samchain/econo-pairs-v1 huggingface dataset:
It is now over a year since the Occupy movement commenced its journey and entered the collective conscience of the public and policymakers. One year on, what has it achieved? Some have suggested rather little, that Occupy’s voice has been loud but vague, long on problems, short on solutions. Others have argued that the fault-lines in the global financial system, which chasmed during the crisis, are essentially unaltered, that reform has failed. I wish to argue tonight that both are wrong – that Occupy’s voice has been both loud and persuasive and that policymakers have listened and are acting in ways which will close those fault-lines. In fact, I want to argue that we are in the early stages of a reformation of finance, a reformation which Occupy has helped stir. Let me start with the contribution of the Occupy movement itself. Occupy has been successful in its efforts to popularise the problems of the global financial system for one very simple reason: they are right. By this I do not just mean right in a moral sense. For sure, Occupy have touched a moral nerve in pointing to growing inequities in the allocation of wealth and incomes globally. The 99% certainly agrees. But so, more interestingly, do a high and rising share of the 1%. Yet it is the analytical, every bit as much as the moral, ground that Occupy has taken. For the hard-headed facts suggest that, at the heart of the global financial crisis, were and are problems of deep and rising inequality.

At the same time, the ballooning of trading activities was starving basic banking of resources. In consequence, the offering to bank customers became a rather different one. The humble, regional loan officer was pensioned-off, replaced by a centralised credit risk model which neither answered back nor required a pension. Branches were closed in an effort to contain costs. Banking became a transactional business, underpinned by a sales-driven, commission-focussed culture. The down-escalator Nonetheless, as long as asset prices were rising, the cheap credit strategy seemed to be working like a dream. For those who had borrowed, debt was being inflated away, not by the traditional route of goods price inflation but by asset price inflation. The world was experiencing the biggest bank bubble, perhaps in its history. In 2007, that bubble burst. Asset prices and balance sheets collapsed. The dream turned into a nightmare, as asset price deflation combined with high debts to put many balance sheets underwater. As the most leveraged institutions on the planet, banks were deepest underwater. To prevent those institutions sinking without a trace, governments were forced to ride to the rescue. This support came from both governments and central banks, in both cases underpinned by the tax-payer. All in, this support to the financial sector amounted to perhaps as much as two-thirds of annual GDP in the UK and US, somewhat less (but still rising) in the euro-area. Those government transfers were not shared equally even across the financial sector, with a strong skew towards institutions deemed too-big-to-fail.
On our part, we will do all we can, using all monetary instruments at our disposal, to contribute to reducing inflation and therefore, interest rates. As regards the exchange rate, this refers to the price of one currency in terms of another. In our case, it refers to the relative price of the kwacha against other currencies. The price of the kwacha against other currencies is directly determined by supply and demand conditions in the foreign exchange market and indirectly through the conduct of monetary policy. To improve the operations of the foreign exchange market, the Bank of Zambia developed the broad-based inter-bank foreign exchange system where suppliers (traditional and non-traditional exporters) and users (importers) of foreign exchange can trade transparently. Following the introduction of this system, there has been a significant improvement in the supply of foreign exchange on the market owing to the confidence in the system by market participants, efficient flow of information among all players and improved external sector performance brought about by increased copper output and unprecedented high world copper prices in recent times. These developments have contributed to the relative stability of the kwacha against major currencies and thus moderating inflationary pressures. In addition, the containment of growth in money supply has contributed to this outcome. Furthermore, the anti-dollarisation campaign that the Bank of Zambia waged some two and half years ago has had an equally important role to play in the observed relative stability of the kwacha against major currencies.

Caleb M Fundanga: Monetary policy issues and the process of foreign payments Presentation by Dr Caleb M Fundanga, Governor of the Bank of Zambia, at the Zambian Heads of Missions Briefing Seminar, Lusaka, 19 July 2005. *  *  *  The Hon. Minister of Foreign Affairs, Lt. Gen. Ronnie Shikapwasha, MP Hon. Deputy Minister of Foreign Affairs Permanent Secretaries Your Excellencies, High Commissioners and Ambassadors Senior Government Officials Distinguished Invited Guests Ladies and Gentlemen It is an honour for me to be here this morning to talk to you on the topic of “Monetary Policy Issues and the Process of Foreign Payments”. This topic provides me with an opportunity to explain the role of the Bank of Zambia in the economy and the process of foreign payments which has been a topical issue. As you may be aware, the Bank of Zambia’s mission is to formulate and implement monetary and supervisory policies that will ensure price and financial system stability. However, in line with the topic above, my presentation this morning will focus on the first aspect of the mission of the Bank, namely, price stability. There are generally three prices of major concern to the Bank of Zambia. These are general prices of goods and services, interest rates and the exchange rate of the kwacha against major foreign currencies. I will now deal with each of these in turn. The central bank deals with general prices of goods and services in the context of inflation.
10  In addition to these cyclical risks, macroprudential policy is also assumed to need to manage what are referred to as structural risks, or cross-section risks, see the Riksbank (2012). The latter concern financial companies having become so closely interwoven and the degree of concentration in the financial system so high that if problems arise in one area they risk spreading rapidly. The effects on the real economy will be similar to those in Figure 1. Of course, these risks may also change over time. 11  Financial Crisis Committee (2013). Parts of macroprudential policy are also discussed in Swedish Government Official Reports (2013), Förstärkta kapitaltäckningsregler[Stronger capital adequacy rules], which was presented on 16 September. The potential design of a Swedish macroprudential framework is also discussed by Goodhart and Rochet (2011), Bryant, Henderson and Becker (2012) and Vredin, Flodén, Larsson and Ravn (2012). 12  The Riksbank (2013). 13  Ministry of Finance (2013). 8  BIS central bankers’ speeches  Interplay between macroprudential and monetary policy important to consider In principle, of course, if monetary policy were initially to try to stabilise both the business cycle and the credit cycle, and there arose a new policy area focusing on the latter – then this would almost by definition ease some of the earlier pressure on monetary policy. But even if we have now made some progress in attaining a framework for macroprudential policy, there are some questions of principle that still need consideration.

To an outsider, that may not sound significant – indeed, some might reasonably ask why the Committee wasn’t already doing this – but it is notable if only as an idea that the Committee had previously considered and rejected on more than one occasion. Indeed, in his authoritative history of the Committee’s early years, Charles Goodhart notes that, as far back as 1983, there was discussion whether the Committee might also monitor the practical application of agreements. At the time, though, this was seen as somewhat awkward and a step too far. That the Committee now has just such a mandate shows that the commitment to consistent international regulation is undiminished – indeed, it is stronger than it has ever been. Let me conclude by once again welcoming you to Basel, particularly those of you who have played a role in the Committee’s earlier years – we hope that returning here brings back many good memories. For the current Committee members, it is a wonderful opportunity to learn from the wisdom of those who have grappled with these issues before us. We also hope to hear some different perspectives, from the banking industry, and from academia, on the challenges and opportunities that face the Committee. I am therefore looking forward to some productive – and hopefully provocative – discussions this morning. BIS central bankers’ speeches  3
4  Van Beers, N., Bijlsma, M. and Zwart, G., “Cross-country insurance mechanisms in currency unions: an empirical assessment”, Bruegel Working Papers, 2014/04, 2014; International Monetary Fund, “Towards a fiscal union for the euro area: technical background notes”, September 2013, available at http://www.imf.org/external/pubs/ft/sdn/2013/sdn1309tn.pdf. BIS central bankers’ speeches  3  The design of a capital markets union – regulatory harmonisation and institutional efficiency The Commission will soon present a first proposal on what a capital markets union could look like in practice. This proposal will then be submitted for public consultation. The details are not yet known, but I would like to share with you some of my ideas about an effective capital markets union. For me, the term “capital markets union” means more than simply tinkering with existing regulation. It means addressing areas that are politically sensitive as well, such as disclosure requirements for companies, supervision of the financial infrastructure, insolvency law and EU-wide harmonisation of capital gains tax regulation. We have already achieved a great deal in the field of payment systems, having broken down barriers and significantly reduced costs for citizens since we introduced the Single Euro Payments Area (SEPA), although the existing legislation now needs to be implemented with full force. We want to do the same in the medium term for the cross-border use of credit cards: in a monetary union, there should be no “roaming” fees when it comes to making payments.

Yves Mersch: Advancing Monetary Union Speech by Mr Yves Mersch, Member of the Executive Board of the European Central Bank, at the Euro Exhibition, Osnabrück, 25 January 2015. *  *  *  Ladies and gentlemen, Euro banknotes and coins are not just a means of payment. The bridges and arches on our banknotes are a symbol of European integration. They stand for the fact that there is a lot which connects us within the Monetary Union, and that our once so divided continent has succeeded in overcoming these deep divisions, as the crisis has recently shown. Our common currency also therefore stands for shared values. “Stability of institutions guaranteeing democracy, the rule of law, human rights and respect for and protection of minorities” have been some of the accession criteria for membership of the EU since the European Council in Copenhagen in June 1993; “Membership presupposes the candidate’s ability to take on the obligations of membership including adherence to the aims of political, economic and monetary union.” 1 The recently published legal opinion of the Advocate General of the European Court of Justice in the case of Peter Gauweiler and the Die Linke party against the ECB on the Outright Monetary Transactions (OMT) programme also refers to these constitution-like shared legal values. This “constitutional compact” underlies European integration and includes the German constitutional principle of constitutional identity review – it does not exclude it.
Expectations may be more solidly anchored, which would lessen the impact of the output gap on current inflation. It is also possible that, as a result of structural reforms, the NAIRU has decreased in many countries in recent years, thus giving the "optical" impression of a horizontal Phillips curve during this period. In a broader sense, globalisation itself may also be responsible for the flattening of the Phillips curve. In an open economy, domestic demand changes can easily be satisfied through increased imports. As a consequence, domestic inflation may become less sensitive to the domestic output gap and more sensitive to global tensions on production capacities. Overall, these developments have made it easier for central banks to bring down inflation without real costs to the economy. But it is clear, today, that these effects are being reversed. The prices of oil, food and other commodities are now increasing fast. There might be three reasons for this rise (the importance of which is currently hotly debated): first a supplydemand imbalance; second, the emergence of commodities as an asset class, attracting substantial flows into commodity funds; and, finally, the use of commodities as a hedge against inflation or dollar depreciation. In addition, while labour supply in emerging countries will remain abundant, it is not all that clear that it will remain cheap. Indeed, we are currently seeing an increase in export prices in emerging countries, which translates into higher import prices for developed economies. In short, the world environment has become very inflationary.

The current financial turmoil is here to remind us that financial innovation is not a smooth process. An appropriate knowledge of the mechanisms through which monetary policy affects the economy is of crucial importance for central banks. Financial innovation affects these mechanisms by altering the channels through which monetary policy operates. Drawing on some lessons from the current turmoil, I would like to make four points. First, securitisation has created new uncertainties in the transmission channels of monetary policy. It may have weakened some channels and strengthened some others. At least in normal times, financial innovation significantly weakens the bank-lending channel. Securitisation gives firms broader access to capital markets and, as such, makes them less dependent on bank funding. Similarly, banks may be more able to issue debt securities and less dependent on the constraint of funding themselves with secured deposits. At the same time, however, securitisation strengthens the “direct” transmission channel through which interest rates operate, since a great number of financial intermediaries are more dependent on liquidity and on its price. Second, financial innovation – to the extent that it makes it easier to take risks and encourages the “search for yield” – may have increased the impact of monetary policy because, in such an environment, risk premia are highly procyclical and move in tandem with interest rates. Third, this same procyclicality of “risk taking” can lead to booms and busts, when investors’ appetite for risk changes.
In the academic literature, some have suggested that the central bank can increase economic stability or reduce the negative effects of slow price adjustment by stabilising an index with fewer prices and weights other than those in the consumer price index.3 Prices that adjust slowly should have a relatively higher weight than prices that change quickly. Prices for goods and services where labour costs are a major component often adjust slowly.4 Labour costs are very important in these indices not only because they change slowly but also because they react to cyclical movements and are seldom exposed to extraordinary disturbances. 3  See Aoki, Kosuke (2001), “Optimal Monetary Policy Responses to Relative Price Changes,” Journal of Monetary Economics, Vol. 48, pp. 55-80, Arrazola Maria and José de Hevia (2002), “An Alternative Measure of Core Inflation,” Economics letters, Vol. 75, pp. 69-73, Mankiw, Gregory and Ricardo Reis (2003),“What Measure of Inflation Should a Central Bank Target?” Journal of the European Economic Association, Vol. 1, pp. 1058-1086, and Woodford, Michael (2003), Interest & Prices – Foundations of a Theory of Monetary Policy, Princeton University Press. 4  Angeloni, Ignazio, Luc Aucremanne, Michael Ehrmann, Jordi Gali, Andy Levin and Frank Smets (2004), “Inflation Persistence in the Euro Area: Preliminary Summary of Findings”, presented at the ECB’s conference on inflation persistence in the euro area, Frankfurt am Main , 10-11 December 2004. BIS Review 43/2005  3  Another topic currently of interest to academic research is whether a price level target may be better than an inflation target.

In reality the division between us was a very narrow one, reflecting the fact - now acknowledged by most outside commentators - that the decision, as to whether or not we will need to raise interest rates moderately further, sooner or later, is very finely balanced. I hope this is a situation that we will get used to. I would expect the professional experts on the MPC to agree quite easily when monetary policy is clearly off track; but I would equally expect them to disagree as often as not at the margin when we are there or thereabouts. As it is I was actually encouraged by the reaction of many of the more thoughtful commentators who - in the circumstances - recognised that it was a reflection of a grown-up process that we could publish a division within the Committee and the reasons for it without generating significant market disturbance. In this sense, too, I think it likely that once the new arrangements are properly bedded down they will be seen to be a very considerable advance on what has gone before. Financial Stability Let me turn now to the Bank’s second core purpose, the maintenance of financial stability. On the same day that the Bank of England Bill was introduced into Parliament, the Chancellor launched the new Financial Services Authority, the FSA, which will become responsible for the authorisation and regulation or supervision of effectively all forms of financial services activity in the UK.
For small businesses, a key barrier was a lack of trust in non-bank channels. For migrant workers, going to a formal business premise and submitting to a customer due diligence process was intimidating and discouraged some workers from approaching formal remittance channels. This insight allowed us to focus on new ways of allowing workers to conduct remittance without physically visiting an office, such as through mobile channels. Another solution that proved to be very effective was bringing MSB services to the workplace. As a group and in their own familiar surroundings, we found that workers were more comfortable in dealing with formal MSB companies face-to-face. I am also pleased to inform that as previously announced, the Bank has finalised guidance that will allow money service business companies to conduct e-KYC for on boarding customers. This in turn will facilitate an end-to-end electronic process for performing remittance transactions below specified limits without a customer having to physically visit an MSB office. For small businesses, our outreach programs were opportunities we could use to explain the regulatory framework for MSB companies and avenues for redress, thereby increasing confidence in the use of formal channels. Had we focused only increasing or providing information on access points, we would not have achieved the results that we did. Second, small ideas can make a big difference. As I alluded to earlier, language barriers presented considerable challenges in getting our messages across to migrant communities. To overcome this, the industry identified Greenback “ambassadors”, who were individuals from countries of the migrant communities.

With the experience gained together, we can deliver positive and significant changes that will improve the welfare of individuals and businesses, not just in these two cities but across Malaysia and in countries that are dependent on remittance flows. Thank you. 4/4  BIS central bankers' speeches
Leaving the maintenance of standards to others – to the sell-side, to public authorities and regulators, or (worst of all) to no-one, as happened a decade ago – cannot serve either your interests, or those of your investors. In my remaining remarks, I want first to review the strong progress that has already been made on developing and embedding the Code, including in some buy-side firms. I will then turn to review four specific concerns sometimes heard from buy-side colleagues still unsure about signing up, and set out what I hope will be persuasive responses. Strengthening buy-side adoption is one of the Global FX Committee’s top priorities for the coming year – and we have asked senior figures from both sides of the market to lead that work, working either as individual liaison representatives, or as members of a new buy-side outreach working group. I am pleased to see several of them here today – including David Clark, Robbie Boukhoufane and Richard Purssell – and I know they would be happy to answer any questions you may have, either now or later. Take up of the Global Code: progress so far Before turning to review progress, I must first confess more than a little self interest in this subject.

In my current role, as Executive Director for Markets at the Bank of England, Chair of the London Foreign Exchange Joint Standing Committee, and a member of the Global FX Committee, I have a responsibility to foster strong, efficient and fair foreign exchange markets in sterling and other currency pairs. But I was also in at the birth of the Code itself, because in 2014-15 I led the team that produced the Fair and Effective Markets Review, which recommended amongst other things that the ‘Global Preamble’ produced by national FX committees in March 2015 should be expanded into a full-blown Global Code, sweeping away the various national texts that preceded it, and setting a new standard for trading practices and behaviours in a market that urgently needed reform. Two years later, in May 2017, the Global Code was launched, setting out a common set of guidelines for good practice in the FX market. The Code contains 55 principles covering ethics, governance, execution 2  All speeches are available online at www.bankofengland.co.uk/publications/Pages/speeches/default.aspx  2  and transparency, information sharing, risk management, confirmation and settlement; and it tackles aspects of current and future market development, including electronic trading, algorithmic trading and prime brokerage. The drafting process was a truly global effort, taking two years and involving central banks and market participants, including buy-side, sell-side and end-users, from 16 jurisdictions around the world. Many of you, or your institutions, played a vital role in that process. Takeup of the Code, which is voluntary, has grown rapidly.