samchain/econo-pairs-v1 huggingface dataset:
4  BIS central bankers’ speeches  policymaker with an equal-sized loss as a 9% unemployment rate against a conservative estimate of 6% for the natural rate of unemployment. (I call this conservative, because while we think a number of factors such as increased job mismatch and extended unemployment insurance benefits have temporarily boosted the natural unemployment rate in the U.S., these factors are not expected to persist in the long-run). There also is an immediate corollary: If you aren’t as riled up over 9% unemployment as you would be over 5% inflation, then you either put even less weight on unemployment deviations in your loss function or you think that the natural unemployment rate is substantially higher than 6%. I’ll address the latter possibility later. However, I now want to turn to reasons why the challenges to policymaking in the current situation are orders of magnitude larger than those we face during more normal times. To preview, these are because: (a) we find ourselves in the aftermath of a Reinhart-Rogoff type financial crisis, which has resulted in severe headwinds weighing on the recovery process; (b) the economic costs of the vast amounts of unused resources in the economy are very large; and (c) the zero lower bound is a constraint on standard monetary policy actions, requiring a broader monetary policy framework if we are to provide more policy accommodation.

With this regard, we need to further promote financial cooperation and more trade and investment facility arrangements such as today’s initiative. Ladies and gentlemen, 9. I would like to emphasize that there are still untapped opportunities abound along the whole spectrum of exchanges and cooperation between Thailand and China. As to give you food for thought, the followings, are a few examples. Firstly, regional supply chain network. Our region has already been regarded as high quality and cost-effective production bases. However, there is still gap to be filled and opportunity to be grasped. Since many economies in the region are not well integrated into the regional production networks. According to the latest World Bank’s Trading Cross Borders indicator which measures the time and cost of trading across borders, the newer member of ASEAN all score well below the ASEAN average. This is mainly due to the huge gaps in infrastructure. 10. Here, we can narrow the gap by mobilizing our region’s abundant financial resources into infrastructure investment. In this regard, China plays a strategic role in the progression of infrastructure development in our region. The improved infrastructure will allow regional economies at various stages of development to participate in regional production networks in line with their evolving comparative advantage. Infrastructure investment is costly but it is worth the expense. 11. Secondly, research and technical development. Although China has emerged into the world centre stage in just recent decades, China is now a world class technology lab who owns the broad range of advanced technologies.
You will recall that the overnight rate reached 280% on 23 October 1997. Although the overnight rate quickly subsided, term rates remained high for some weeks thereafter and the stock market experienced considerable volatility and property prices fell. Renewed exchange rate pressure in January again saw interest rates spike upwards, though the reaction this time was less severe. Nonetheless an inverse yield curve persisted during much of January with the interbank rates higher than the prime lending rate. Also during this period, the banks have had to contend with the blows to confidence from continuing regional upheavals, most notably the liquidity crisis in Korea around the turn of the year and the dramatic events in Indonesia which are still being played out. Coupled with mounting evidence that the domestic economy is slowing down, it is not surprising that the banks in Hong Kong are going through more difficult times. The severity of the Asian crisis is a once-in-a-lifetime event and no banking system in the region can hope to be unaffected by it. There is bound to be an impact on the banks’ funding and liquidity, their loan growth, their asset quality and ultimately their profitability. Apart from the effect on individual banks, the Asian crisis will also have repercussions on Hong Kong’s position as an international financial centre, given that so many regional and international banks affected by the crisis are based here. How precisely has the Asian crisis impacted on banks in Hong Kong?

This is a “belt and suspenders” approach to capital regulation. The leverage ratio will help contain the buildup of excessive leverage in the system, serving as a backstop to the risk-based regime and safeguarding against banks’ attempts to “game” the risk-based requirements. Equally critically, the risk-based framework helps ensure that banks do not game the leverage ratio. Let’s not forget that simple measures like a leverage ratio have been in place in the past and did not alone prevent banking failures. BIS central bankers’ speeches  1  Risk-weighting is difficult but vitally important. Therefore the Basel Committee is in the process of reviewing the risk-weighting regime of the capital framework to ensure that it is as simple and comparable as can be while still capturing the risk profile of banks’ varied asset portfolios. Complexity is a byproduct of the desire, among regulators and banks, for risk sensitivity. Risk measurement will never be perfect. Simplicity, however, can sometimes come at a cost. Ignoring risk does not make it disappear. Without measuring risk properly, we may allow it to build up undetected. Operating only with a non-risk-based leverage ratio creates incentives to shed safe assets and to increase the riskiness of asset portfolios; to forgo risk-reducing hedging strategies because they could result in higher capital requirements; and to engage in off-balance sheet activities and other sophisticated structures that expose a bank to contingent risks. This is likely to increase the aggregate risk in the economy and thereby create global financial stability concerns.
Closer to home, SGX-listed companies have had their fair share of failures in corporate governance. BIS central bankers’ speeches  1  7. The answer does not lie in even more rules. We must now focus on changing behaviour and building capabilities, to make the recent reforms meaningful. Let me highlight three areas: •  one, strengthening market discipline  •  two, building Board competencies  •  three, instilling the right values  Strengthening market discipline 8. Let me begin with market discipline – the process by which stakeholders apply effective scrutiny on a company. The key enabler for market discipline is disclosure. We have put in place, in the SGX listing rules, the necessary requirements for disclosure to be ongoing, timely, and accessible. But for disclosure to enable effective market discipline, it must also be meaningful. 9. Meaningful disclosure is especially important given that our Code is non-mandatory. We have adopted a “comply or explain” approach so that we can pitch the expectations at the level of best practice while allowing companies the flexibility to deviate from these expectations if their particular circumstances warrant it. But companies must explain publicly the reasons for any such deviations so that the market can judge. 10. Unfortunately, disclosures being made by companies deviating from the Code are often uninformative. Let me give an example.

As more plantations embrace sustainability practices, this will enhance the industry’s international reputation and may even elevate Malaysia to be a global leader in sustainable palm oil. At the same time, the income and livelihood of smallholders would also improve as their outputs benefit from better market access upon being certified. DFIs could consider adopting the Value Based Intermediation Assessment Framework or VBIAF sectoral guides on palm oil6, developed by the Islamic financial industry which provides guidance on overlaying credit or investment decisions with ESG considerations. Thirdly, DFIs can onboard or nudge plantations to work towards enhancing the living conditions of estate workers by incorporating this as part of the credit assessment process. This ensures palm oil plantations meet the basic needs of workers i.e access to safe drinking water and proper housing. This is a specific use case where sustainable finance can contribute towards strengthening Malaysia’s sustainable economic growth but in order to execute this well, DFIs need to work with other partners across the public and private sectors, which leads me to my next point. DFIs should be creative in designing innovative funding structures and solutions that leverage on the capacity of the private sector and knowledge from other partners, including peers and the Government. 2/5  BIS central bankers' speeches  DFIs are often constrained by the size of their balance sheet or capital and take on outsized risks in specific sectors in serving their mandates.
However, in some situations it may be necessary to allow a little longer time than two years for inflation to return to target, in order to avoid causing unnecessary fluctuations in the real economy,” continued Mr Öberg. “My experiences of forecasting work are that there is considerable uncertainty linked to longer-term forecasts. This makes it important to take into account different types of risk when making monetary policy decisions. One risk that I envisage is connected with the strong developments in the real economy – the strong growth and rapid increase in employment. We will probably attain a fairly normal capacity utilisation level in the labour market in the not too distant future, while the central wage agreements for the greater part of the labour market will be renegotiated next year. In the February Inflation Report, underlying domestic inflation was calculated at up to 3 per cent at the end of the forecast period, which reflects an expectation of relatively high domestic cost pressures,” said Mr Öberg. “In my opinion, there can be some risk that the expansionary monetary policy will overly reinforce the economic upswing and allow domestic prices and costs to rise. It could have more long-term consequences for price-setting and wage formation. The policy rate is still below what can be regarded as an average figure over a long period of time. The question is at what pace it should be raised to a more normal level. This will in turn depend on how the economy develops,” considered Mr Öberg.

I shall here take up three aspects of flexible inflation targeting: measures of inflation, taking consideration of developments in the real economy and taking into account financial developments,” said Mr Öberg. “Monetary policy is guided by various measures of underlying inflation. There is no single measure of inflation that at each point in time indicates the proper stance of monetary policy. The Riksbank can choose to disregard effects that contribute to inflation deviating temporarily from the target. This occurs on a regular basis with regard to, for instance, indirect taxes and household mortgage interest expenditure, as well as supply shocks that are assessed as temporary. In practice, monetary policy today is mainly based on one measure of underlying inflation, UND1X,” observed Mr Öberg. “The Riksbank also takes into account developments in the real economy when making monetary policy decisions. In the preparatory works for the Sveriges Riksbank Act, it was stated that the Riksbank, without prejudice to the price stability target, should support the goals of general economic policy with a view to maintaining a sustainable level of growth and high rate of employment. If a disruption were to contribute to inflation deviating substantially from target, it is a question of judgement as to how quickly it should be returned to 2 per cent. Normally, monetary policy aims to attain the inflation target within two years.
Such risks, and the fact that they were not addressed, played a major role in the run-up to Iceland’s financial crisis. We have tried to learn from this. In addition, it is clear that small open economies that are financially integrated with the rest of the world face increasing difficulties in pursuing independent monetary policy without jeopardising financial stability if they adhere to conventional economic and prudential policies. To solve this problem, it is not sufficient to have a floating exchange rate. Additional tools and measures must be applied. Among them are foreign exchange market intervention, conventional macroprudential tools, and rules that limit foreign exchange mismatches in domestic balance sheets. Conditions could arise, however, where this would not suffice, and then it could prove necessary to activate capital flow management measures like the special reserve requirement that we have used in the recent past. This mainly occurs when the exchange rate is higher than is warranted by economic conditions, international reserves are ample, and the economy is on the verge of overheating. Under such conditions, it is difficult to use exchange rate flexibility, foreign exchange market intervention, or interest rates to counteract capital inflows. The next challenge is to ensure secure, efficient, and economical payment intermediation. Last year the Central Bank issued a report on retail payment intermediation from the standpoint of contingency and financial stability. It discusses important public interests.

28 March 2019  Speech Már Guðmundsson, Governor of the Central Bank delivered at the 58th Annual Meeting of the Central Bank of Iceland, 28 March 2019  Prime Minister, other ministers, Chairman of the Economic Affairs and Trade Committee and other members of Parliament, bank directors, foreign ambassadors, other honoured guests! This is the last speech I will give at the Annual Meeting of the Central Bank of Iceland, as I will step down as Governor this August, as is provided for by law, after ten years in the position. I would therefore like to focus on matters other than current tasks relating to monetary policy, financial stability, and other Central Bank functions, but it is unavoidable to make an assessment of the most recent events. I will focus on two main areas. First of all, I would like to take a backward glance at developments in the Icelandic economy and financial system over the past ten years. In this context, I will give my assessment of how successfully the Central Bank has achieved its objectives. The published and printed versions of this speech will include selected charts that illustrate economic developments over the period. Second, I will take a look at the future and discuss several challenges in connection with the Central Bank’s tasks and objectives. Let us now cast our minds back to mid-2009. At that time, Iceland was in the midst of its severest economic contraction since World War I, a century ago.
11  Looking further ahead, developments in global financial markets will have a considerable impact on the GPFG. Higher inflation and signals that interest rates will be raised faster than markets expected have recently made investors uneasy. The long equities bull market may be nearing an end. In a transitional period, higher interest rates will also reduce the value of the GPFG’s fixed income portfolio. NORGES BANK ECONOMIC PERSPECTIVES 17 FEBRUARY 2022  Developments ahead may also be marked by demographic changes, tension between countries and lower global trade integration. Moreover, we are facing a necessary transition to a low-carbon economy. Whatever happens abroad will still leave its mark on the GPFG. No investment is completely safe, as history has shown. In 1904, the Norwegian government set funds aside in the State Reserve Fund to be used only “in extraordinary circumstances or in an emergency”. When it was dissolved in 1925, it was nearly empty. Creative accounting must take some of the blame. Yet it didn’t help either that it was invested in only a few assets – mainly UK, French and German government bonds – investments regarded at the time as absolutely safe. After the First World War, the value of German and French government bonds was close to zero, wiping out much of the State Reserve Fund’s assets.5 The investment strategy behind the GPFG stands in stark contrast. The fundamental principle underlying the strategy is risk diversification. This lessens the potential for an across-the-board value decline in GPFG assets.

(2016)  10  8  8  6  6  4  4  2  2  85  Weaker competitiveness  1925  10  ECONOMIC PERSPECTIVES 17 FEBRUARY 2022  1927  1928  1929  0  0 1924  1925  1926  1927  1928  1929  Source: Grytten (2008)  Source: Grytten (2008)  The events around the time of the first annual address raised issues that are still relevant today. What is the role of the central bank, and how far does it extend in normal times and at times of crisis? NORGES BANK IS BANKER TO THE BANKS The central bank’s overarching goal is to promote economic stability. That lies at the core of our mission to serve the public interest. Low and stable inflation is a precondition for economic stability. Other important preconditions are stability in the financial system and a safe and efficient payment system. The banks’ settlement system, the very core of the payment system, is operated from the central bank. Norges Bank is banker to the banks. Banks can turn to us as lender of last resort when other credit channels dry up. Norges Bank conducts continuous oversight of the financial system. When large shocks hit the economy, our workday abruptly changes. The central bank then takes on a key role in stabilising the markets. Shocks stem from various sources. In the 1920s the problem was insolvent banks. The 2008 financial crisis engulfed the entire global financial system.
Lars Nyberg: Financial disturbances and the real economy Speech by Mr Lars Nyberg, Deputy Governor of Sveriges Riksbank, to Danske Securities, Stockholm, 11 March 2002. *  *  *  I would like to begin by thanking you for the invitation to come here to Danske Securities and speak to you, who are at the real heart of the financial sector, but also heavily dependent on occurrences in the real economy. In my speech today I intend to concentrate mainly on the relationship between developments in the real economy and financial developments, as it has looked in the past and as it may look in the future. The Riksbank's two objectives, maintaining price stability and promoting efficiency and stability in the payment system in a broader context, have both real economy and financial aspects. The objectives are more closely linked than might be thought initially. Turbulence on the financial markets has repercussions for economic activity and developments in the real economy and thus great significance for the shaping of monetary policy. It is difficult, if not impossible, to pursue an effective monetary policy when the financial markets are functioning inefficiently. At the same time, price stability and stable, low inflation expectations help to create security and stability in the financial markets. This far it is quite simple. It is rather more difficult to make an in-depth survey and understand the relationship between the financial and the real economies.

However, there is a risk that the complexity of these instruments will increase the difficulty of seeing to which credit risks companies and banks are actually exposed. 2  BIS Review 18/2002  The complexity of the financial instruments and the fact that they are often found, in various forms, on both the asset side and the liability side of companies' balance sheets as well as "off balance sheet", makes it difficult to detect the financial risks within banks and companies. This is particularly serious as an increasing number of households have their savings in these companies' shares, but nor is it easy for professional analysts and portfolio managers to see. The collapse of the American company Enron can serve as an example of the problems connected with the development of complicated financial instruments. A lack of understanding of the instruments used and a lack of transparency in the company's accounting meant that directly after the collapse there was considerable concern over possible contagion effects. Here I do not mean the evident breach of the regulations in force, where auditors burn documents and senior managers sell shares in the company prior to publishing negative information. Enron raises a number of other, in the long term more fundamental, issues. Today, I shall limit myself to discussing three of these. Firstly, Enron was basically an energy company, which in time came to pursue financial operations on a large scale, but without coming under the supervision to which financial companies are normally subjected.
The “comply or explain” principle is a powerful tool In my view, the ESRB has had a better start than might have been expected, given its size and composition. It has focused not only on identifying risks, but also on suggesting how to handle them. And the risks discussed have been the relevant ones, in spite of their political sensitivity. Certainly, a lot remains to be done before the ESRB will have established its working procedures. And it remains to be seen what it will be able to produce under normal conditions, out of the present crisis mode. But, properly managed, it should develop into a useful institution, forcing countries and authorities to act in time to avoid difficult and dangerous situations. Comply or explain is a powerful tool, if respected. BIS central bankers’ speeches  7

Although economic developments are favourable, inflationary pressures remain low. Moreover, the Swiss franc remains highly valued and the situation on the foreign exchange market is still fragile. Against this backdrop, the contours of a ‘new normal’ are emerging for central banks. While there are still many significant unknowns in the political, geopolitical and economic arenas, one thing is certain: the environment in which the central banks operate has evolved considerably, mainly due to structural changes. Some of these changes had already begun well before the crisis, but they have accelerated in the intervening period. I am thinking here of the digitalisation of the economy, for example, as well as the emergence of new technologies on the financial markets. In this speech, I would like to outline how the SNB has had to adapt – and continues to adapt – to make sure it is always in a position to fulfil its mandate.