samchain/econo-pairs-v1 huggingface dataset:
Mervyn King: Monetary policy developments Speech by Mr Mervyn King, Governor of the Bank of England, to the CBI, Institute of Directors, Leeds Chamber of Commerce and Yorkshire Forward at the Royal Armouries, Leeds, 21 October 2008. *  *  *  My first memories of Leeds are from a wet summer in 1958. I was ten years old, we lived on the moors above Hebden Bridge, and my father took me to my first Test Match –England against New Zealand at Headingley. It rained all day on both Thursday and Friday, and, when play started in mid-afternoon on Saturday, on a drying wicket New Zealand were bowled out by Laker and Lock for 67. So I became a slow bowler. I was taught to bowl – slow left arm – at Old Town primary school by the headmaster, Alfred Stephenson. During the morning break he would mark the wickets in chalk in the playground, and draw a small circle exactly on a length. If we could pitch the ball within that circle he would give us a farthing. As we improved, and the payout of farthings increased, the morning break became shorter and shorter – my first lesson in economic incentives, or what is known in the trade as “moral hazard”.

The constraints imposed by such a financial infrastructure, and the inadequacies and inefficiencies attendant thereto, provide key justification for the development of the capital market which will play the lead role for mobilizing domestic and foreign investment, as well as engendering low cost, efficient, financial intermediation. While in our financial sector development we have taken steps to improve the payments system, supervision of banks, strengthening their capital base, and enhancing efficiency in general, we have also put strong emphasis on ensuring the emergence of a comprehensive financial sector, that will meet the demands of an emerging market economy such as ours. BIS Review 107/2007  1  In the process of developing the capital market, we have worked with private sector and external development partners, especially the First Initiative and the Commonwealth Secretariat, to put in place a robust legal and regulatory framework that will facilitate the process. Through the Resident Consultant provided by the First Initiative, we have defined the system of regulations that would guide the operations of the capital market, and the stock exchange in particular, in all facets of its operations. We have ensured that these are consistent with acceptable international standards, and I can now confidently say that our stock exchange will operate with adequate safety and protection of the interests of the investing public. No one therefore should entertain any fears in transacting business through our stock market. The process of developing the legal framework has been participatory and transparent.
Whichever infrastructure you look at – transportation, communication and power links, water and environmental sustainability – in every area the needs are growing, the need to remove bottlenecks to economic growth and social development are growing. 33. Traditionally, it has been a sector that has been financed by governments and banks. Governments will be constrained in the future, across the region. Although banks currently have ample liquidity, they too will over time become more constrained. So that combination of governments and banks isn’t going to be able to cope with the rapid growth in financing for infrastructure in the future. •  This is why institutional investors – insurers, pension funds and other long term investors – have become very important. For insurers, infrastructure is an attractive asset class. It is attractive as a potential diversifier of assets, and has the potential to provide reliable inflation-linked returns over time, and with low correlation to other conventional assets. 34. But we need quality data for infrastructure to take off as an asset class for long term investors. We need quality data for reliable performance benchmarks to be constructed, and to allow long term investors to perform asset allocation on a reasonably reliable basis. That quality data doesn’t yet exist but it is being put together by the EDHEC Infrastructure Institute in Singapore. By the end of this year they expect to have usable performance benchmarks, including for unlisted infrastructure debt and equity.

In this regard, we are naturally supporting efforts by the French Treasury and insurers to improve the prudential treatment of long-term equity investments already during the 2018 review. On a topical note, I would add that it is crucial for supervisors to apply all prudential requirements with equal rigour. The string of failures by insurers doing business on the French market under the FPS, particularly in construction insurance, is a reminder of the importance of this. The ACPR is obviously working hard to deal with this crisis, which is affecting tens of thousands of French policyholders. But the requisite convergence of supervisory practices also needs to become a reality very soon. I know that Gabriel Bernardino and EIOPA are making this a priority. Finally, let me be clear: it is unreasonable to apply the new IFRS17 accounting framework right now, given the current state of the discussions. Aside from the complexities of creating a European governance framework for these standards, there is also an obvious issue of timing, and fortunately, the IASB appears to be reopening discussions on this. Implementing IFRS17, which will be costly and complex, will follow on from implementation of Solvency 2, a process that has kept insurers very busy. Beyond the question of timetabling, there are major substantive issues. We want an agreement on identifying groups of loss-making contracts. As it stands, the draft is unworkable. We also want to see completion of the discussions on the treatment of reinsurance contracts held.
This in a sense underscores the importance of Tinbergen’s augmented policy rule – that there should be as many policy tools as there are complex sub-systems – when managing a complex system of systems. None of the models so far considers global spill-overs, either through trade or financial channels. Generally-speaking, there is a dearth of macro-economic models which take seriously these international spillovers in an analytically-coherent fashion. Even if modelling this behaviour is over-ambitious in the short-term, there may be merit in improved monitoring of these global flows of financing over time, given their importance for the stability of economies and financial systems. Elsewhere, I have likened this to the creation of “global weather map”. This could be used to track and map the source, scale and nature of cross-border capital flows in close to real-time (Haldane (2012, 2014) and IMF (2013)). Plotting this complex, rapidly-adapting web would be a natural precursor to using it to address “what if” questions. What, for example, would be the impact of a rise in US interest rates on the international flow of funds? The IMF would be the natural guardians of this surveillance-cum-stress-testing machine. (c)  Policy design  Significant changes have been made to the macro-financial policy architecture since the crisis. In general, these frameworks have moved closer towards meeting Tinbergen’s rule of having as many distinct policy tools as there are complex layers in the macro-financial system.

This is a diagnostic on the diversity of a bank’s business model – whether it is engaged in investment as well as commercial banking. Some of these trading assets will also be complex and hence difficult to price and trade – so-called Level 2 and 3 assets. As Chart 3 shows, the average SIFI had a trading book of around a quarter of assets in 2006. For the largest, this was closer to around 50% of assets. 7  See BCBS (2014). 8  Notional exposures are likely to be a poor proxy of the underlying risk on this portfolio, but provide an indication of the scale of gross derivative positions. 6  BIS central bankers’ speeches  Since the crisis, there is little evidence of these complexities having reversed. Chart 4 updates the four metrics using end-2013 data. The balance sheet of the average SIFI has not shrunk. In fact, it had risen to around $ trillion by end-2013. For the largest SIFI, it was around $ trillion. The pattern is even more striking off balance sheet. For the average SIFI, the derivatives book has risen by over 50% to over $ trillion by 2013. For the largest, it had risen to $ trillion. On the other complexity metrics, the number of legal entities for the average SIFIs is essentially unchanged comparing 2006 and 2013.
7 See: https://www.bankofengland.co.uk/education/econome. 3  All speeches are available online at www.bankofengland.co.uk/news/speeches  3  That being said, an economics education is certainly not a prerequisite to a career in the Bank. The Bank offers on the job training for all ages to entice diverse talent. Our Future Capability programme is aimed at pupils keen to get their careers started after leaving school. Almost 90% of our 2018 Future Capability intake were from a state school and over half were female. Historically, one impediment to improving diversity in central banking has been the lack of diversity among economics graduates. Just under a third of students studying economics to A-level and undergraduate level in British Universities are female.8,9 To enable the Bank to hire from a broader set of disciplines and train them as economists and technical specialists we have introduced an in-house Central Banking Qualification (CBQ), in which graduate hires can earn a Masters Degree in Central Banking. This means that only half of our graduates study economics, with the remainder plucked from the sciences, business and the humanities. In recent years, our graduates have come from 40 different universities, a six-fold increase in the past decade. In the Bank’s September 2019 intake, we expect that almost half – 46% – of graduates will be female. This is the most diverse outcome since we began recording the diversity of graduate intakes. Last year, the Bank won the TARGETjobs 'Most Popular Graduate Recruiter in Banking, Insurance and Financial Services’ for the second year running.

An important aspect of successful job applications and interviews is being able to demonstrate personal development. For too long at the Bank, the opportunities to broaden skills and experience were granted on an informal basis to those who either knew about the opportunity or were recommended by a colleague. This tended to further reinforce homogeneity in senior leadership. In 2017, to level the playing field we launched an internal “opportunities” board. This connects people who need help with a short-term project to those able to offer it. Since we launched the site two years ago, 700 opportunities, from speech research to short-term holiday cover have been advertised across the organisation. The Bank has also created a ‘high potential’ talent pipeline, which has 50% female representation, and coupled this with new approaches to development support. Our new sponsorship programme connects a high potential candidate and senior colleague to help sponsees identify assignments and opportunities to hone their skills and increase their experience. The pilot consisted of 19 colleagues, 84% of whom were female at the scale just below senior management. Building on this success, we have extended the programme and 80% of colleagues in the second phase are female. As well as sponsorship the Bank recognises that mentoring (both formal and informal) can have a positive impact on an individual’s confidence to progress their careers. That’s why we launched our One Bank Mentoring Scheme in 2017 and ensured it is open to all staff.
But unlike monetary policy, which usually follows the Tinbergen rule of having as many policy instruments as there are targets, fiscal policy tends towards perpetual indeterminacy. It has to achieve multiple objectives, including cyclical stabilisation, supporting long-run sustainable growth, or dealing with the efficiency-equity trade-off, through the use of multiple, but often insufficient, instruments and subject to constraints, most importantly, the need to ensure the sustainability of public finances. In this context, the history of the monetary union reveals a constant tension between the quest to achieve short and medium-term national objectives and the hope that the common institutional framework would yield consistent supranational outcomes. The shortcomings of the original framework are well known. 2 They can be summarised in five points. First, the original rules set at the time of the Maastricht Treaty were overly simplistic and did not take into account the impact the cyclical position of the economy has on the headline deficit. In particular, it failed to avoid expansionary (procyclical) fiscal policy during periods of high economic growth, as the rules were silent about the need for Member States to save during good times. And this also led to contractionary fiscal policy during recessions since the deficit rule would call for adjustment at times when the automatic stabilisers were pushing public finances deep into the red. Consecutive reforms attempted to address this shortcoming, at the cost of increasing complexity. Specifically, the focus shifted to the use of medium-term “structural” variables.

Early evidence from the Bank’s Decision Maker Panel Survey suggests that the impact of Brexit holding back business investment growth may be less in 2018 than 2017. 5  All speeches are available online at www.bankofengland.co.uk/speeches  5  What is the Bank’s role in this context? I have been thinking about the whole range of policy challenges associated with productivity since the aftermath of the financial crisis in my former role at the Treasury. My role has changed since then, and I naturally have a different focus in my new role. It is the Bank’s responsibility to deliver monetary and financial stability. But by delivering low inflation, a safe and sound financial system, and a payments and settlements system that operates smoothly, we are ensuring the right environment for business investment. But our responsibilities for the financial sector mean that our role doesn’t stop there. For example, we can play an important role in supporting the development of new technologies (Slide 8). The Real Time Gross Settlement (RTGS) renewal programme, which I oversee at the Bank, is a major investment in the UK’s financial infrastructure which will deliver a range of new features and capabilities. RTGS is the means by which central bank reserves are transferred between banks big and small, and settles around £ of transactions per day. Although we decided that distributed ledger technology wasn’t sufficiently mature to support the core RTGS system, we will ensure the system works with that technology, however it evolves.
2  If we analyse how lending has evolved compared with income, in the business sector the recovery of turnover and the subdued growth of debt in 2021 appear to have led to an improvement in firms’ financial situation, although on average it is still more vulnerable than before the pandemic. Thus, firms’ average debt and debt burden ratios began to fall in 2021 and the percentage of highly-indebted firms2 decreased across the board, down to almost pre-pandemic levels in the sectors moderately affected and largely unaffected, but still 7 percentage points (pp) higher than in 2019 in those that were severely affected. 2  Firms are understood to be highly indebted when their ratio of net financial debt to (gross operating profit + financial revenue) is higher than 10, or they have positive net financial debt and zero or negative earnings. 3  In the case of households, favourable labour market and income developments are also contributing to the recovery in their economic and financial situation. In 2021, households’ gross disposable income (GDI) grew by 2.2%, although it remained 2.8% down on 2019. From the onset of the health crisis to end-2021, households’ aggregate net wealth rose by 9.8%, assisted by the increase in value of their financial assets and, above all, their real estate assets and by their relatively stable debt levels.

As in the past, in this latest episode the structural deficiencies identified are partly linked to a deficit of cohesion among the national economies that can only be remedied through further relinquishing of sovereignty. Perhaps the relative novelty of the recent crisis in the monetary union is that it shows, with particular seriousness, that any delay or lack of resolve in adopting the necessary reforms would not only be harmful to European construction but would generate very pronounced risks to economic and financial stability in Europe and the rest of the world. Admittedly, major reforms to monetary union governance have been made to date. I refer, for instance, to the new requirements made of domestic policies to contain macroeconomic imbalances in several areas, to the surveillance mechanisms established for these requirements and to the setting in place of national crisis-management systems, with centralised financial support arrangements for those countries most affected. However, such progress is not sufficient to ensure the proper functioning of a common monetary area. One of the main manifestations of the shortcomings observed is the continuing market fragmentation within the euro area. This is, namely, the existence of a country-risk component that means that markets assign different valuations to similar financial assets on the basis of the issuer’s nationality. In particular, the perceived risk of financial institutions’ liabilities depends to some extent on their geographical location.
Ravi Menon: Crypto tokens - the good, the bad, and the ugly Speech by Mr Ravi Menon, Managing Director of the Monetary Authority of Singapore, at Money20/20, Singapore, 15 March 2018. * * * Ladies and gentlemen, good afternoon. And to all our foreign guests, welcome to Singapore. This is a conference named after Money. Money has been with us for at least 5000 years. And over the last 300 years or so, we have come to accept Money as being issued by central banks whose mission in life is to safeguard its value. Now, along comes a new phenomenon – crypto money or currency or asset. The past year has seen explosive growth in the trading and use of these crypto assets. We have also seen a rollercoaster ride in their prices. Bitcoin – the most well-known of the crypto currencies or assets – hit a high of nearly $ 000 in December last year. And then lost two-thirds of its value in just over a month. MAS has been watching the crypto space with great interest. Our views are still evolving but let me share with you the current state of our thinking and our evolving regulatory approach. I will use the more generic term “crypto tokens” rather than “crypto currencies” or “crypto assets”. Crypto tokens began life as the medium of exchange within the blockchain ecosystem. But the token has now assumed a life of its own, outside the blockchain. Are crypto tokens money?

Investors in schemes involving crypto tokens may also be exposed to a heightened risk of fraud. These schemes are often conducted online by operators whose authenticity and credibility are difficult to verify. Managing crypto risks The challenge for central banks and regulators is this: how can we harness the potentially transformative benefits of blockchain technology and crypto tokens while containing some of their risks? MAS has to-date chosen not to regulate crypto tokens directly. But we are: 3/6  BIS central bankers' speeches  focusing on the activities associated with crypto tokens, evaluating the different kinds of risks these activities pose, and considering the appropriate regulatory responses, all the while, seeking to ensure that we do not stifle innovation. The key risks MAS is monitoring in the crypto world are in the areas of financial stability, money laundering, investor protection, and market functioning. Financial stability MAS and other regulators are studying the nexus between the crypto world and the financial system to assess how risks to financial stability may be transmitted: market risk from the direct exposure of financial institutions to crypto tokens; credit risk through unsecured lending to crypto token businesses; and leverage when borrowers pledge crypto tokens as collateral to borrow and buy more crypto tokens. MAS assesses that the nature and scale of crypto token activities in Singapore do not currently pose a significant risk to financial stability. But this situation could change, and so we are closely watching this space.
General government budget deficit percent of GDP  General government budget balance, cash (national methodology) General government budget balance (ESA 2010) General government primary balance** General government structural balance***  2010  2011  2012  2013  2014  2015  2016  2017* 2018*  -6.3  -4.2  -2.5  -2.5  -1.7  -1.4  -2.4  -3.0  -3.0  -6.9  -5.4  -3.7  -2.1  -1.4  -0.8  -3.0  -3.0  -3.9  -5.4  -3.8  -1.9  -0.4  0.3  0.9  -1.5  -1.6  -2.3  -5.6  -2.9  -2.4  -0.9  -0.4  -0.3  -2.2  -3.3  -4.3  *) projections for 2017 and 2018 were produced by the Ministry of Public Finance (cash deficit) and the European Commission (AMECO) **) the primary balance is the general government balance (ESA 2010) excluding interest payable ***) the structural balance is the general government balance adjusted for the cyclical component (estimated based on potential output) Source: MPF, European Commission  17  Figure 24. Current account deficit and non-debt-creating capital flows 0  5  -1  0  -2  -5  -3  -10  -4 -5  Source: NBR, NIS  -7 -8 -9 2017f  2016  2015  2014  2012  2011  -10 2010  *) mostly EU structural and investment funds **) direct investment, equity (incl.

that background, the NBR Board decided to successively cut the monetary policy rate, to narrow the symmetrical corridor defined by interest rates on standing facilities around the policy rate, to provide liquidity to credit institutions via repo transactions (repurchase transactions in government securities) for ensuring the smooth functioning of money market and of other financial market segments, to lower the minimum reserve requirement ratio on foreign currencydenominated liabilities of credit institutions, as well as to purchase leu-denominated government securities on the secondary market with a view to consolidating structural liquidity in the banking system that should contribute to the smooth financing of real economy and the public sector. As regards the purchase of leu-denominated government securities on the secondary market, a measure widely resorted to by central banks in the current context, I would like to stress that the NBR decided to launch secondary market purchases only after its position on the market shifted from net debtor to net creditor in relation to commercial banks. From this perspective, in full compliance with the NBR Statute, the measure was carried out with a view to ensuring an adequate level of financial system liquidity and I do not think it qualifies as a quantitative easing measure per se. Finally, the NBR took operational measures to ensure the continuity and smooth functioning of payment and settlement systems underlying payments in domestic currency, as well as to ensure the necessary cash flows for banks to conduct all operations.