samchain/econo-pairs-v1 huggingface dataset:
Thus, today, the received wisdom is that central banks should follow clearly articulated policies aimed at a stable monetary environment. This in turn begs the question of how to define a stable monetary environment. BIS Review 135/1999  2  In Hong Kong, a highly open economy with no capital controls, we focus on stability of the exchange rate, but this regime itself requires a flexible economic structure and a sound banking sector. I believe that Hong Kong possesses those attributes, as demonstrated not least by the adjustment of the past two years, and that the peg remains the appropriate regime for us, but I would be the first to admit that it is may not suit others. From the point of view of investors, it is the stability and credibility of macroeconomic policy as a whole which probably determines, or ought to determine, investment strategy. As experience tells us, it can be a costly mistake to pay attention only to particular parts of the policy regime, such as the exchange rate, without scrutinising the wider context in order to be satisfied that the overall design is credible. And so it is my pleasure to help to launch this conference today, and to welcome those of you from outside Hong Kong. We pride ourselves in being a place which offers not only a wide choice of excellent conference facilities but also, more importantly, the critical mass of financial and ancillary services which issuers and investors require - and which many of you here today contribute to.

Markets expect quick, bold and “shock-and-awe” decisions on highly complex matters. They are exasperated that something can be agreed by leaders but take months to enter into force. Yet this is a necessary condition of operating in a system of 17 sovereign democracies. Decisions have to be explained, approval processes have to be followed, compromises have sometimes to be made. These dynamics were witnessed even in the US when Congress sent back the TARP in 2008. The net effect on the euro area, however, is that by the time decisions are eventually implemented the expectations of market have moved on. The impact of those decisions is then discounted. These market-democracy dialectics provide a second reason why a more integrated economic and financial union is so essential for EMU. The rationale for the original design of EMU – with centralised monetary policy, but decentralised economic policies – was linked to principles of subsidiarity and democratic accountability. This was consistent with the environment that prevailed 20 years ago. But these same principles now imply more Europe, not less. Subsidiarity is the principle that the centre should perform only those tasks which cannot be performed effectively at the national level. Can we really argue, in the current crisis, that the centre is not the more effective level to exercise, or at least coordinate, certain economic and financial policies? Democratic accountability is the principle that citizens should be able to hold their representatives responsible for decisions.
I expect that our new Chair, Janet Yellen, will play a significant role here as she uses her press conferences to explain what simply cannot be communicated with a series of dots or within the statement we release after each meeting. Alas, there is Congress Now mind you, your monetary authority – your Federal Reserve – does not hold every card to your future in its hand. No matter how clearly we communicate, no matter how expertly we tailor our supervision of your banks, no matter how we conduct monetary policy, our work is necessary but not sufficient to the success of the Louisiana, Texas and U.S. economies. The fiscal authorities – Congress and the executive branch – must do their job to provide the proper tax, spending and regulatory incentives for businesses to take advantage of the cheap and abundant money the Fed has made possible and put it to work to grow, expand their payrolls and let America truly prosper. I will spare you my thoughts on Congress (it is not very central banker-like to resort to profanity). All I will say is that you and your neighbors and friends and customers are the ones who elect people to office and whether you are a “D” or an “R,” you need only look at yourself in the mirror to see who is in charge of placing the right people in office to get the job done of putting the American economy back on track. I’d say you have some serious work to do here.

Marzunisham Omar: Comprehensive approaches to monetary and financial policy making in ASEAN-5 countries Welcome remarks by Mr Marzunisham Omar, Assistant Governor of the Central Bank of Malaysia (Bank Negara Malaysia), at the third BNM-IMF Seminar, Kuala Lumpur, 17 July 2019. * * * In his remarks at this seminar last year, Odd Per quoted the book Enchanted; “First time is luck, second time is a coincidence and third time is a tradition.” Here we are gathered today for the third BNM-IMF Seminar to celebrate this “tradition”, a tradition I hope will continue for many years as we can all agree that candid and open dialogue between the IMF and ASEAN-5 central banks is mutually beneficial. Let me take this opportunity to thank the IMF and the team at Bank Negara Malaysia for organising this Seminar and to my colleagues from the region for being highly supportive of this effort. The topic today – “Comprehensive Approaches to Monetary and Financial Policy Making in ASEAN-5 Countries” – is indeed timely given the ongoing work at the IMF on the “Integrated Policy Framework”. I hope today’s Seminar will help shed greater insights on how central banks in ASEAN economies, which are small, open economies, navigate through increasingly complex, interrelated issues in our pursuit of preserving monetary and financial stability. I have no doubt that we in ASEAN will also find today’s Seminar useful in understanding the IMF’s latest thinking on these issues. There are two parts to my brief remarks today.
An extended period of low interest rates and abundant liquidity inevitably generates the fear of a resurgence of the high levels of inflation that we have witnessed in the past. Given the current situation, these fears are unwarranted. In most advanced economies, capacities are still underutilised and output gaps are set to close only very gradually (chart 12). Money, despite having been made available by central banks in unprecedented amounts, has not showed up proportionally in investment and consumption. This reality implies that inflation pressures will be contained for some time to come. Moreover, central banks have the necessary instruments at hand to counter inflation pressures, if and when they manifest themselves. The implication for our analysis is that the inflation premium in interest rates is set to remain small in the future.5 But even though the currently low policy rates are adapted to current economic realities and do not pose a threat to price stability in the foreseeable future, they may pose a risk to financial stability through various channels. First, by lowering the cost of credit and increasing the value of assets, low interest rates could provide the breeding ground for asset price and credit booms. In this regard, the current developments in Swiss mortgage and real estate markets are telling: real estate prices and mortgage credit have been growing with considerable momentum for several years already. Importantly, the growth rates of both prices and credit volumes are at levels which cannot be fully explained by fundamental factors.

Households, governments and banks in many advanced economies are still in deleveraging mode, and this attempt to reduce the debt overhang is likely to weigh on short-term growth prospects. Moreover, persistently high  8  Cf., e.g., Adrian and Shin (2009). 9  Cf., e.g., Miller et al (2002). 10  Cf. Tinbergen (1956). BIS central bankers’ speeches  5  unemployment rates and tight financial conditions continue to dampen consumption spending and business investment in several euro area countries. Against this background, the Swiss economy is expected to continue its expansion in the quarters to come. Available indicators hint at a fairly robust second term in 2013. For instance, monthly data show that exports are gaining momentum, driven by the strengthening of foreign demand. For 2013, we expect the Swiss economy to grow between 1.5% and 2%. Despite this moderately optimistic outlook, we must be aware that downside risks remain substantial. Let me name three: first, structural problems in Europe persist, and could cause new market tensions. In particular, the European banking system remains vulnerable. Second, a negative fiscal shock in the US in early 2014, caused, for instance, by renewed political deadlock over public budget negotiations, would probably be a drag on the global economy. Third, adjustments of the monetary policy stance in one area (e.g. the US) may create undesired spillovers in other regions (e.g. emerging markets or Europe). This could lead to increased volatility in financial markets. What does this economic outlook imply for the likely evolution of interest rates?
Already today, the Internet banks contain much more than merely the opportunity to make payments and check one’s account balance. One function on the Internet that will probably lead to increased competition within the finance sector is the existence of companies that offer price comparisons. There are, for instance, several independent companies on the Internet today which enable a simple comparison of mortgage costs or provide assistance in finding the most beneficial insurance policies. Competition will increase with regard to share trading, mutual funds, insurance and mortgages, even from abroad. One reason for this is that the Internet will cause a reduction in entry barriers, i.e. that the costs connected with starting a business and achieving critical mass with regard to customers will not be as high as before. New companies today do not need to establish far-reaching office networks, which is proved by companies such as Skandiabanken and companies known as Internet stockbrokers. Finally, it is perhaps worth pointing out that IT in the financial sector does not merely consist of the Internet. Many of the instruments that are currently traded in the markets, particularly derivative instruments such as options and swaps, are completely dependent on modern information technology to be priced and traded at all. As derivative instruments are mainly used to buy and sell financial risks in a cost-efficient manner, it is possible to say that IT comprises a base for modern financial risk management, as it is put into practice on dealers’ tables around the world.

One example where the banks did not co-operate in the payment market is the service of digital invoicing systems. Up to spring 2002 the banks were offering two different, non-compatible systems, “e-giro” and “e-faktura”. The existence of two digital invoicing systems was an obstacle with regard to getting both companies and households to utilise the new technology. Today the banks are investing in making the systems compatible with one another and the goal is that invoicers and invoicees will be able to reach one another regardless of which bank they use. If this succeeds, it should lead to increased acceptance from customers and enable critical mass to be achieved more easily. Will cash disappear? The use of cash in Sweden has halved since the mid-1950s, which is of course a result of the technological developments with card payments and later Internet payments offering good substitutes for payment with banknotes. However, the decline in the use of cash has slowed down in recent years and the M0 money supply is currently around SEK 90 billion, or 4 per cent of GDP. Cash is suitable for certain types of transaction, including, unfortunately, those that people don’t want registered, and there is perhaps a lower limit for the demand for banknotes. In addition, the alternative cost for cash has been low in recent years, as a result of low inflation and low interest rates. However, the use of cash in Sweden is higher than in other Nordic countries.
Considering the price stability objective stipulated in the Sveriges Riksbank Act and the stance taken in the preparatory work, it can be concluded that monetary policy should be aimed at stabilising inflation around the inflation target and resource utilisation around a normal level. This is called flexible inflation-targeting in the terminology I proposed in a number of papers published in the 1990s (Svensson 1999). This is, incidentally, completely in line with the stance adopted by the parliamentary Committee on Finance in 2007, in its comments on the evaluation of monetary policy in the period 1995–2005 by Francesco Giavazzi and Frederic Mishkin (2006/07:FiU27): “The Committee maintains that Swedish monetary policy should be conducted in a flexible way and should aim to stabilise the development of inflation, employment and production.”  BIS Review 22/2010  1  This being so, some people may wonder: Wouldn’t it be better to have a level of resource utilisation that is higher than normal? Shouldn’t monetary policy be aimed at achieving a higher level of resource utilisation than normal? Well, you may think so – but 40 years of practical experience and 30 years of theoretical and empirical research have produced overwhelming evidence that monetary policy alone cannot bring about a higher than normal level of resource utilisation. Making attempts through a more expansionary monetary policy will not lead to success in increasing resource utilisation and employment.

But I will dwell on one particular point: what makes life difficult for these funds is not so much the fall in bond yields per se but one that isn’t accompanied by a fall in yields (rise in prices) on other, riskier securities they hold as assets. That’s precisely what has happened in recent years: on days that long-term real interest rates have fallen, equity prices have declined. More often than not, in other words, the yields on gilts and equities have gone in opposite directions and, over time, the gap between those yields has widened considerably. Since an independent easing of monetary policy tends at the margin to depress yields (raise prices) of all assets – and that’s precisely what you observe if you focus specifically on those episodes – it’s hard to believe that policy shocks are the main reason for the divergence between bonds and equities that underlies  2  All speeches are available online at www.bankofengland.co.uk/publications/Pages/speeches/default.aspx  2  the rise in pension deficits. More likely candidates are growing pessimism about future economic growth, across the world, and the perception that risks around that lower central path are skewed to the downside. This is part of the wider point that, in large part, central banks have been accommodating a long, drawn-out decline in the neutral real rate of interest. The decline in policy rates is a symptom not a cause of the forces shaping the global economy.
•  Many blue chip companies as well as government agencies have issued bonds. 45. But retail participation in corporate bond market has been low. •  It is costly for bond issuers to tap retail market. •  Minimum lot sizes are at least $  46. MAS and SGX are reducing cost of retail bond issuance and making it easier for retail investors to buy corporate bonds listed on SGX. •  Bond Seasoning Framework and Exempt Bond Issuer Framework will allow eligible corporate issuers to issue bonds to retail investors at lower cost in minimum denominations of $ while ensuring sufficient safeguards for investors. •  Proposals for both initiatives have been put out for public consultation and response has been positive. •  MAS will finalise and announce rules soon. Expanding ETF options 47. Equity investment offers potential for higher returns compared to regular savings and fixed income products. But investing in individual stocks entails higher risks and exposure to market volatility. 48. Exchange-traded funds (ETFs) can be low-cost way for investors to gain exposure to basket of underlying equities to build a well-diversified investment portfolio. ETFs also give investors exposure to various asset classes including bonds and commodities. 49. MAS has made it easier for retail investors to access more ETFs. •  Previously, all ETFs using derivatives were classified as complex or Specified Investment Products (SIP) – they could only be sold to retail investors with enhanced safeguards.

Improving our fiscal position is the most effective means we have available to reduce our vulnerability during this prolonged period of adjustment. We need to produce a substantial reduction in our structural deficit over the medium term and begin to reduce the more dramatic longer term gap  2/3  between our resources and commitments. And we need to restore a reasonable cushion in our structural budget balance to help us deal with future shocks. If we are unable to begin to generate more confidence in the capacity of the U.S. political system to produce these improvements, we would face a greater risk of future increases in risk premia. And even though substantial fiscal consolidation would not by itself bring the external imbalance down to a more sustainable level, it would improve the prospect for a smoother adjustment to that outcome. The general risk inherent in these imbalances—the risk of more adverse growth outcomes and asset price volatility—reinforces the importance of sustaining the strength and resilience of the U.S. financial system. Our financial system today is in substantially stronger shape than it was even in the recent past, and the major institutions now appear to be managed so that they are less vulnerable to the type and magnitude of shocks they’ve experienced in the past couple decades. Our challenge, however, it to make sure they are as well positioned to deal with the full range of potential future risks.
And the Treasury is also consulting on how investment banking distress should be handled in the light of the problems with the Lehmans insolvency and administration since last autumn. 7 Cross-border resolutions There is also a vital cross-border element to all of this, which absolutely must be recognised and tackled if we are to establish sounder foundations for a world of free, global capital markets. 6  I owe that expression to my colleague Paul Fisher. 7  See, HM Treasury (2009), “Developing effective resolution arrangements for investment banks”, May 2009. 6  BIS Review 83/2009  Around thirty-five years ago the founding document of the rules of the game for international banking was issued: the Basel Concordat for the supervision of internationally active banks. Although updated in the early 1980s to embrace consolidated supervision in the wake of Banco Ambrosiano’s collapse, its essential precepts have remained unchanged. 8 Home supervisors carry the responsibility for consolidated supervision. Broadly, hosts carry little or no responsibility for branches, other than for liquidity, although it is not easy to pin down what that means; but hosts carry somewhat greater responsibility for the soundness of subsidiaries. (Within well-defined regional areas, variants can operate: eg passporting within the EU.) The point of rehearsing all that familiar stuff is that the division of labour for supervision of banks during peacetime absolutely must be consistent with the insolvency and other regimes that would operate in the event of failure or distress.

Economic activity would have been lower and unemployment – particularly youth unemployment – higher. This would have had a disproportionately higher impact on the incomes of the poor and the young. At the same time, inflation would have been lower, which research shows transfers wealth from younger households to older households, who are more likely to be savers.3 So the ECB not acting also carried distributional implications. Further, the deeper and more prolonged recession would likely bring about greater hysteresis, depressing future growth and hence returns for savers. Overall, households would have been worse off had the ECB not acted. Counterfactual discussions aside, how have households fared across the euro area? To gauge the effect on different euro area households, we can draw upon results from the Eurosystem’s Household Finance and Consumption Survey (HCFS), conducted in 2010 and 2014. Even though these surveys do not cover the period since the introduction of the negative deposit facility rate, they do coincide with declines of 2-year euro area benchmark bond yields by 130 basis points and 10-year bonds by 110 basis points. Euro area net financial income as a fraction of total household income fell slightly. When looking more closely at households grouped by wealth quintiles, we find that households with the lowest net wealth, whose debt payments are higher than their financial income, had an unchanged position. Households with the highest net wealth, whose financial income is much higher than their debt, had the most marked fall in income.
These situations require robust governance at board level. 22  IDC: Wordlwide Semiannual AI Systems Spending Guide (March 2019). See: https://www.bis.org/review/r180727a.pdf and Finastra, FTI Consuting Survey 2019. 24 McKinsey & Company research for the Future of Finance review. 23  8  All speeches are available online at www.bankofengland.co.uk/news/speeches  8  To ensure that the benefits of cloud computing are realised and the associated risks are well managed, the PRA will issue a Supervisory Statement in the autumn that sets out its supervisory approach. The Bank, together with the FCA, will also establish a forum to discuss the results of a survey that it has conducted on AI use in finance and determine an appropriate supervisory approach. The Bank’s management and analysis of data is critical to our effectiveness as regulators and to the City’s competitiveness. The Bank now receives 65 billion data points each year of firm-related information. To put that into context, reviewing it all would be the equivalent of each supervisor reading the complete works of Shakespeare twice a week, every week of the year. For firms, while the Cloud and AI have reduced the costs of storage and analysis, producing regulatory submissions is still labour intensive and costs the industry an estimated £ billion per year.25 This is the new frontier of regulatory efficiency and effectiveness. The PRA is exploring how new technologies could streamline firms’ compliance and regulatory processes while improving our ability to analyse relevant data.

12  All speeches are available online at www.bankofengland.co.uk/news/speeches  12  Consumers should have greater choice, better services and equal access to finance. Small and medium sized businesses should have access to new credit to grow. Banks themselves should be more productive and supervision more efficient. And the financial system should seize the opportunities and manage the risks associated with the UK’s transition to a carbon-neutral economy. The success of the new finance will be assured if we remember some old lessons, namely: -  That similar activities should be regulated consistently;  -  That markets don’t always clear, liquidity is state contingent and the riskiness of an asset depends in part on the entity that holds it;  -  That individual responsibility is essential for collective welfare;  -  That ending Too big to Fail is a moral and a financial imperative; and  -  That when it comes to financial stability, success is an orphan. Memories fade, complacency sets in and the virtues of prudence are soon forgotten. Most fundamentally, we must always remember that finance is not an end in itself. It is a servant of the real economy, of the households and entrepreneurs that make this country great. They are demanding a more sustainable, inclusive and prosperous future. The ultimate test of the New Finance is whether it helps deliver just that. 13  All speeches are available online at www.bankofengland.co.uk/news/speeches  13