samchain/econo-pairs-v1 huggingface dataset:
Indeed, to some, the Hong Kong dollar increasingly sticks out like a sore thumb, but to others it is being seen increasingly as a pillar of stability in financial markets in the Asian region and an example of financial prudence. I hope you belong to the latter group of people rather than the former, but I fear that I may be expecting too much, for indeed it is quite natural when you do not have the chance to examine in detail an apparently controversial matter to be sceptical about it rather than to hang your faith in it. But my task today is, so to speak, to try and win you over. Exchange Rate Policy 3. Let me start with Hong Kong’s exchange rate policy. Here one is often attracted by the simplistic argument that Hong Kong, which prides itself as the freest economy in the world, should best operate with a freely floating exchange rate. I obviously do not subscribe to that view. Hong Kong, as you all know, is a highly externally oriented economy. Almost all our daily needs are imported, including for example the water from our tap at home and sand for construction. And almost all our manufactured products are exported. Furthermore, we are very much an entrepot, handling a large volume of re-exports1, supported by the largest container port in the world. And our service industries are also very externally oriented, providing financial and other services for the region, in particular for the Mainland of China.

In the past three decades, only a handful of countries have managed to achieve that status, and importantly, to sustain their position. In fact, the road to becoming a high-income economy is more difficult today, as countries are confronted with challenges and uncertainties like never before. According to the OECD1, the present landscape has “new rules, new environmental constraints, new technologies and more competition”. We will need to adapt to these changes, while managing other shocks that may come our way. What we don’t want is for the economy to take one step forward, only to be pulled two steps back. Along these lines, allow me to share four points on how Malaysia can more confidently transition towards a high-income economy. An economy centred on innovation My first point is on putting innovation at the centre of our economic development. Malaysia has come a long way. From being a commodities-based economy, we have diversified into high-end manufacturing and modern services. This helped us advance into a middle income economy in the early 70s. Yet, since then, we have struggled to achieve productivity- and innovation-driven growth needed to become a high-income economy. Even today, the deficit in the innovation capability of our economy remains. For instance: Malaysia does not spend enough on R&D. In fact we spend less than half of other frontier economies like Korea, Taiwan and Singapore. Our R&D efforts have focused on generating scientific knowledge, but less on applying that knowledge. This has resulted in low commercialisation of R&D.
To improve their public finances these countries are now implementing strict budget tightening, which is necessary to attain a stable long-term development in public finances. But at the same time, the budget constraints will in the short term subdue GDP growth, particularly in the euro area. (Figure: Interest rate differential against Germany). Concerns over losses in the banking sector The problems have also affected the banking sector. Banks normally include government securities among their assets, which means that they risk suffering losses if the countries to which they are exposed have problems managing their debt. As the public finances problems became increasingly acute in several areas during the spring, the market focused more on the exposures of the European banks to the countries with the greatest problems. The uncertainty over which banks risked making losses pushed up risk premiums on interbank loans. This was reflected in the basis spread, that is, the difference between the interbank rate and the expected policy rate. During the latter part of April and May the basis spreads in the euro market and the United States rose. (Figure: Basis spread). BIS Review 109/2010  3  One measure of how the financial markets assess banks’ credit ratings is the premiums paid for what are known as CDS – credit default swaps 1. High premiums here entail a high credit risk. During the spring the CDS premiums for the European banks rose, particularly in Greece and Portugal, but also in Spain and Italy.

in mortgages); the associated transactions produce a swap curve, which serves as a benchmark for pricing and valuing bonds and loans. To date, however, trading – and hence liquidity – in SARON swaps has been low. This will change once more SARON-based cash products become available. The successful transitioning away from Libor therefore hinges on the development of such products. Page 2/6  Berne, 12 December 2019 Andréa M. Maechler  News conference  In order for SARON to be used as the reference rate for cash products, a longer-term interest rate must be calculated from the daily rate. As early as 2018, the NWG recommended various options for calculating an average interest rate based on realised SARON values. This approach, known as compounding, is also gaining traction abroad. A wide range of options for calculating such average rates has been proposed and evaluated. At its latest meeting, the NWG was more specific and narrowed down its set of recommended options. 1 As a result, market participants can now begin embedding the compounding approach in products such as mortgages. In addition to new SARON-based cash products, solutions must be found for existing Liborbased products. Ideally, these will be replaced by new, SARON-based contracts. At the very least, the existing contracts must be furnished with fallback clauses, which will come into effect when Libor is no longer available as a reference rate. I should stress that it is evident that the Swiss franc Libor will cease to exist.
Given that the stock market constitutes an important part of our financial market, promoting the use of RMB in this segment would help drive underlying RMB FX, derivatives or financing activities and enrich the RMB product space in Hong Kong. What needs to be thought through, however, is how to drive the demand from both issuers and investors, and how to ensure price convergence and reduce the risk of market fragmentation if there are parallel counters in both RMB and HKD for Hong Kong-listed stocks. We hope to be able to come up with some practical suggestions soon. 17. The third factor that is needed is an efficient and robust infrastructure. The financial blueprint and plumbing underpinning our system is the unsung hero of our success as a financial centre. Without it, liquidity will be denied and product innovation will never leave the planning room. The RMB infrastructure in Hong Kong is the most developed one among the offshore markets. We have the RMB RTGS system in place since June 2007, and the daily turnover through the system now amounts to over RMB1.5 trillion, which is already larger than that of its HKD counterpart. The equities and bond clearing and settlement systems in Hong Kong also already have capabilities to process RMB transactions, and both are linked to the RMB RTGS system to achieve Delivery versus Payment settlement. 3/4  BIS central bankers' speeches  18.

Some of the ideas that I have just mentioned will take time to materialise. Some may need a testing ground to pilot before being scaled up. On this, the Guangdong-Hong Kong-Macao Greater Bay Area or Qianhai could function as pilot zones in the Mainland to test new crossboundary initiatives with Hong Kong. The Wealth Management Connect is a case in point. Conclusion 21. Ladies and gentlemen, what I have presented to you is a very brief summary of our thoughts on the role of Hong Kong in promoting the international use of RMB, but even that, I am sure you will agree, is already quite a menu. And we are already actively exploring some of these policy initiatives with our Mainland counterparts. But we cannot do it all on our own. While we need to create the necessary policy headroom, the market should be the one driving the process of RMB internationalisation. The active participation of market players is critical. I would therefore warmly welcome views and suggestions from Members of TMA and its subcommittees on ways to enhance the liquidity, to expand the product diversity and to build an efficient infrastructure in order that we can further develop the role of the Hong Kong markets in the process of the internationalisation of the RMB. 22. With its 76 institutional members and over 3,000 individual members, the TMA has been providing broad-based support to foster market development in Hong Kong. We believe the HKMA and the TMA’s relationship can also be a mutually beneficial one.
The upswing in the global economy spread to the Norwegian economy through strong export growth and higher prices for Norwegian exports. At the same time, demand in the sheltered sector remained buoyant. There was also slippage in government budget spending allocations throughout 1999. Private consumption continues to rise, fixed investment is increasing in service sectors, and unemployment remains low. The decline in petroleum investment is necessitating restructuring and lower production levels in some Norwegian manufacturing sectors. Developments so far indicate that this turnaround has been offset by continued high employment growth in the public sector, private services and non-petroleum-related manufacturing. Chart 10 Wage shares by industry Labour costs as a percentage of factor income  However, enterprises’ financial position is vulnerable. The growth in labour costs in the latter half of the 1990s left its mark on profitability. Both in manufacturing and other industries, labour costs as a percentage of factor income have increased since the mid-1990s. The analysis in the June 2000 Inflation Report indicates that consumer price inflation in 2001 and 2002 may exceed levels which are consistent with exchange rate stability over time. The risk of rising wage and price inflation has increased, while there now appears to be little risk of a pronounced recession over the next two years.

On the basis of developments in the Norwegian economy and the future outlook, Norges Bank raised its key rates by 0.25 percentage point as of 13 April, by 0.5 percentage point as of 15 June and by 0.5 percentage point as of 10 August. As already mentioned, this represents a substantial step in the adjustment of the interest rate that is appropriate on the basis of the analyses in the June Inflation BIS Review 67/2000  10  Report. However, in the light of recent trends in the economy and the balance of risks, the probability that the next change in interest rates will be an increase is greater than the probability of a reduction. Coordination of economic policy The experience of the 1970s and 1980s shows that, in the long term, monetary policy is not suitable for influencing competitiveness or the size of the internationally exposed sector. Any attempt to do this through the use of monetary policy instruments will inevitably lead to instability. However, fundamental real economic forces of this kind can be shaped through the use of fiscal policy. Although monetary policy is not suitable for influencing competitiveness, exchange rate fluctuations may provide an early warning that the internationally exposed sector is on the verge of losing or gaining strength in the contest for economic resources. A sound basis for exchange rate stability is a fiscal policy which manages to smooth fluctuations in domestic demand and production, coupled with well functioning income determination.
The other path would be to expand the range of financial intermediation activity that is directly backstopped by the central bank’s lender of last resort function. This expanded range  16  Although the largest stand-alone securities firms adopted bank holding company status during the crisis, their non-depository institution arms do not have access to the discount window backstop because Section 23A of the Federal Reserve Act restricts the ability of the holding company to transfer assets from the non-depository institution to the commercial bank affiliate that has access to the discount window. 17  See Daniel K. Tarullo. 2012. “Industry Structure and Systemic Risk Regulation”. December 4. http://www.federalreserve.gov/newsevents/speech/tarullo20121204a.htm. In this speech, he explores three policy proposals: (1) breaking up large financial institutions by reinstating Glass-Steagall restrictions or by imposing other prohibitions on affiliations of commercial banks with certain business lines; (2) placing a cap on the nondeposit liabilities of financial institutions; and (3) requiring financial institutions above a specified size to hold minimum amounts of long-term debt available for conversion to equity to avoid or facilitate an orderly resolution of a troubled firm  8  BIS central bankers’ speeches  could be defined either in terms of access by the types of firms that are systemically important in market-based finance, or by types of activity or assets. It is worth pausing here to review in a little more detail the two key functions performed by a lender of last resort.

As the concerns about the U.S. housing market escalated in 2007, participants in the tri-party repo market became increasingly concerned about the liquidity and credit risks that they faced. The clearing banks became uncomfortable with their large intraday exposures to their tri-party securities firm customers. After all, if a securities firm were to fail suddenly, the clearing banks could be stuck with huge loans to these counterparties, secured by securities that were not necessarily high quality and liquid. Thus, as the condition of the most troubled securities firms deteriorated, there was a risk that one morning a clearing bank might decide not to unwind a firm’s tri-party transactions in order to avoid a large intraday exposure. 6  The problem was particularly acute for those firms with large securities trading and over-the-counter derivative businesses operated outside of depository institutions. In the United States, even those securities firms that were part of bank holding companies were vulnerable because Section 23A restrictions in the Federal Reserve Act that govern transactions between the bank and the nonbank affiliates as part of a bank holding company complex sharply limited what assets the securities firm could pass through to the bank and on to the Fed’s discount window facility. 7  In the unwind, cash was transmitted back from securities firms to wholesale investors each morning, to hopefully be reinvested and returned back to the securities firms by the end of the day to finance their inventories of securities.
Given the stronger focus of financial regulators on conduct and culture, such professional codes will matter greatly going forward as an important complement to regulatory standards. The FSPB is well placed to lead and support initiatives to establish standards of conduct for the financial industry. Its standards not only serve as useful frameworks for financial institutions and professional bodies to develop specific guidance for their own employees and members; they also serve to embody the industry’s collective commitment to socially responsible values and 1/3  BIS central bankers' speeches  ethics. For example, I noted with interest that the Professional Code being launched today commits to dealing with counterparties, including suppliers and agents that “subscribe to sound ethical principles”. Matters such as the environmental footprint or human rights record of third party providers are not typical obligations currently found in regulatory standards, yet, these are matters of great importance. They are a reflection of the values of the industry, and they matter to many conscientious consumers in this age of increasingly accessible information. Given the central role of financial services in any economy, these are issues likely to move from the periphery to increasingly important business considerations. At the global level, we are already seeing greater attention given to sustainable and responsible finance. In many cases, it will require the industry to draw on experience beyond the traditional core competencies of most financial services providers.

Finally, before I leave the banking system, I want to highlight one piece of good news in recent market developments. We have had a number of incidents of extreme market volatility over  2  BIS central bankers’ speeches  the past year or so – the removal of the Swiss Franc peg; a 30 basis point fall within 90 minutes in UST yields on 15 October 2014; the so called ‘Bund tantrum’ earlier in the year; and the seizure of US equity markets this summer, against the backdrop of news about China. These have raised a number of issues about changes to market structure and market liquidity. But the one dog that has not barked, however, is the transmission of the shock from these market events to the core banking system that support markets. For example, the reaction in UK banks’ CDS premia to these disruptions has been small and not out of line with broader market movements. I would put this down in no small part to the reforms of bank capital and liquidity that have made banks more resilient. So while money was lost in these market episodes and some people had a very bad day at the office, they did not cause wider shocks in the banking system. And that leads me in to the other subject I want to talk about today – the changes we are seeing in the liquidity of financial markets, which some indeed ascribe to reforms of the capital and liquidity standards in the banking system.
In the labour market, this implies taking a view on what influences the relative bargaining power of employees and employers. Candidates include: the evolution of unemployment (perhaps relative to some equilibrium measure of unemployment);[26] the extent of mismatch in the labour market (as reflected in measures like the ratio of vacancies to unemployment);[27] and the pace of churn in the labour (captured in measures of hiring and vacancies). In goods markets, the relative bargaining power of firms along value chains will be influenced by factors such as: the strength of demand and thus corporate pricing power; the intensity of competition among firms; the barriers to entry and exit from specific market segments; and the regulatory regime. Monetary policy makers need to form judgments on the relative importance of each factor and thus take a view about how they influence the responsiveness of intrinsic inflation persistence to monetary policy actions. These issues therefore lie at the heart of current MPC discussions. Indicators of inflation persistence While I have emphasised the importance of constructing a behavioural story in forming judgements about inflation persistence, in practice real time assessments will rely on how the data flow is interpreted against those judgements. At its March meeting, the MPC again identified the tightness of the labour market, the strength of wage developments and the momentum in service price inflation as the key indicators it uses to assess the magnitude and evolution of inflation persistence, on which it has placed considerable weight in taking monetary policy decisions.

This is what creates the potential for the ‘second round effects’ that seek to avoid the real cost of higher energy prices to sustain above target inflation even as the original impulse to headline inflation from the direct effect of higher energy prices on household utility bills recedes. [24] In other words, the level of energy prices is likely to have implications for how much intrinsic inflation persistence exists in the aftermath of an energy price shock. If a rise in energy prices in seen as permanent, it is more likely to trigger greater intrinsic inflation persistence. And the greater the proportion of any energy price rise that is seen as being lasting rather than temporary, the greater the intrinsic inflation persistence that is likely to follow. Page 9  Making assessments of this type is particularly important at present. Headline inflation is set to fall sharply in the coming months, both because the big contributions from energy price rises last year will drop out of the annual calculation and because wholesale gas prices have reverted of late. But the level of energy prices remains well above pre-pandemic levels, so the scope for some sustained momentum in inflation stemming from greater intrinsic inflation persistence exists.
The centrepiece of the supervision of significant banks will be the Joint Supervisory Teams, responsible for the day-to-day oversight of these banks. These teams will be made up of specialists from the ECB and from the national authorities, under the leadership of a coordinator designated by the ECB, and a sub-coordinator designated by the national supervisor. Approximately 75% of those making up the teams will be drawn from and designated by the national supervisors; in the case of Spanish banks, it will of course be staff from the Banco de España. Inspection visits to significant banks, what is known as on-site inspection, will continue to be conducted by the national authorities, and their results will be passed onto the ECB for the adoption of the appropriate measures. With regard to the less significant banks, national authorities will continue to directly supervise them as they have to date. Over 3,600 banks across the euro area are involved here. The ECB will define common practices and criteria, it will monitor the actions and position of these banks and it will always be entitled, if it considers it necessary, to re-claim direct supervision over any of these banks. 2  BIS central bankers’ speeches  The competences and responsibilities of the Banco de España in the framework of the new Mechanism I would now like to address the competences and responsibilities of the Banco de España, as a national supervisor, under the new Mechanism.

Anita Angelovska Bezhoska: Opening address - Fifth Meeting of the Regional Working Group for Financial Education of Southeastern Europe Opening address by Ms Anita Angelovska Bezhoska, Governor of the National Bank of the Republic of North Macedonia, at the Fifth Meeting of the Regional Working Group for Financial Education of Southeastern Europe, Skopje, 27 September 2019. * * * Distinguished representatives of the central banks, Dear representatives of international institutions, Dear guests, ladies and gentleman, It is my great pleasure to give the opening address at the Fifth Meeting of the Regional Working Group for Financial Education of Southeastern Europe, hosted by our national bank. I am more than certain that joint fora, such as this one, are important venue for raising our awareness and knowledge on matters of mutual interest. And, there is no dilemma that financial education, as a spotlight of this working group, is an issue of mutual interest gaining prominence and importance among all stakeholders – central banks, regulators, financial services providers, consumers. We are all faced with rapidly evolving financial landscape, in which being knowledgeable means being capable of reaping the benefits and mitigating risks. Now allow me to shed some light on a couple of important dimensions such as relevance of the financial literacy and the benefits it brings to the society, the specific circumstances that brought this issue to the fore in the last decade, the role played by the central banks in this segment, the current state and the challenges ahead for the region and our country.