private sector will shrink to about 1% of GDP in 2020–2022. As usual, making our decisions, we also factored in risks. We are currently talking a lot about disinflationary factors, and they do prevail for the moment. However, there are also proinflationary risks over the forecast horizon. First, such risks are associated with external factors, which include the world economy and global financial markets. Second, it is hard to exactly assess the extent to which the inflation slowdown in the food market is caused by temporary factors, the timing and the likelihood of the turnaround in their dynamics and the intensity of balancing changes in food prices given the current low base. Third, as we have noted, the aggregate effect of five earlier key rate cuts will be gradual and its estimation will take time. As for the fiscal policy, the situation seems more balanced in terms of its effect on inflation in 2020, given that budget spending, including into the national projects, will be distributed over time. Let me remind you that the next policy meeting of the Board of Directors will also be a core one, same as today. This is associated with the changes in the schedule of the Board of Directors’ policy meetings. We are going to sum up the results of 2019 at our next meeting.

EU level harmonisation often applies to high level principles and minimum requirements, while implementation, additional requirements and enforcement is left to the member states. In practice, this becomes a barrier to integration. An EU bank will be subject to as many different reporting requirements and regulatory relationships as it has countries of operation. For a banking group involved in life insurance and securities trading this number should be multiplied by three. For instance, ABN Amro is rumoured to be dealing with 47 different regulators only in the EU. Second, today’s banking regulation was originally designed to protect the soundness and stability of the national banking system and sometimes even to politically control it. Thus, supervisors as well as central banks have national mandates and responsibilities vis-à-vis their politicians and citizens. This was all fine in the so called good old days of closed national markets. Now, however, it may sometimes be in conflict with the ultimate goal of a single market in financial services. Some of the work needed in these areas has already been started. The Brouwer reports to the Ecofin well describe some of the difficulties. The BSC Task Force on Crisis Management has taken the first steps towards a more structured approach to crisis management of cross-border banking groups, through the signing of a Memorandum of Understanding. CEBS (Committee of European Bank Supervisors) is also trying to take on some of these issues, in particular regarding the convergence of supervisory practices.
Flexibility in working hours and in the retirement age gives each worker the opportunity to choose between work and leisure. This freedom to choose is a benefit in itself. However, the terms - wages,  10  BIS Review 20/2002  working hours and pension schemes - should reflect the value added of labour. Pension benefits should therefore depend on how long each person chooses to remain in employment. Many countries have evaluated and some countries have worked out changes in their pension systems to cover a higher portion of pension expenditure through accumulated capital, i.e. a funded system. Sweden has recently implemented a pension reform that ensures that annual pension benefits increase in relation to the number of years the person has worked. At the same time, an increase in life expectancy for each age group will reduce the annual pension. This motivates the person to remain in employment and helps to ensure that the system is sustainable. Due to the duration of the transfers to pension reserves in Sweden, the replacement of the former pension system by the reformed one requires a transitional period over several years. In Norway, the surpluses on the current account and the Government Petroleum Fund simplify any replacement of today’s pension system by a funded pension system. Labour is our most important resource. The decline in average hours worked cannot continue if we are to have a sustainable pension system.

The current evaluation of our public pension system must focus on the incentives to work and the effects on the average retirement age. A fund-based system may be an appropriate approach and at the same time make pension savings transparent for each individual. This may in itself provide an incentive to increase working hours. Thank you for your attention. BIS Review 20/2002  11
Targeting the price level directly, however, was generally considered not possible since the linkages between policy instruments and prices were somewhat uncertain and contained the long and variable lags. These problems led to two new issues which brought about a revolution in the approach to central banking. These are transparency and improved forecasting. Clearly, monetary policy is most effective in the presence of a firmly established nominal anchor, and the more understandable that anchor is to the public the better. An effective commitment to long-run price stability is just such a nominal anchor that the target rate of inflation communicates to the public the price level the central bank is aiming to achieve at specified dates in the future. Any move away from policy rules for long periods must face and deal with long and variable lags in the economy’s response to changes in policy stance. Improved modeling and forecasting is giving central banks increasing confidence in basing current policy decisions on expected future outcomes. When we sum up these developments in monetary policy, we need a monetary framework which includes the following components. It should be: •  transparent;  •  accountable;  •  predictable and easy-to-monitor; and  •  reliable. This is also why the IT (inflation targeting) countries introduced these institutional and operational features into their monetary policy frameworks. Before passing to the key issues for the success of IT regime, I would briefly like to focus on the basic key requirements of the inflation targeting framework in the literature.

Under an inflation targeting regime the central bank would be forced to calculate and publicize the long-run implications of its short-run actions, thus ensuring that they would be subject to public scrutiny and debate. To the extent that the central bank governors dislike admitting publicly that they may miss their long-run inflation targets, the existence of an inflation targeting framework provides an incentive for the central bank to limit its short-run opportunism. The advantage of the inflation targeting regime is its great emphasis on the regular communication with the public and transparency. This property plays an important role in the success of inflation targeting, particularly in the industrialized countries. The policy makers in the developed countries use every opportunity to communicate with public speeches, and takes a step further by way of inflation reports. Transparency and openness of the operating framework of monetary policy can bring important credibility gains, and institutional arrangements such as greater independence of the central bank can be helpful in this regard. European Central Bank and central banks in the EU zone are good examples for a model. Hence, it is perhaps not surprising that in many countries the adoption of official inflation targets has been accompanied by moves toward central bank independence and accountability. Nowadays, central banks are increasingly publishing information on their policies that they would have considered state secrets only twenty years ago, like minutes of board meetings and policy models.
But transmission through the exchange rate channel is uncertain and volatile, as the exchange rate is also an asset price that fluctuates with speculative capital flows and can deviate from equilibrium over time, only to correct quite suddenly. Unless the financial system is even better protected, this process can interact very badly with financial stability, as was the case in Iceland during the financial crisis. In its publications “Monetary policy in Iceland after capital controls” and “Prudential rules following capital controls”,2 the Central Bank has described the framework that it considers appropriate to replace the pre-crisis framework. Much of what is described in the two reports has already been put in place, but the final brushstrokes remain undone. We intervene in the foreign exchange market; i.e., we have a managed float and not a free-floating currency. We have adopted prudential rules that greatly reduce the banks’ opportunities to take risks with their foreign currency balance sheets. We have established a Financial Stability Council and a Systemic Risk Committee in order to monitor financial system risk more effectively than we did previously, and we are developing prudential rules and macroprudential tools to respond to systemic risk. This will make the conduct of monetary policy easier. And in addition, I hope that statutory amendments will be passed soon in order to put brakes on foreign-denominated lending to resident borrowers without foreign currency income and assets.

Már Guðmundsson: Monetary policy at a crossroads Speech by Mr Már Guðmundsson, Governor of the Central Bank of Iceland, at the Icelandic Chamber of Commerce Monetary Policy meeting, Reykjavík, 5 November 2015. *  *  *  Honoured chairman, ladies and gentlemen: The Iceland Chamber of Commerce has a decades-long tradition of holding a meeting like this one on economic developments and prospects and monetary policy. The meeting is held following the publication of the Central Bank’s autumn forecast and, in latter years, the Monetary Policy Committee’s interest rate decision. The title of my talk today is Monetary policy at a crossroads. These crossroads are, first, the disappearance of the slack in the economy and the development of a positive output gap, with the result that the task of monetary policy is no longer to stimulate GDP growth to the extent that the inflation target allows but to ensure that the tension in the economy does not cause overheating, which would jeopardise economic stability. The second crossroads is that, in recent months, the labour market situation has become much more serious than would have been anticipated given the state of the economy. The third lies in the unusual level of uncertainty about the inflation outlook, stemming from the interplay between domestic inflationary pressures and the global tendency towards deflation. And fourth is the recent rapid progress in solving the of the balance of payments problem Iceland has faced since the financial crisis struck and the approaching liberalisation of capital controls.
There was a net increase of about 6,900 jobs in financial services and FinTech in 2018, driven mainly by the banking and insurance industries.2 Over the last three years (2016–18), we saw an average of 4,900 financial services and FinTech jobs created on a net basis per year. This is above our ITM target of 4,000 net jobs growth in financial services and FinTech. 9 / 11  BIS central bankers' speeches  Hiring in the financial sector remains healthy so far this year and job growth is on track to meet the ITM target of 4,000. Sustaining this rate of job growth will not be easy in the face of technological change unless efforts are continually stepped up to upskill the workforce. As digitalisation and automation become more pervasive in the financial industry, jobs will be transformed. Some will inevitably be displaced. MAS, the financial industry, and our tripartite partners are taking this very seriously and undertaking a variety of measures to help prepare the financial sector workforce for a digital future. Last year, more than 20,000 individuals – or about one out of eight workers in the industry – went through MAS/IBF-supported upskilling programmes. Nineteen financial institutions have stepped forward and committed to re-skill close to 4,000 finance professionals and redeploy them in new or expanded roles over the next two years. Some 1,700 of them have already started this journey, and 800 have successfully transited into new roles. CONCLUSION Let me wrap up.

The financial crisis is a vivid reminder that there can be many risks to financial stability, and of the need for strong internal and external constraints on banks. Here, the “three pillars” of regulation, supervision, and bank culture must all play effective roles. Regulation establishes what is legally permissible for banks to do; supervision helps to reinforce those rules and evaluate whether the bank’s controls and other processes are conducive to safety and soundness; and bank culture sets the norms for what is appropriate behavior. 9 But, at the same time, these pillars are mutually reinforcing. Regulation and supervision, for example, attempt to address various market failures in banking that can contribute to excessive risk taking.10 Bank culture, in turn, helps establish norms in areas where regulation may be silent. In this way, regulation, supervision, and bank culture are complements, and deficiencies in any of these pillars can be problematic. For example, as we have seen in cases of unsafe or unethical behavior in recent years, strong regulation and supervision cannot substitute for deficiencies in bank culture—especially not on a timely basis. It is the public sector’s job to establish and enforce rules, but rules are inherently limited in their ability to constrain conduct and behavior. Much of our regulatory regime has been developed in response to financial problems that have arisen over time. Because regulation is typically reactive in this way, it may not always keep pace with the evolution of the financial system or the broader economic environment.